Vietnam has long flown under the radar in discussions about Asia’s rising economic powers. While China, India, and Indonesia often dominate the headlines, Vietnam is quietly but confidently establishing itself as one of the region’s most important emerging markets.

With a burgeoning industrial base, growing reputation as a business-friendly hub, rising energy demand, particularly in the liquefied natural gas (LNG) sector, and an increasingly diversified trade portfolio, Vietnam is now impossible to overlook.

The transformation of Vietnam over the past three decades has been nothing short of remarkable. From a primarily agrarian economy to one driven by manufacturing, services, and exports, Vietnam has consistently demonstrated an impressive capacity for economic reform and openness. The country's accession to the World Trade Organization (WTO) in January, 2007 marked a turning point, as it further integrated into the global economy. Today, it is reaping the rewards of those early decisions with consistent GDP growth, strong foreign direct investment (FDI) flows, and a youthful and, increasingly, skilled labour force.

One of Vietnam’s most significant achievements in recent years has been establishing itself as an alternative manufacturing and start-up hub in Asia. As geopolitical tensions and rising costs have prompted many multinational companies to seek options beyond China, Vietnam has emerged as a prime candidate. Major corporations including Samsung, Apple suppliers, and automotive giants have moved or expanded operations into the country, drawn by a combination of low costs, relative political stability and key location along vital Asian shipping lanes.

The Hanoi government’s commitment to improving infrastructure has further enhanced Vietnam’s appeal. Ports have been modernised, road and rail networks upgraded and industrial zones expanded.

Ho Chi Minh City as the business capital of the country, and political centre Hanoi now stand out not only as economic powerhouses in their own right, but also as centres of innovation and entrepreneurship, with a fast-growing start-up ecosystem.

At the same time, Vietnam is navigating its required energy transition with pragmatic ambition. While renewables such as wind and solar are being rapidly scaled up, Vietnam has recognised that LNG will play a vital role in supporting its industrial and urban growth in the medium term; in a similar vein to other regional economies in the form of a transitional fuel on the way to eventual net-zero status. The country’s first LNG terminal, located in the south, began operations in 2023, signalling the start of a major shift in Vietnam’s energy landscape. More terminals and gas-fired power projects are in the pipeline, as the government seeks to move away from coal and meet its growing electricity demands with a more reliable and cleaner-burning fuel.

Vietnam’s LNG strategy not only addresses domestic energy needs but also underlines the country’s willingness to adopt global standards and integrate into international supply chains. It provides opportunities for collaboration with major energy exporters such as the United States, Qatar and Australia, while aligning with broader decarbonisation goals shared by Hanoi’s regional and global partners.

Trade, too, has played a central role in Vietnam’s emergence as a key Asian player. While China to the north still remains Vietnam’s largest trading partner, the country has made significant strides in diversifying its economic relationships. It is a member of multiple major trade blocs, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). These agreements give Vietnam preferential access to markets across Asia, Oceania and the Americas, bolstering its exports and positioning it as a key node in regional supply chains.

Perhaps even more striking is Vietnam’s strengthening of trade ties with the West. The EU-Vietnam Free Trade Agreement (EVFTA), which came into effect in 2020, has opened new doors for Vietnamese goods in Europe while attracting investment from European companies seeking to expand in Asia.

The EU-Vietnam Investment Protection Agreement (EVIPA) bilateral investment treaty is similarly far-reaching. The country’s growing economic relationship with the United States also continues to flourish, particularly in technology, textiles, and agricultural exports.

Yet while Vietnam is booming, in the process bringing tourist numbers up to record levels with almost 11mn arrivals in the first half of 2025, challenges remain.

Infrastructure bottlenecks remain in some regions, regulatory transparency can be inconsistent, and environmental sustainability remains a work in progress. Additionally, the country faces increasing pressure to move up the value chain, away from basic assembly and low-cost manufacturing towards more sophisticated production and services. However, the government’s ambitious plans under its “Socio-Economic Development Strategy 2021–2030” suggest that policymakers are well aware of these hurdles and are actively seeking to address them.

Moreover, Vietnam’s population, currently 100mn, is young, tech-savvy, and increasingly urban. This demographic dividend is helping to fuel domestic consumption and innovation. Coupled with rising levels of education and digital connectivity, Vietnam is not only producing goods for the world but also nurturing its own consumer market and technology ecosystem.

In a world reshaping itself around new geopolitical realities, Vietnam stands out for its pragmatism and agility. It is building a nuanced foreign policy that balances relationships with China, the United States, Japan, India and ASEAN neighbours, while avoiding entanglement in the growing rivalries of the day. This flexibility has helped it win friends across the globe and position itself as a reliable partner in trade, investment and diplomacy.

The nation’s journey from post-war hardship to economic dynamism is a compelling example of what can be achieved through reform, openness, and forward-thinking policy. It is still a developing economy, and the road ahead will undoubtedly present further complexities. Yet in the constellation of Asia’s emerging markets, Vietnam is shining ever more brightly and will continue to do so.