Vietnam Advances 'Doi Moi 2.0' Economic Reform Programme With New FDI Law and Private Sector Expansion

Background

Vietnam's economic transformation since the original Doi Moi reforms of 1986, which shifted the country from a centrally planned to a market-oriented economy, has produced one of the most sustained growth stories in Asia. From a country with per capita GDP below 100 dollars at the start of Doi Moi, Vietnam had reached approximately 4,500 dollars per capita by 2025, driven by agricultural liberalisation, export-oriented manufacturing investment, and the country's integration into global supply chains beginning in the 1990s. Vietnam became a critical node in the global electronics supply chain when Samsung Electronics began investing heavily in Vietnamese manufacturing facilities from 2009, eventually making Vietnam the largest Samsung manufacturing hub outside South Korea. Today Samsung and its suppliers account for approximately 30 percent of Vietnam's total exports. Intel, LG, and dozens of Taiwanese electronics manufacturers have followed similar investment paths, making northern Vietnam in particular one of the most dense concentrations of electronics manufacturing in Southeast Asia. The country's advantages have included competitive labour costs, a young and rapidly improving workforce, political stability under the Communist Party, geographic proximity to China's supply chain networks, and successive trade agreements including the EU-Vietnam FTA, the CPTPP, and bilateral investment treaties that have given it preferential market access. The question that Vietnam's policymakers have been grappling with since the 2020s is how to avoid the 'middle-income trap', the tendency of countries to stall at the 5,000 to 10,000 dollar per capita range when their labour cost advantages are eroded by income growth while they have not yet developed the innovation and productivity capabilities that sustain growth at higher income levels.

The Doi Moi 2.0 Legislation

The Foreign Investment Law amendments passed by the National Assembly on October 15, 2026 represent the most significant legal change to Vietnam's FDI framework since the 2020 Investment Law overhaul. The amendments address three strategic sectors that the government identifies as the drivers of Doi Moi 2.0 growth: digital economy services, semiconductors and advanced manufacturing, and green technology. In the digital economy, the increase of permitted foreign ownership in telecommunications from 49 to 65 percent and the full opening of cloud computing, e-commerce platforms, and digital financial services to 100 percent foreign ownership addresses a longstanding barrier to investment by global technology companies that were reluctant to commit large capital outlays to markets where they could not hold controlling stakes. For semiconductors and advanced manufacturing, the dedicated investment zone framework creates twelve designated areas across Vietnam, including two in the north near the Chinese border at Bac Giang and Bac Ninh where existing electronics clusters provide labour pools and supporting industries, and two in the south near Ho Chi Minh City targeting the design and testing segments of the semiconductor value chain. Companies investing a minimum of 500 million dollars in qualifying semiconductor facilities within these zones receive 10-year corporate income tax holidays followed by a 5-year preferential rate of 10 percent, accelerated customs clearance procedures, guaranteed power supply with a quality standard applicable to clean room manufacturing, and preferential land lease rates. Green technology provisions extend similar incentives to battery manufacturing, offshore wind component production, and electric vehicle assembly, reflecting Vietnam's ambition to participate in the energy transition supply chains that represent the next wave of manufacturing investment opportunity.

• Telecommunications foreign ownership limit increased from 49 to 65%; cloud computing and digital finance fully opened to 100% foreign ownership.
• 12 semiconductor investment zones with 10-year tax holidays for qualifying 500 million dollar minimum investments.
• Guaranteed power supply quality standard applicable to clean room manufacturing.
• Green technology incentives cover batteries, offshore wind components, and EV assembly.

Competitive Positioning

Vietnam's Doi Moi 2.0 reforms arrive in a competitive landscape where multiple Southeast and South Asian countries are aggressively bidding for the supply chain diversification investment that Western technology companies and governments are seeking to reduce dependence on China. India's Production Linked Incentive scheme has attracted significant Apple supplier investment, including Foxconn and Tata Electronics assembly facilities producing iPhones for export. Indonesia, Malaysia, Thailand, and the Philippines are all implementing semiconductor and electronics investment incentive programmes of varying ambition. Vietnam's competitive advantage in this environment rests on its existing scale in electronics manufacturing, particularly the Samsung ecosystem, which provides a supplier base and workforce with electronics manufacturing experience that newer entrants cannot quickly replicate. The risk for Vietnam is that it may be offering incentives in a bidding war that primarily redistributes existing investment rather than creating net new capacity, with the beneficiaries being the technology companies rather than the host countries. The Hanoi-based economic policy research community has debated this concern extensively, with proponents of the reform arguing that attracting higher-value segments of semiconductor supply chains such as design, testing, and advanced packaging, even if at the cost of significant tax incentives, produces workforce development, knowledge spillovers, and supply chain depth that justify the fiscal cost. Critics argue that Vietnam should focus on strengthening domestic enterprise participation in existing supply chains rather than offering blanket incentives to multinationals. To Lam's government appears to have concluded that both tracks are necessary and that the legal framework change enables rather than commits to the level of incentive provision, which will be determined by individual investment agreements negotiated with qualifying companies.

Sources

• Reuters
• Vietnam Investment Review
• World Bank Vietnam
• ASEAN Briefing
• Financial Times