Vietnam forecast to achieve investment-grade credit rating sooner than planned

Vietnam’s goal of securing an investment-grade credit rating by 2030 could be achieved earlier than planned as the country already meets most key benchmarks, according to market analysts.

In a 2026 outlook report released this week, experts from investment management firm VinaCapital said the Government has ample financial resources in its own currency to cover costs such as land compensation and locally produced construction materials. However, projects involving imported technologies, including high-speed rail and power generation, will require foreign currency, making an investment-grade credit rating an increasingly pressing issue this year.

“While the Government aims for an investment-grade rating by 2030, we believe it can be achieved sooner since Vietnam already meets most quantitative criteria and only needs to address a limited set of qualitative issues,” said Michael Kokalary, chief economist of VinaCapital.

The assessment follows a recent move by Fitch Ratings, which last month upgraded Vietnam’s long-term senior secured debt ratings to BBB- from BB+. Fitch cited expectations of average recovery prospects for senior unsecured debt and additional recovery benefits from the secured portion of the debt instruments.

According to VinaCapital’s report, Vietnam’s GDP expanded by 8% in 2025 while the VN-Index surged 37%. The Government expects growth to accelerate to 10% in 2026 and VinaCapital also anticipates very strong performance this year, driven by a surge in infrastructure spending, resilient exports and a modest recovery in consumption.

“Vietnam’s 2025 GDP growth was significantly boosted by an 80% jump in exports of laptops and other high-tech items to the US and by a 42% increase in both Chinese and Indian tourist arrivals, which masked mediocre domestic consumer spending growth. This year, we expect a normalization of both consumption and export growth. These two dynamics will largely offset each other, while the lagged impact of an infrastructure spending surge in 2025 will support Vietnam’s GDP growth in 2026," the report states.

“We also acknowledge that 10% GDP growth represents an upside scenario, with the Government having a range of tools at its disposal that could support this outcome, particularly if additional stimulus measures are implemented.”

Domestic consumption has remained weak over the past two years as households depleted savings during COVID and have since maintained an unusually high savings rate. While estimates vary, most analysts agree that elevated savings help explain the subdued pace of retail sales growth, according to VNA.

Trucks carrying export goods at Tan Vu Port in Hai Phong city (Photo: VNA)

“We expect consumption to return to more normal levels of growth, although not to boom, by mid-2026, at which point the savings rate will have been elevated for nearly three years, giving households ample time to rebuild a considerable portion of their pre-COVID savings. Furthermore, household incomes in Vietnam have been growing at a circa 6–7% pace over the last two years and the stock market and real estate prices were both up more than 30% in 2025, all of which supports spending," the report added.

“The caveat to this forecast is that unlike our expectation for resilient exports for 2026, which is built on solid leading indicators, our consumption recovery forecast is built on more subjective econometric analysis. That said, the Government has a very ambitious GDP growth target for 2026 that can only be met with higher consumption growth. To date, the Government has taken some modest steps to support consumption, but it could easily do much more if needed.”

VinaCapital noted that while the Government’s reform agenda is designed to lift long-term growth, it is also under pressure to deliver strong short-term results. Balancing both is challenging given the dynamic of short-term pain for long-term gain. As a result, the firm expects policymakers to rely heavily on three key levers it can realistically pull to boost GDP growth in 2026: consumption, infrastructure development and real estate development.

Double-digit GDP growth hinges on state-owned enterprises

As Vietnam targets two-digit GDP growth, state-owned enterprises are expected to lead strategic sectors and set the pace for the wider economy.

State-owned enterprises hold a pivotal role in strategic sectors. To achieve double-digit GDP growth, they must truly become engines that lead and generate spillover effects across the economy.

Declining efficiency

During the 2010-2015 period, state sector investment capital grew at an average rate of around 6.34 percent per year. However, in the 2020-2024 period, that figure fell sharply to approximately 2.6 percent per year.

The share of state sector investment in the overall economy also dropped significantly, from 44 percent in 2010 to just 27.6 percent in 2024. Notably, the share of investment by state-owned enterprises in total public investment declined from 43.56 percent in 2010 to 34.43 percent in 2023.

From this data, Dr. Huynh Thanh Dien of Nguyen Tat Thanh University observed that in recent years, investment growth in the state sector has been markedly slower than in the non-state sector.

Beyond shrinking scale, the efficiency of capital use in SOEs has become a matter of concern. According to Dien, SOEs are typically large enterprises, yet their ICOR - a measure reflecting capital use efficiency - is higher than that of the private and FDI sectors.

Specifically, in 2023, the ICOR of the state sector stood at 6.19, compared to 4.9 in the private sector and 4.67 in the FDI sector. This indicates that to generate one unit of growth, the state sector must deploy more capital, implying lower investment efficiency.

“Although SOEs are identified as playing a leading role in the economy, in reality their investment levels and operational efficiency are trending downward. In principle, SOEs operate in key sectors with stable demand and relatively secure profitability, yet their investment efficiency is significantly lower than that of the private and FDI sectors,” he said.

The core reason behind this paradox lies in governance mechanisms and the investment institutional framework applied to SOEs.

Under current orientation, SOEs must focus on key sectors, essential public services, and national defense and security tasks. At the same time, they are required to divest from many other fields in line with policy mandates. This has narrowed their operational space, leaving insufficient legal grounds to enter new high-efficiency sectors and limiting their ability to seize market-driven opportunities.

In addition, the authority of the state owner’s representative agencies over SOEs remains overlapping and deeply interventionist. Although the law allows owner representatives to directly decide on investments below 50 percent of equity capital, many internal regulations still require enterprises to seek opinions and submit reports before making decisions. Lengthy appraisal and approval processes, coupled with complex procedures, slow investment progress, increase costs, reduce capital efficiency, and may even cause firms to miss market opportunities.

Another important factor concerns personnel and incentive mechanisms. The selection of owner representatives and management teams in SOEs has not fully adhered to market principles and still carries strong administrative characteristics.

In many cases, officials are transferred from administrative roles to enterprise management positions without fully meeting business governance requirements. Salary and bonus mechanisms are tightly constrained and less attractive than in the private sector, making it difficult for SOEs to attract and retain high-quality talent, VNN reported.

The Phuong Nam Pulp Mill project in Thanh Hoa Commune, Tay Ninh Province, formerly Long An, is among the most prolonged and difficult loss-making cases in the industry and trade sector. Photo: Nguyen Hue

Furthermore, Dien noted that the legal framework for handling investment and business risks in SOEs remains unclear. Business inherently involves risk, yet if every instance of capital loss is automatically assigned personal liability, it fosters a fear of mistakes and responsibility, stifling innovation and the willingness to act.

In practice, many SOEs have suffered prolonged losses, insolvency, and mounting interest expenses over years, yet there is still no clear legal corridor for comprehensive restructuring or bankruptcy under market mechanisms.

Operating under modern market logic

Against this backdrop, Dr. Huynh Thanh Dien said the spirit of Resolution 79 on developing the state economy, recently promulgated, is highly significant. However, to develop SOEs into forces capable of leading the market in line with Resolution 79, the core issue lies not merely in demanding growth or expanding scale, but in comprehensively reforming the institutional framework for governance and operations in accordance with modern market logic.

He outlined four key considerations.

First, SOEs should be clearly classified by function and operational objectives instead of being subject to a uniform management mechanism. They can be divided into three main groups.

The first group comprises infrastructure SOEs, tasked with ensuring essential service provision at reasonable prices and promoting regional connectivity and spatial linkages.

The second group includes SOEs providing public services in areas such as education, healthcare, and culture, aimed at achieving social welfare objectives and improving quality of life.

The third group consists of commercial SOEs operating in competitive markets with the goal of generating profits for the state and contributing to the budget.

Each group should have distinct objectives, evaluation criteria, and governance mechanisms, avoiding a one-size-fits-all approach.

Second, independence, standards, and transparency in SOE operations must be ensured. The overarching principle is that the state should not directly intervene in daily business decisions but manage through objectives, standards, and supervision mechanisms.

SOEs should publicly disclose financial information, business results, and corporate governance practices in line with international standards, thereby creating market discipline and enhancing accountability.

Third, the independence and capacity of supervisory agencies must be strengthened. These agencies should possess sufficient authority, resources, and expertise to conduct objective oversight, free from vested interests.

In particular, a clear risk governance framework should be established as the basis for evaluating responsibility. If managers have fully complied with risk management procedures yet still face objective risks, there should be mechanisms to exempt them from personal liability. Only then can the spirit of daring to think, daring to act, and daring to take responsibility truly take root.

Fourth, there must be transparent determination of sectors where the state should maintain long-term ownership and those from which it should divest.

State capital should concentrate on key industries of strategic importance to national security, social welfare, and macroeconomic stability. At the same time, in sectors where the private sector can perform more effectively, decisive divestment is needed to enhance resource allocation efficiency.

International experience shows that successful SOE models share common features: a clear separation between the state’s regulatory function and its ownership function, genuine autonomy granted to enterprises, accompanied by strict and transparent oversight.

In Vietnam, despite many reform efforts, state management agencies still simultaneously perform the role of owner representative, while the legal framework on the qualifications and standards of owner representative agencies remains insufficiently clear. As a result, many investment and business expansion proposals by SOEs are delayed, causing them to miss market opportunities, Dien noted.

What are other countries doing to develop SOEs?

Reflecting on some of the most successful SOE development models worldwide, Master Antoine Goupille, lecturer in management at the School of Business, RMIT University Vietnam, pointed to three main lessons.

First is the professionalization of the ownership role. The most important lesson is to shift the state from direct operator to professional strategic shareholder. Singapore’s Temasek stands as a typical example.

Temasek operates as a state investment company independent from politics. It demands commercial viability and international-standard governance from enterprises within its portfolio.

“This separation enables SOEs to compete globally based on real capabilities, while reducing administrative constraints that undermine operational efficiency,” he told VietNamNet.

Second is the application of global governance standards. Leading SOEs worldwide adopt stringent corporate governance standards, often aligned with OECD principles, to clarify accountability and enhance managerial autonomy.

Partial listing or equitization, as seen in Brazil and Poland, is not only aimed at capital mobilization but also at introducing market discipline, increasing transparency, and diversifying ownership while maintaining strategic control.

Third is strategic focus and innovation. Successful SOEs typically concentrate resources on strategic areas where private investment remains insufficient, such as national infrastructure, digital platforms, or frontier technologies.

Some Chinese SOEs, for example, demonstrate that policy-oriented enterprises can still become engines of innovation in strategic, high-risk sectors, provided they operate under corporatized models with professional governance.

Tet tourism season sees strong nationwide growth

Vietnam’s tourism sector recorded a vibrant and safe performance during the nine-day Lunar New Year (Tet) holiday of 2026, serving an estimated 14 million visitors, up 12% year-on-year, according to the Vietnam National Authority of Tourism (VNAT).

The holiday from February 14–22 saw tourism activities flourish not only in major cities but also across many localities nationwide. Average room occupancy at accommodation facilities reached up to 60%, with several destinations posting notably high rates, including Phu Quoc at around 95%, Sa Pa at 90–95%, and Da Lat and Phan Thiet at 80–90%.

International arrivals increased sharply in key destinations such as Da Nang, Hanoi and Ho Chi Minh City, with foreign visitor numbers in some places approaching domestic levels. This reflects the growing appeal and stronger global positioning of Vietnam’s tourism brand.

In the domestic market, bookings for local tours rose by 15–20% compared with the same period last year and accounted for a larger share than outbound travel. Travel trends showed a shift toward personalized experiences, cultural exploration, and longer stays rather than short trips covering multiple destinations.

Major tourism centres reported strong results. Ho Chi Minh City welcomed an estimated 4.32 million visitors, up 35%, with tourism revenue reaching about 12.15 trillion VND (nearly 490 million USD), a rise of 42.9%. Popular products included river tours, double-decker city sightseeing, and traditional Tet cultural experiences.

Ninh Binh received more than 2.37 million visitors, surging 81.38%, with tourism revenue estimated at 2.451 trillion VND, up 52.3%.

Hanoi welcomed around 1.34 million visitors, up 36.3%, generating 4.87 trillion VND in tourism revenue, an increase of 40.2%. Occupancy rates at four- and five-star hotels exceeded 72%, supported by events such as the “Happy Tet 2026” program, Old Quarter flower markets and traditional cultural activities.

Da Nang, one of the most attractive destinations in the central region, served about 1.1 million visitors, up 27%, with tourism revenue estimated at 3.96 trillion VND. Other provinces such as Khanh Hoa, An Giang, Lam Dong and Quang Ninh also attracted large numbers of tourists thanks to diverse cultural and festive programs.

VNAT attributed the positive performance to favorable visa policies, effective promotion efforts, and continuous product innovation by localities and businesses.

The strong results were also supported by early and comprehensive preparations. Since late 2025, VNAT has issued directives to ensure safety, service quality, price transparency, food safety, and traffic and fire prevention during the peak season. Local authorities established hotlines, arranged round-the-clock duty teams and strengthened inspections to promptly handle emerging issues.

Tourism enterprises actively launched promotional programs and new products, including traditional Tet experience tours, heritage journeys, double-decker city tours and river cruises. Many high-end accommodation facilities organised New Year celebrations and hands-on cultural activities to enhance visitor experiences, cited VNA.

International visitors experience the traditional new year calligraphy activity (Photo: VNA)

Meanwhile, airlines added hundreds of thousands of seats and increased flight frequencies on both domestic and international routes. Major airports such as Tan Son Nhat, Noi Bai and Da Nang handled record passenger volumes, while cruise tourism welcomed more than 10,000 international visitors during the holiday.

According to VNAT, the longer Tet break created favorable conditions for travel planning and helped kick-start a dynamic year for the tourism industry. Growth was recorded across both domestic and international markets and between major hubs and emerging destinations. In many localities, tourism revenue rose faster than visitor numbers, indicating higher spending and improved service quality.

Changing travel behavior is also evident, with more visitors booking services online, opting for longer stays, and seeking personalized experiences linked to local culture and heritage – trends that point to more sustainable market development.

Hue City named among world’s top 25 honeymoon destinations for 2026

Hue City in central Vietnam has been ranked sixth among the world’s top 25 honeymoon destinations in the Travelers’ Choice Best of the Best Awards by online travel platform Tripadvisor.

The Travelers’ Choice Best of the Best title recognises the highest level of excellence in travel. It is awarded to destinations that receive a high volume of exceptional reviews and opinions from the Tripadvisor community over a 12-month period. Of more than 8 million listings on the platform, fewer than 1% achieve this distinction.

According to the platform, Hue is built along the Perfume River, which divides the former imperial capital of the Nguyen Dynasty.

Thai Hoa Grand Court, Hue Imperial Citadel.

There are numerous must-see historic sites, it added, especially designated UNESCO World Heritage sites.

Tripadvisor suggested visitors explore attractions across the city, including the ornate Imperial Citadel, the colourful Thanh Toan Tile-Roofed Bridge, the royal tombs, and the innermost Tu Cam Thanh, or Forbidden Purple City, which was reserved for the King, Queen and several concubines.

Other destinations on the top 25 list include Bali, Indonesia; Mauritius; the Maldives; Saint Lucia; Galle, Sri Lanka; Napa, United States; Positano, Italy; Watamu, Kenya; and Antigua.

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