Vietnam needs proactive adaptation to maintain competitiveness

Speaking at the 2025 Fearless Forecast event on November 21 in Ho Chi Minh City, Townsend emphasised the need for a strategic mindset shift to explore resilient growth strategies.

“Vietnam’s shift from textiles, which accounted for 16 per cent of GDP in 2019, to a burgeoning tech sector contributing 16.5 per cent of GDP in 2023, demonstrates its potential. However, to sustain growth, the country must move beyond industrial production, manufacturing, and coastal condominium projects,” he said.

Townsend identified two real estate sectors, Purpose-Built Student Accommodation and Senior Living, as promising areas for sustainable development. He stressed the importance of anticipating future challenges, such as increasing competition from other manufacturing hubs and an evolving regulatory landscape.

“Vietnam ranked 26th out of 50 economies in the regulatory component of the World Bank’s 2024 Business Ready report, reflecting progress but still lagging behind the Philippines and Singapore,” Townsend noted.

As Vietnam's largest companies expand overseas, Townsend advised local entrepreneurs, investors, and families to adopt a consultancy mindset to explore alternative investment strategies. “Everyone should be their own consultant. Diversifying risk and exploring overseas markets can yield stable returns beyond traditional avenues,” he said, adding that garment manufacturers should consider factories in Bangladesh, while tech companies should explore facilities in China and Korea.

Vietnam's adaptability will determine its ability to integrate regional and global trends into its strategies. “A swift recovery is unlikely this time, given delays in project approvals and rising financing costs. Vietnam’s real estate market is entering a phase of significant restructuring and must be prepared to adapt,” he warned.

Vietnam’s manufacturing sector has already transitioned from a focus on garments to becoming a key player in technology. However, global initiatives such as Make in India and America’s reshoring efforts present new challenges. Vietnam must now determine its next steps to sustain its growth trajectory.

The World Intellectual Property Organization’s 2024 Global Innovation Index ranked Vietnam second among lower-middle-income countries and 46th out of 133 countries overall, underscoring its potential in sectors like semiconductors, artificial intelligence, and renewable energy. However, tapping into these opportunities requires a mindset shift.

“What worked in the past won’t be enough,” Townsend remarked. “With 25 per cent of Vietnam’s population projected to be over 60 by the time today’s infants graduate university, new sectors like Senior Living and Purpose-Built Student Accommodation will require the same strategic focus and support that drove earlier industrial growth. Proactive adaptation will be essential for Vietnam to remain competitive.”

Vietnam's economic growth is projected to recover to 6.1 per cent in 2024, supported by continued strong external demand, resilient foreign direct investment, and accommodative policies, according to International Monetary Fund (IMF).

Vietnam’s economic growth is expected to accelerate by the end of 2024, partly fuelled by a rise in foreign investment, but medium-term growth prospects will face headwinds.

The Ministry of Public Security and the Ministry of Planning and Investment (MPI) have agreed to enhance cooperation in public investment, crime prevention, and digital transformation.

Backed by a recovery in production and trade this year, Vietnam’s domestic economy is set to experience higher growth in 2024, driven by continued support for enterprises and individuals.