However, Prof. Dr. Hoang Van Cuong, member of the Prime Minister’s Policy Advisory Council and Vice President of the Vietnam Economic Association, noted that this bright outlook conceals darker aspects. The economy has not yet fully harnessed its internal strengths: exports remained heavily dependent on foreign direct investment (FDI), while domestic value added accounts for only 30-35%. A production model based on assembly and processing has kept labor productivity among the lowest globally. Without a decisive transformation, Vietnam risks falling into the “middle-income trap.”

Barriers to Vietnamese businesses

According to Dr. Hoang Van Cuong, Vietnamese enterprises face many challenges from both internal and external factors, making their integration into global value chains difficult. The greatest weakness lay in endogenous capacity: limited capital, outdated technology, and weak management skills prevented most firms from meeting the rigorous requirements of advanced production stages that required modern technology, substantial investment, and high technical expertise. “Alongside that was the quality of human resources. Although Vietnam has a young and abundant workforce, expertise, especially in advanced technical skills, remained limited. One of our three strategic breakthroughs has to be in developing high-quality human resources so that workers could take on critical tasks,” he stressed.

Beyond internal challenges, he also warned of an overemphasis on attracting FDI “at any cost.” Over many years, Vietnam has prioritized solving capital shortages and creating jobs, but without strong enough constraints to require foreign investors to bring high technology or transfer it to domestic firms.

The result is weak linkages between FDI and domestic supply chains. Most Vietnamese firms are involved only in low-value supporting roles. Foreign investors introduce labor-intensive assembly operations, generating low domestic value added. In contrast, many other countries implement stricter policies that require FDI to localize and transfer technology, thereby strengthening domestic firms.

On the competition front, Cuong argued that Vietnamese firms still lacked the strength to stand on equal footing with foreign investors in joint ventures. This weakness becomes more acute because most local firms are small, under-resourced, and poorly linked. Instead of collaborating for strength, many competed directly against each other, leading to mutual weakening.

As a result, Vietnamese companies struggle to accumulate sufficient resources, including capital, technology, and skilled labor, to participate in high-technology stages of advanced global supply chains and enhance value added.

From a market perspective, Dr. Nguyen Van Than, Chairman of the Vietnam Small and Medium Enterprise Association, noted that tariff incentives and trade facilitation under the Vietnam-EU Free Trade Agreement make Europe a vast export market worth hundreds of billions of dollars. However, Vietnam has only captured a small portion of this potential. Meanwhile, many firms focus on the U.S. or other regions but achieved limited results. In finance, he observed that despite repeated interest rate cuts by the central bank, small and medium enterprises still face difficulties accessing bank loans due to collateral requirements and procedural obstacles.

Mr. Nguyen Trung Chinh, Chairman of CMC Corporation, warned of a “trap” in how value added is measured, illustrating it with the textile sector: if firms focus only on producing intermediate inputs to raise domestic content ratios, they might end up increasing localization but face environmental risks and limited economic value.

Opportunities from integration, green economy, and digital economy

Despite the many challenges, Vietnam holds significant opportunities from deeper economic integration and global trends. Mr. Dang Hong Anh, Vice President of the Vietnam Youth Union and President of the Vietnam Young Entrepreneurs Association (VYEA), underscored that as digital and green economies became the global rulebook, Vietnam has the chance to attract capital, technology, and talent. “Opportunity smiles only on those who prepare: persistent institutional reform, long-term investment in science and technology, innovation, expanding international cooperation, and building a national brand grounded in quality and reliability,” he noted.

He proposed that the state-business relationship be reframed as a “co-creation relationship,” in which the state provides transparent rules and a level playing field, while businesses compete, innovate, and jointly protect fair markets. A notable initiative is a national target program to convert 5 million individual household businesses into formal enterprises, unlocking a vast untapped domestic resource. To implement this, a robust public-private cooperation model was required: the state needs to offer strong policy incentives to enable these small operators to confidently enter the entrepreneurial arena. At the same time, the young entrepreneur community pledges to lead with the initiative “Each young entrepreneur mentors two new ones,” focusing on sharing management experience, providing strategic guidance, and helping new ventures navigate risks.

Dr. Hoang Van Cuong emphasized two main paths for Vietnamese enterprises to elevate their position in global value chains. The first is to strengthen internal capacity, including capital, technology, and workforce skills, enabling firms to handle high-value stages. The second is to master entirely new value chains and develop innovative products independent of foreign control. Emerging sectors such as artificial intelligence (AI), digital technology, and automation devices serve as prime examples.

Dr. Nguyen Van Than proposed that the state intensify communications and support for firms entering markets. In tax policy, firms with revenue under VND1 billion should enjoy preferential tax mechanisms. For access to capital, the mindset has to change: from collateral lending to embracing unsecured credit as the default, with collateral only as supplementary. Credit guarantee mechanisms have to be improved so that funds could truly expand micro and SME lending. Simultaneously, lending models should be modernized, leveraging digital banking and fintech to deliver capital swiftly, cheaply, and directly to small and medium firms.