HANOI, September 11 — Vietnam’s economy expanded 8.2 per cent in the first half of 2026, its fastest growth in years, but a peer-reviewed analysis published on 11 September 2026 by Khoi Dang of Franklin & Marshall College argues the headline number is K-shaped: generated almost entirely by a small group of foreign-invested enterprises (FIEs) and government-favoured conglomerates, while small- and medium-sized enterprises and ordinary workers are left behind. The industrial figures are striking.
Industrial production volume was 10.8 per cent higher in the first half of 2026 than a year earlier — Vietnam’s fastest first-half expansion since 2019 — with manufacturing alone up 11.4 per cent. Exports climbed 21 per cent, and foreign direct investment disbursements rose 11.2 per cent year-on-year to reach US$13 billion in the first half.
Foreign firms, domestic gap
That growth is concentrated. FIEs account for only 3.5 per cent of all firms but made up 80 per cent of the value of Vietnam’s exports, a 26 per cent annual increase — nearly six times the 4.6 per cent growth recorded by their domestic counterparts. The imbalance points to weak linkages between the foreign and domestic sectors.
When domestic firms cannot meet the standards of multinational manufacturers, the multinationals import their inputs instead. Vietnamese firms then lose not only revenue from large FIE orders but also the experience, skilled labour and technology transfer that supplying a foreign client would bring.
Foreign investors are drawn to Vietnam’s cheap, hardworking labour force rather than a well-integrated industrial base or high-skilled human capital, the analysis says, which results in Vietnamese workers receiving mostly low-paid assembly jobs. An International Labour Organization study of Vietnam’s electronics sector found that line operators typically accounted for 80–85 per cent of the workforce at the multinational enterprises it interviewed. Much of the resulting profit flows back to the home countries of FIEs.
Policy tilts toward champions
Policy has added to the pressure. In May 2025, Vietnamese General Secretary To Lam signed Resolution 68, which aims to promote private economic development, including by cultivating an elite group of national champions intended to replace FIEs and anchor domestic supply chains. In practice, significant resources have flowed to a small number of large Vietnamese conglomerates such as Vingroup, Sun Group and Masterise Group without the promised linkages to smaller suppliers.
In June 2026, these three companies had 18 projects exempted from standard annual credit growth limits, citing their status as national key projects. The State Bank of Vietnam has also set aside US$20 billion to preferentially finance key infrastructure projects from eligible enterprises until 2030.
Vietnam’s financial system compounds the problem for SMEs. Banks are mainly funded by short-term deposits while the infrastructure projects they finance often need 5–20 years to mature, leaving them exposed to liquidity and interest-rate risks. SME borrowers face lending rates of 10–12 per cent, more than double the roughly 4 per cent preferential rate for government-directed priority sectors.
Some 93.5 per cent of loans in Vietnam require collateral assets rather than being assessed on cash flows or business prospects. SMEs make up 98 per cent of the country’s enterprises but contribute only about 20 per cent of total outstanding bank credit.
The analysis notes that China, by contrast, incentivised foreign companies to transfer technology and source locally by leveraging its enormous domestic market, allowing it to develop a sophisticated domestic supplier base that has since produced globally competitive manufacturers. What to watch next is whether Vietnam’s credit exemptions and the State Bank’s preferential financing window produce the supplier linkages Resolution 68 promised, or whether the gap between FIE-led exports and the domestic sector continues to widen.
