“Unleashing Vietnam’s Economic Growth: Dragon Capital’s Insights on Resolution 68 and the Rise of the Private Sector”

In the first 30 days after the US announced retaliatory tariffs, Vietnam’s macroeconomic indicators did not show significant fluctuations, and the underlying growth momentum remained stable.

April 2025 data showed that the Industrial Production Index (IPI) increased by 8.9% year-on-year and reached 8.4% in the first four months, led by a strong 10.1% growth in the manufacturing industry. Retail goods and services revenue increased by 11.1% and 9.9% year-on-year in the first four months, significantly surpassing the 8.6% growth in the same period last year, indicating that domestic demand remained positive despite external fluctuations.

In a recent report, Mr. Nguyen Quang Hung, CFA, Senior Economist at Dragon Capital, pointed out that some pressure signals have started to emerge.

The Purchasing Managers’ Index (PMI) for April fell sharply to 45.6 from 50.5 in March, indicating a contraction in manufacturing activity due to decreases in new orders and output. Export enterprises promptly expedited shipments to avoid disruptions, leading to a temporary surge in trade activities.

In the first four months, exports increased by 12.8%, recording a trade surplus of $5.0 billion. This export growth reflects the openness of the Vietnamese economy and the increased purchasing from US businesses from markets other than China when the 145% tariff was imposed. The US was Vietnam’s largest export market in the first four months, reaching $43.3 billion, accounting for 30% of total export turnover.

The Dragon Capital expert stated that Vietnam is in trade negotiations with the US, and the first round of talks has concluded. Subsequent rounds are expected in May and June, focusing on issues such as transshipment through third countries and commitments to increase imports from the US.

Resolution 68 sets forth a comprehensive policy program to realize these goals

Amidst global trade uncertainties, Vietnam is striving to boost domestic growth, particularly through the private sector. Resolution 68 was issued to elevate the role of this sector, which currently comprises over 940,000 registered businesses and approximately 5 million individual business households. The private sector contributes about 50% of GDP, more than 30% of the state budget revenue, and employs around 82% of the workforce.

By 2030, the government aims to have at least 2 million operating enterprises. The expected average annual growth rate is 10–12%, increasing the contribution to GDP to 55–58%, budget revenue to 35–40%, and employment to 84–85%.

Resolution 68 presents a comprehensive policy framework to achieve these objectives. Notably, the resolution includes a commitment to decriminalize civil and economic violations and strengthen property rights, which are crucial for fostering business confidence and promoting investment.

Policies encouraging innovation have also been emphasized, with provisions allowing enterprises to deduct 200% of actual expenses incurred for scientific, technological, and R&D activities from taxable income. Additional support includes tax reductions, fee cuts, land rent waivers, and enhanced access to credit for private enterprises.

Furthermore, these reforms are designed to strengthen Vietnam’s economic resilience and mitigate the impact of external shocks, positioning the private sector as a more stable, long-term growth driver amidst rising global uncertainties. The effectiveness of the resolution will depend on the administrative apparatus’s implementation process and the private sector’s policy absorption capacity.

Regarding corporate profit growth, first-quarter 2025 data from the top 80 large-cap stocks showed a stable growth picture but with some differentiation. Float-adjusted post-tax profit increased by 10.2% YoY.

Specifically, the banking sector continued to be the main contributor to profits, with credit growth recorded alongside a narrowing net interest margin and varying profit performance among banks. Residential real estate and retail saw remarkable results, reflecting positive domestic demand and early recovery signals in the housing market. Meanwhile, the production and essential consumer goods sectors continued to slow down due to export impacts and profit margin pressures.

“Overall, the data suggests that domestically-oriented sectors are regaining momentum, while export-dependent and cost-sensitive industries remain under pressure,” the expert clarified.