Vietnam beyond the struggles
From one of the poorest to the top 20 fastest-growing economies
Before the 1986 economic reform – Doi Moi, Vietnam remained one of the poorest countries globally, with a GDP per capita of merely $235.7 in 1985. In less than 40 years, the country managed to increase its GDP per capita by 18 times, reaching over $4,300 in 2023 [1]. More than that, Vietnam has been among the top 20 fast-growing economies in the last decade [2] and continues to show impressive economic progress. In fact, the International Monetary Fund predicts Vietnam to remain in the top 20 countries with the highest growth in 2024 [3].
The economy has also shown immense resilience. Indeed, while the COVID-19 pandemic caused the world’s GDP to decline by 3.4% in 2020 [4], Vietnam was one of the few economies that managed to maintain positive growth [5]. It was thanks to the government’s effective strategy of contact tracing, mass testing, and quarantining in the early phase, which successfully prevented a large-scale lockdown and minimized impacts on business-as-usual activities. Coupled with investment incentives for sectors such as software production and high-tech, Vietnam managed to retain its attraction among global investors despite the hardships posed by the pandemic. While the worldwide FDI inflows fell by 35% in 2020, Vietnam’s only declined by 2%, making it in the top 20 most FDI-attracting economies [6].
The implementation of a nationwide vaccination campaign allowed the country to quickly reopen and emerge as an appealing destination for geographical diversification. To ensure supply chain resilience, vaccines were prioritized for workers in industrial parks, export processing and industrial zones. FPT’s employees were among the first to receive vaccinations, marking the start of Vietnam’s largest-ever mass immunization with nearly 9,000 people vaccinated. Local enterprises also played an active role in helping the government maintain outbreak control while ensuring business continuity. For example, FPT granted free access to its AI-powered learning platform - VioEdu, helping thousands of students access necessary materials despite school closure. In addition, the company helped local authorities launch voiceBot, which made voice calls to 1.2 million people and helped detect thousands of infection cases. Other companies within the FPT ecosystem - Long Chau pharmacy chain and FPT Software also joined hands to help Vietnamese citizens access medicine promptly and efficiently. The two companies successfully leveraged technology including AI and Cloud for operational optimization, allowing Long Chau to halve service time, minimize stockout rate to 5%, and expand exponentially to improve medicine affordability and accessibility to everyone across the country. Such success in navigating the pandemic has paved the way for Vietnam to recover swiftly and thrive in the new normal, allowing the country to grow at 8.02% in 2022 – the highest rate in 25 years [7].
An emerging innovation hub
Vietnam has been a rising star on the global innovation map, with its digital economy growing at a CAGR of 8.9%, making it the fastest-growing among 51 countries analyzed by the Financial Times [8]. The country is also one of three nations that holds the record for outperforming on the global innovation index for 13 consecutive years [9]. What makes it even more impressive is that the country’s technology industry has only emerged in the last decades. Over 20 years later, the sector reached $148 billion in 2022, nearly 500 times larger than that of 2000 [10], with local enterprises such as FPT leading the sector by becoming the first Vietnamese corporation to achieve $1 billion in global IT services (2023).
The country has been a favorite investment destination, attracting $36.61 billion of FDI in 2023, a 32.1% year-on-year increase [11]. To put it in perspective, Vietnam is among five nations that together have attracted over 10% of global greenfield investment since 2017 [12]. Leading companies have realized the immense potential of the country and its contribution to securing the global supply chain resilience, with corporations such as Panasonic, Foxconn, Canon, Qualcomm, and LG Electronics establishing manufactures in the country. Beyond that, companies including Samsung, Lego and Schaeffler are seeing Vietnam as an enabler for actualizing their visions in digital transformation, sustainability, and research & development.
At the forefront of technological advancement, Vietnam now holds the potential to become a global powerhouse for AI and semiconductor development. Aiming to be among the top 50 nations in AI development by 2030 [13], the country has encouraged active AI R&D and collaboration among enterprises and organizations. For instance, FPT - one of the pioneering forces in AI development, has established its own AI center, focusing on R&D and dedicated training programs to foster a new generation of AI engineers. The company has also formed partnerships with leading organizations such as NVIDIA, Landing AI, and Mila for advancing AI research. Alongside AI, Vietnam is also a prime destination for semiconductor development, even considered the most attractive by the president of the US Semiconductor Industry Association (SIA) [14]. The country has attracted global chip manufacturers to set up production in Vietnam, such as Intel’s largest factory for assembling, packaging, and testing chips [15]. Local players are also strengthening the country’s semiconductor capabilities, with companies including FPT Semiconductor and Viettel leading the initiative.
How did Vietnam get there?
Bamboo diplomacy setting the political stability
Located on the Indochina peninsula in Southeast Asia, Vietnam shares borders with China, Laos, and Cambodia and enjoys close proximity with financial hubs and major markets such as South Korea, Japan, Singapore, and Hong Kong. Having a coastline of over 3,000 km, the country can easily access the East Sea (or South China Sea), in which 60% of the global trade passes through this area [16]. Complementing its geographical advantages, Vietnam has maintained a stable political landscape to emerge as a leading destination for sustainable investment.
The country has been following a “bamboo diplomacy” strategy - a unique foreign policy that takes after the image of the bamboo’s “strong roots, stout trunk, and flexible branches” to promote “independence, self-reliance, flexibility, and diversification of relations” [17]. As of 2023, the country has formed diplomatic relations with nearly 200 countries and signed 16 free-trade agreements (FTAs) with nearly 60 economies [18], including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). More notably, Vietnam has established comprehensive strategic partnerships with the world’s largest economies, including the US, China, South Korea, Japan, Russia, India, and Australia [19].
Robust human development for a future-ready workforce
With education at the center of Vietnam’s development, the country has implemented continuous education reforms. The heightened focus on education has prepared the nation with a young, tech-savvy, and future-ready workforce. Specifically, Vietnam has over 530,000 people working in the ICT sector and up to 57,000 students enrolling in computer science and IT-related majors annually [20]. The country now remains one of the nations with the highest number of IT graduates and it is thanks to a shared vision among authorities and local companies.
Back in the 1990s when computers were a luxury, local enterprises such as FPT already realized the potential capabilities of Vietnamese developers, believing that high performers in STEM would make exceptional programmers. To prepare a technology-ready workforce that can fulfill not only domestic demands but also foreign markets, local corporations invested early in IT-related training and education, with FPT Education being one of the pioneers. Established in 1999, the education group has expanded to a full range of educational levels with its subsidiary - FPT University being Vietnam’s first privately owned institution. Since its inception, FPT University has played an active role in shaping Vietnam's IT workforce, continuously equipping its students with advanced technology expertise. The university has established its dedicated AI branch in Quy Nhon which provides training in emerging technology such as machine learning, deep learning, and computer vision while allowing its students to participate in real-life projects from other FPT subsidiaries. More recently, FPT University has set up the department of Semiconductor and Microelectronics, aiming to provide in-depth training in IC design and accelerating R&D for the industry. With the help of local enterprises such as FPT, Vietnam is now equipped with a high-quality and knowledgeable workforce. Indeed, Vietnamese workers are ranked high on skill analyses, including top 10 in Asia Pacific in skill proficiencies (business, technology, data science) [21], top 10 globally with best developers [22].
Building a digital nation: Progressing at speed
Entering the 21st century, Vietnam has two major goals: becoming a high-income country by 2045 and reaching net-zero emissions by 2050, with digital transformation seen as the key to achieving these targets [23]. Aiming to become a digital nation by 2030, Vietnam has made significant progress in digitalizing public services (digital government), building a digital society, accelerating the digital economy, and enhancing digital infrastructure.
Vietnam’s 7th rank in Asia Pacific on the 2022 Digital Society Index [24] has highlighted the country’s progress in leveraging technology to transform its citizens’ life quality. Internet users in Vietnam reached 77.93 million in 2023, accounting for 71.9% of its population. The country has successfully achieved a 4G mobile broadband coverage of 99.8% and is one of the first countries to commercialize 5G, planning to roll out in as early as 2024 [25].
To maintain its position as the fastest growing digital economy in Southeast Asia [26], it is important for Vietnam to improve digital infrastructure to accommodate the growing needs of investors and its people. The government recently approved information and communications infrastructure planning earlier this year. Under this plan, Vietnam aims to enhance data access and IoT infrastructure, placing the country among the world’s top 20 in converting the Internet to IPv6 technology by 2025 [27]. It also plans to cover 100% of the households with access to fiber-optic cable services [28] and raise smartphone ownership to 100% of the adult population by 2025 [29]. Additionally, the country has accelerated the development of R&D and innovation infrastructure, including the Hoa Lac High-Tech park which is home to the National Innovation Center and FPT’s F-ville campus - Vietnam’s largest software outsourcing center. The country also plans to establish more IT parks and R&D facilities across the country, with specialized projects already under construction such as the AI Center in Quy Nhon initiated by FPT.
Vietnam in the new era
Fifty years since the unification of Vietnam, the country has managed to rise above the aftermath, growing with immense speed, agility, and resilience. The solidarity among the government, individuals, and communities is a critical element but what contributes to accelerating the success is the participation of local enterprises such as FPT in every stage of the country’s development. Entering a new era, Vietnam sets even more ambitious targets, striving to reach the high-income group and achieve net zero emission. Despite how challenging it sounds, the government and Vietnamese people have continuously shown determination in actualizing these visions, leveraging digital transformation as a key enabler. Accompanied by leading technology companies including FPT, the country has reaped early success in recent years, showing a positive sign of staying on track to achieving its targets.
