VIETNAM

The Private Sector in Vietnam Foreign Direct Investment in Vietnam Vietnam’s vision Resolution 68

The Private Sector in Vietnam

Vietnam’s private sector has emerged as a dynamic force, driving the nation’s remarkable shift from a state-controlled economy to a vibrant, market-driven powerhouse since the transformative Doi Moi reforms of 1986. With over 940,000 private enterprises and approximately 5 million household businesses, it forms the backbone of local economies, contributing 51% to GDP and employing over 42 million people, 85% of the workforce. Its unique strengths – innovation, a skilled workforce, global integration, agricultural modernization, and high homeownership rate – position Vietnam as a global model for inclusive economic growth.

Leveraging a high-quality workforce

At the core of the private sector’s success is Vietnam’s exceptional education system, which produces a highly skilled workforce tailored for a knowledge-driven economy. In the 2022 PISA assessments, Vietnamese 15-year-olds ranked 31st globally in mathematics and 34th in science, surpassing many wealthier nations and securing second place in ASEAN, behind only Singapore.

At the primary level, Vietnam leads Southeast Asia in math, reading, and writing, driven by a rigorous, STEM-focused curriculum. Annually, 50,000-60,000 IT and computer science graduates enter the workforce with coding and software engineering skills meeting international standards, empowering private enterprises to excel in high-tech industries.

High homeownership offers unique strength

A unique strength of Vietnam’s private sector is its 90% homeownership rate, one of the highest in the world. This allows families to allocate more income to education, entrepreneurship, and consumption. With 42 million workers in the private sector, many use their property’s value to launch or grow businesses, fueling economic growth. Combined with rapid urbanization and a growing middle class, this creates a resilient economy and new opportunities, directly driving private sector expansion.

Pioneering innovation and digital transformation

Fueled by a skilled workforce, Vietnam’s private sector drives innovation and digital transformation, supported by proactive government policies like the 2020 Enterprise Law, which streamlined business registration, and the Politburo’s Resolution 68 (May 2025), which positions the private sector as the “most important force” in industrialization and digitalization.

With nearly 74,000 digital tech firms, Vietnam attracts global giants such as Microsoft, Samsung, IBM, Oracle, Qualcomm, and NVIDIA, who establish R&D centers and IT back offices. These leverage competitive developer costs to advance software development, cybersecurity, and AI. In 2024, the IT outsourcing sector generated $0.7 billion, with projections of $0.78 billion in 2025 and $0.88 billion by 2028, aiming for a 12%+ ICT contribution to GDP.

Dominating key industries and global trade

The private sector commands critical industries – manufacturing (electronics and textiles), retail, and logistics – while leading export-oriented ventures that integrate Vietnam into global supply chains. Foreign-invested private firms contribute over 70% of exports, which reached $220 billion in the first half of 2025, a 14% year-on-year increase. The sector’s shift from state-led enterprises to private-led innovation has boosted its GDP share to 51%, with projections of 55-58% by 2030, showcasing its adaptability and capacity for sustainable growth.

Revolutionizing agriculture with innovation

Vietnam’s private sector redefines agriculture, blending tradition with modern, high-value production. Predominantly driven by private households and small enterprises, agriculture accounts for 12% of GDP in 2024 and employs 33% of the workforce. As the world’s second-largest coffee exporter (1.06 million tons worth $6 billion in the first seven months of 2025), top pepper exporter, and a leader in rice (5.88 million tons by mid-August 2025), Vietnam excels globally. By shifting toward premium, sustainable, and organic products for markets like the US and EU, the sector enhances export value and strengthens rural economies amid urbanization.

Government support for private-led growth

The government’s steadfast support amplifies the private sector’s strengths, allowing it to play a key role in generating jobs, fostering innovation, and enhancing labor productivity. Policies like the 2020 Enterprise Law and Resolution 68 have shifted focus from state-led economy to private enterprise, enabling the sector to add 1.5 million jobs between 2021 and 2024. In the first half of 2025, GDP grew 7.52% year-on-year, with Q3 forecasts of 8.6-8.9%. The private sector’s resilience, demonstrated by 8.02% growth in 2022 despite COVID-19, reflects a synergistic blend of policy foresight, educational excellence, technological innovation, agricultural modernization, and consumer empowerment.

A model for inclusive growth

Vietnam’s private sector excels through its skilled workforce, technological innovation, global trade integration, agricultural transformation, and consumer-driven growth. Backed by robust government support, it drives over half of Vietnam’s GDP and sets a compelling example of adaptive, inclusive economic development. As it continues to align with global trends, Vietnam’s private sector is not just an engine of change but a blueprint for sustainable prosperity worldwide.