Four decades of economic reforms have seen Vietnam transform from one of the world’s poorest countries to a newly reclassified upper middle-income economy, after the World Bank updated its status in July 2026.

Vietnam is already consistently one of the best-performing economies in Southeast Asia, and the government has set ambitious targets for the country to achieve economic growth of at least 10% per year between 2026 and 2030, with the goal of reaching high-income, developed country status by 2045. A key pillar of this strategy involves increasing foreign investment, alongside strengthening the domestic private sector. Vietnam recently introduced a raft of reforms, with more likely to come, to encourage both foreign direct investment (FDI) and foreign portfolio investment as it simultaneously develops the financial infrastructure required to support it.

In 1986, Vietnam’s government embarked on its Doi Moi reforms, which saw the country pivot from a closed, centrally planned economy to a market-led one. Changes ranged from ending collective farming and introducing private property rights and free enterprise, to encouraging foreign direct investment and opening the economy to global trade. Vietnam also joined external organizations such as the Association of Southeast Asian Nations (ASEAN) in 1995 and the World Trade Organization in 2007. 

The reforms have had a significant impact, with GDP per capita rising from under $700 in 1986, to just over $5,000 in 2025 according to data from World Bank, lifting millions of people out of poverty. The data also shows that GDP growth has averaged just over 7% a year since 2022 when economies reopened after the COVID-19 pandemic, rising to 8% in 2025, This increase was driven by a combination of rising exports, investment and a strong domestic market, making Vietnam the fastest-growing economy in ASEAN.

The outlook for Vietnam remains strong, although the country faces a number of headwinds. As an export-led economy with a trade-to-GDP ratio of nearly 170%, it is vulnerable to geopolitical tensions, such as the Middle East conflict’s impact on oil prices and global demand, and the effect of tariffs on global supply chains. 

In a recent report, the World Bank also identified a number of structural weaknesses in Vietnam’s growth model, namely a widening gap between foreign-invested and domestic firms, highly leveraged corporations and ongoing exchange rate pressures. In light of some of these challenges, the World Bank has slightly downgraded its GDP forecast for Vietnam to 6.8% for 2026, although it expects economic growth to rebound to 7.1% in 2027.

To power its next phase of growth, the government has embarked on another significant reform agenda. The “era of national rise,” as General Secretary To Lam calls it, is a strategic roadmap to assist Vietnam in achieving high-income developed nation status by 2045. The reforms span four broad areas:

Repositioning the Economy: Since 2025, the government has enacted more than 86 laws and 300 decrees covering everything from reducing bureaucracy and streamlining regulation, to updating its tax, customs and judiciary systems, to creating a structured framework for its digital economy. The reforms aim to modernize Vietnam’s business environment, strengthen its domestic private sector and attract more foreign direct investment. A central goal is to reposition the country from a low-cost manufacturing hub, to one where  innovation and the private sector drive growth. To help achieve this pivot, new FDI incentives are expected to focus on FDI quality and value creation, rather than quantity.

Deepening Capital Markets: Meanwhile, the country is also actively opening up its capital markets to both domestic and foreign investors. A recent executive decision (Decision No. 1413/QD-TTg) signed in July 2026 outlined a series of measures designed to modernize Vietnam’s financial system and integrate it with global markets. Among the long-term changes outlined, the Decision aims to diversify funding sources away from bank lending by deepening the capital and stock markets, growing the bond market to approximately 60% of GDP and growing stock market capitalization to 120% of GDP by 2045.  It also seeks to modernize the bond market through increased use of credit ratings and bond risk classification, and to introduce  new products, including bonds for ESG-related projects and infrastructure development. In addition, it will explore a standalone regulatory framework for digital assets. 

Opening Market Access: The reforms also include measures to make market access easier for foreign investors, including a review of the current restrictions on foreign ownership, a simplification of account opening and foreign exchange procedures, and an acceleration in Vietnam’s plan to adopt International Financial Reporting Standards. The decision also paves the way for FDI enterprises to be listed on the country’s stock exchanges. 

Upgrading Financial Infrastructure: At the same time, a number of upgrades are planned to Vietnam’s financial market infrastructure, including the introduction of a central counterparty clearing model for the stock exchange by 2027, and enabling the lending and borrowing of securities, intraday trading and controlled short selling. In addition, Vietnam is developing international financial centers in Ho Chi Minh City and Da Nang in a bid to attract global financial institutions and support the development of deeper, more sophisticated financial markets. In October 2025, Vietnam entered into a Comprehensive Strategic Partnership with the UK, which will, among other things, see the two countries deepen their financial cooperation and enable Vietnam to draw on UK expertise to support the development of its international financial centers, capital markets, fintech sector, green finance and insurance sectors.