KEY TAKEAWAYS FOR INVESTORS
- Direction of travel: Reforms under President To Lam aim at high-income status by 2045 and reach high-tech manufacturing, trade and logistics, agribusiness and food, energy, and the digital economy. Speyside Group assesses the direction as clear, consistent, and positive, which supports long-horizon capital deployment.
- Financial center: The Vietnam International Financial Center offers a special legal framework, an FX regime, and fiscal incentives intended to attract foreign capital. Implementation is at a very early stage, so financial investors should treat it as a milestone to monitor.
- Real-economy risk: Land ownership, permitting risk, and other nontechnical risks remain, and projects are often seen as unbankable. Partnering with the right local players and finding champions in the system can make projects bankable, with significant risk-adjusted returns.
- Precedent: A.P. Moller-Maersk’s port and logistics partnerships in Vietnam illustrate how local alignment can convert market access into infrastructure positions of scale.
- License to operate: Deep due diligence, a considered route to market, and an explicit strategy for securing and maintaining license to operate separate successful entrants from stalled ones, even for the most conservative investors.
Most would agree that the modern era of opportunity for foreign investors in Vietnam dates back to the so-called “Doi Moi” reforms initiated by the communist leadership in 1986. These reforms established a market-based economy and opened the country to FDI and global trade, with early Japanese, Korean, European, and U.S. multinationals establishing a foothold that has largely served them well in the intervening 40 years.
Now, under the ambitious leadership of President To Lam, Vietnam is partway through an arguably bigger transformation, a so-called Doi Moi 2.0, guided by the ambition of achieving high-income status for the country by 2045. These reforms are changing everything from the structure of the state to almost all key industry sectors, most notably high-tech manufacturing, trade and logistics, agribusiness and food, energy, and the digital economy.
The scope and scale of the FDI opportunities this presents are huge, reminiscent of the transformation seen in the 1990s in Central and Eastern Europe. However, many seasoned Vietnam watchers remain skeptical, referencing the gulf between the ambitions on paper and the realities on the ground, where projects are often seen as unbankable, daily bureaucratic realities highly challenging, and licenses to operate difficult to secure and maintain.
In Speyside Group’s view, both these perspectives have merit. Vietnam is a country that presents foreign investors with huge new opportunities, while at the same time being a place that is challenging to do business. However, Speyside Group would argue that the direction of travel is clear, consistent, and positive; the country is making the tough reforms necessary to attract capital and expertise to deliver on its big ambitions.
Part of the bureaucratic challenges faced by international investors relates to the fact that so much is being reformed all at once. Big structural reforms, like reducing the number of provinces from 63 to 34 with the aim of increasing efficiency and effectiveness, are being done at the same time as comprehensive changes to business regulation and the financial system. This inevitably causes short-term issues but will in the long term pay off.
For the financial community, the creation of the Vietnam International Financial Center should be seen as an important milestone, with every possible incentive being introduced to make Vietnam a safe and attractive destination for foreign capital, from a special legal framework and FX regime to fiscal incentives and much more. Implementation is at a very early stage, but the signs are encouraging.
For those looking at FDI into the real economy, challenges around land ownership, permitting risk, and a wide range of other nontechnical risks remain, but through partnering with the right local players and finding the right champions in the system, projects can be made bankable and the potential risk-adjusted returns very significant, as A.P. Moller-Maersk has shown, closing a series of multibillion-dollar joint ventures in seaports, air cargo hubs, and inland logistics infrastructure.
Is it easy? No, but few jurisdictions are these days. Is it worth seriously considering, and working with partners like Speyside and others to do deep due diligence, consider the best route to market, and the best approach to securing and maintaining license to operate? In Speyside Group’s view, emphatically yes, even for the most traditionally conservative of companies and investors.
Conclusion
Vietnam’s Doi Moi 2.0 is a long-horizon transformation whose direction is clear even as its execution remains uneven. The investors that succeed will accept short-term friction as the price of early access, choose local partners and champions with care, and treat license to operate as a strategy to be built and maintained rather than a formality. Those that wait for the bureaucracy to become frictionless risk ceding first-mover advantage to better-prepared competitors. Speyside Group’s view is that deep due diligence, disciplined route-to-market planning, and sustained stakeholder engagement make the opportunity bankable, even for the most conservative companies and investors.
