While recognising the challenges ahead, he emphasised the crucial role of public investment as a key driver of growth. He also pointed out that Vietnam has sufficient fiscal space to increase public debt if necessary to boost infrastructure investment and economic expansion.
Journalist: - What is your assessment of the government's target of achieving at least 8% GDP growth in 2025?
Nguyễn Bá Hùng: - The government appears optimistic about Vietnam's economic prospects for 2025. Given the strong growth momentum in 2024, this target is within reach. One of the primary factors that could drive economic growth is public investment. Accelerating public investment disbursement or even increasing its scale could provide a significant boost to growth in 2025.
Vietnam's public debt remains at a very safe level, estimated at around 36% of GDP in 2024. If necessary, the government can borrow more to invest in infrastructure. Public debt could rise to 40–50% of GDP while still remaining within a safe threshold.
However, Vietnam's economy will also face numerous challenges in 2025, particularly in trade. In the short term, exports to the US may surge due to American consumers stockpiling goods in anticipation of potential price hikes resulting from President Trump's trade policies. However, if Vietnamese goods are subjected to higher tariffs, this could pose significant difficulties for the country's exports.
Another critical factor is domestic demand. While domestic consumption improved in 2024, it has yet to meet expectations. Therefore, further stimulus measures are required. Many domestic businesses have struggled over the past few years, so government-led public investment and fiscal policies remain essential tools to boost demand. Ultimately, the effectiveness of these measures will depend on their implementation.
- What fiscal policies should the government focus on in 2025 to drive public investment?
- Given the current state of Vietnam’s economy, fiscal measures are still necessary to stimulate domestic demand. The extension of the 2% VAT reduction until June 2025 is a commendable decision. Public investment serves as a crucial driver of growth due to its widespread spillover effects. Therefore, accelerating the disbursement of public investment projects from the beginning of the year is essential to achieving higher disbursement efficiency.
Additionally, the government should effectively implement support policies, such as funding for administrative streamlining and assistance for workers undergoing occupational transitions. These measures can increase household spending, thereby contributing to overall economic stimulation.
Furthermore, Vietnam should explore new fiscal policies aimed at promoting industrial development and technological innovation. Providing tax incentives for high-tech sectors, renewable energy projects, and digital infrastructure development could attract further private investment and enhance the country’s long-term growth prospects.
- Infrastructure development is currently considered a critical component of public investment. What is your perspective on this?
- Vietnam is likely to continue attracting strong foreign direct investment (FDI), although this depends on global economic conditions. Recently, Southeast Asia—including Vietnam—has benefited from an inflow of FDI. However, Vietnam must compete with neighbouring countries to sustain and enhance this advantage.
While Vietnam’s business environment remains favourable, maintaining its competitive edge requires reducing costs through improved infrastructure. Investing in infrastructure development not only enhances FDI attraction but also supports the growth of domestic private enterprises. By strengthening local businesses, Vietnam can boost private sector investment, further driving economic expansion.
Another critical aspect is increasing the local supply of inputs for FDI enterprises. Currently, many FDI firms operating in Vietnam primarily rely on imported materials, while domestic suppliers remain weak. Strengthening local supply chains can improve Vietnam's position in global trade and enhance overall economic resilience.
Additionally, infrastructure investment should prioritise sustainability and smart urban development. Building modern transport networks, improving digital connectivity, and expanding renewable energy projects will not only attract investment but also ensure long-term economic stability. A well-developed infrastructure system can significantly enhance productivity and create a more attractive business environment.
- The National Assembly has authorised an increase in the budget deficit to 4–4.5% of GDP if necessary, along with potential increases in public debt, government debt, and external debt, even exceeding the warning threshold of 5% of GDP. What are your thoughts on this approach?
- The measures currently being considered to boost economic growth are heading in the right direction, particularly given the past reliance on exports and FDI while domestic enterprises and consumer demand have struggled. Public investment and fiscal policies serve as essential stimulus tools in this context.
Concerns over public debt should not be overstated. In reality, Vietnam's public debt is currently at an extremely safe level, providing room for increased spending and public investment without posing risks to fiscal sustainability. The government’s bold initiative to increase public investment from $27 billion to $36 billion represents a significant step. If successfully implemented, this strategy could have a substantial positive impact on economic growth and macroeconomic stability.
To manage debt effectively, Vietnam should focus on enhancing fiscal discipline and ensuring that borrowed funds are allocated efficiently. Implementing robust project management frameworks and improving transparency in public expenditure will help maximise the returns on investment. Additionally, diversifying funding sources by leveraging public-private partnerships (PPPs) and foreign investment can reduce reliance on government borrowing while still achieving infrastructure development goals.
Vietnam can also take advantage of favourable interest rates and explore international financial instruments, such as green bonds, to support sustainable infrastructure projects. These initiatives will not only improve public finance management but also align with global trends in responsible investment and economic resilience.
The coming years will be crucial for Vietnam as it navigates economic uncertainties while striving to achieve high growth. By prioritising public investment, fostering a competitive business environment, and ensuring responsible fiscal management, Vietnam can sustain its economic momentum and strengthen its global position.
While borrowing more for public investment is a viable strategy, it must be accompanied by structural reforms to enhance efficiency, transparency, and sustainability. A well-calibrated mix of fiscal expansion and strategic investment will be key to unlocking Vietnam’s full economic potential.
- Thank you for your insights.
