‘Vietnam’s New Industrial Policy Under Tô Lâm’: Key Takeaways

The 13th Central Committee of the Communist Party of Vietnam and the 15th National Assembly are nearing the end of their terms as 2025 approaches its final days. This final stretch offers a retrospective vantage point to take stock of successes and failures, allowing for recalibrated paths, course corrections, and steadier footing for the future.

Consequently, the “deep and comprehensive” reforms pursued at an “extraordinarily rapid” pace under General Secretary Tô Lâm must be subjected to serious scrutiny. At the upcoming 14th Party Congress, whether the Party’s top leader continues to hold the helm will depend largely on how the public and the political system assess his performance after nearly a year and a half in power.

In this context, expert perspectives become valuable reference points for both general readers and policymakers evaluating the state apparatus. Nguyễn Khắc Giang’s political science study, Vietnam’s New Industrial Policy Under Tô Lâm, provides precisely this type of rigorous assessment.

Nguyễn Khắc Giang offers a critical dissection of the formation and implementation of Việt Nam’s new industrial policy, situating it within the “Era of National Aspiration” promoted by Communist Party leader Tô Lâm. The author examines the progression of industrial policy under the General Secretary from Hưng Yên, utilizing three primary analytical frameworks: historical context, contemporary strategies, and the obstacles to sustainable economic development.

Việt Nam currently faces the risk of the middle-income trap despite notable progress since Đổi mới. Can the recent “aspiration” drive be considered another Đổi mới moment? Furthermore, what challenges and lessons should leaders confront after more than a year on this path? 

The Evolution of Việt Nam’s Industrial Policy

Since the Đổi mới reforms of 1986, the industrial policy framework of Việt Nam has traversed multiple phases, each defined by specific historical contexts and limitations. According to Nguyễn Khắc Giang, the era prior to Tô Lâm’s leadership can be divided into three primary periods: 

1. A phase of liberalization with ownership bias (roughly 1986 to 2010),
2. A period of failed state-led industrialization (concentrated in the 2000s), 
3. A phase characterized by strategic neglect (2011 to 2024).

The author argues that these three phases shared a common failure: fragmented implementation and a lack of meaningful structural industrial transformation.

However, Tô Lâm’s ascent to power in 2024 marks a significant turning point. Since assuming the role of General Secretary in August 2024, the leadership has begun rolling out what is considered the most comprehensive industrial policy framework to date. This new strategy emphasizes two core dimensions: (1) institutional restructuring and the creation of (2) ownership-neutral incentives.

A Comprehensive Industrial Policy

Intensifying geopolitical competition has pushed many countries, including traditionally free-market economies, to return to centralized industrial planning. This global resurgence of state-led intervention has shaped the reformist thinking within the Vietnamese political system.

Consequently, the industrial policy initiated by Tô Lâm is not entirely novel in its intent but is distinct in its concrete design and implementation over the past year.

The strategy focuses on 11 high-tech sectors, emphasizing four key industries: semiconductors, artificial intelligence, renewable energy, and digital services. [1] By concentrating on these areas, the strategy aims at “leapfrogging”—bypassing traditional production stages to build interconnected industrial ecosystems.

The semiconductor sector receives particular priority, with policies promoting investment in fabrication plants and providing substantial financial support to firms entering the industry. [2]

To advance this strategy, the government has deployed specific policy instruments such as value-added tax rebates, R&D cost deductions, and preferential public procurement, all codified in Government Decree 214/2025. Nguyễn Khắc Giang argues that this approach reflects Việt Nam’s international trade commitments and a willingness to learn from past failures.

Crucially, this new policy elevates the private sector—especially large domestic conglomerates—to the role of primary engine for industrial development, marking a shift away from the dominance of state-owned enterprises (SOEs). [3]

Simultaneously, the state seeks to attract high-capability foreign investors by ensuring equitable treatment across different ownership forms to create a competitive investment environment.

Efforts by the Political Apparatus

The Politburo of the Communist Party of Việt Nam has laid the theoretical foundation for this new strategy through four key documents: Resolutions 57, 59, 66, and 68. [4] These resolutions target technological breakthroughs, international integration, and legal reform. Most notably, Resolution 68 marks a conceptual shift by elevating the status of the private sector from merely “one of the important forces” to “the most important force” in the economy. [5]

Translating this theory into practice, the legal framework has been adjusted to support these goals. [6] The amended Corporate Income Tax Law now offers preferential tax rates and tax holidays to encourage research and development in high-tech industries. [7]

Additionally, the administration has implemented policies to prioritize access to land and credit for high-tech firms and small- to medium-sized enterprises. The Tô Lâm administration is also leveraging public procurement to actively support domestic innovation startups. [8]

Key Characteristics Under Tô Lâm

Nguyễn Khắc Giang identifies the defining characteristic of Tô Lâm’s approach as a preference for pragmatic outcomes over rigid ideological directives. This strategy prioritizes nurturing endogenous capabilities in domestic manufacturing to reposition Việt Nam within global high-tech value chains. [9]

To achieve this, the leadership eschews external protectionism or export controls. Instead, the policy relies on domestic instruments, specifically targeted subsidies and tax incentives. [10]

This approach is built on comprehensive institutional reform and a commitment to a level playing field where the private sector is recognized as a central economic engine. The ultimate objective is clear: to propel Việt Nam out of the middle-income trap and realize the long-promised ambition of “becoming a dragon” by 2045. [11]

The Feasibility of “Becoming a Dragon”

The success of this new direction is far from guaranteed. Nguyễn Khắc Giang argues that the effectiveness of the industrial policy hinges on the state's ability to manage three interlocking tensions in economic governance:

1. Reconciling socialist orientation with market mechanisms;
2. Balancing current dependence on foreign direct investment with the development of future domestic capabilities;
3. Navigating geopolitical pressures.

While General Secretary Tô Lâm has demonstrated the political will to address these issues, ineffective oversight risks exacerbating systemic instabilities rather than resolving them. [12] 

The author notes that the implementation of the policy faces deep structural constraints that are difficult to resolve. These include:

• Bureaucratic rent-seeking and weak human capital;
• Energy and infrastructure gaps;
• Enclave-style FDI with limited spillover effects.

Furthermore, the government’s policy space is significantly constrained by free trade agreement frameworks, complicating proactive intervention.

Internally, longstanding ailments like bureaucratic inertia and institutional fragmentation continue to obstruct strategy implementation, manifesting as rent-seeking and poor inter-ministerial coordination. [13] 

Externally, the economy remains vulnerable due to reliance on Chinese inputs, closed-loop FDI dynamics, and international commitments that limit the use of traditional support tools. [14]

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Nguyễn Khắc Giang posits that Việt Nam’s industrial policy stands at a critical crossroads. The transformative potential of the country's industries is currently colliding with the heavy legacy of past strategies and the volatility of the global economy. [15]

Yet, this is not a dead end. 

The study underscores that the industrial strategy under Tô Lâm still leaves room for success, but it requires the government to thread a difficult needle: effectively managing internal conflicts, balancing state guidance with private sector dynamism, and resolving chronic implementation weaknesses. Furthermore, social and ecological considerations must be integrated more fully into the policy design. [16]

Frank reassessment and good-faith criticism should not be viewed as threats to leadership. Rejecting critique and open dissent will result in a painfully high cost of charting a sound future. Reflection at the close of a political term is only useful when vision is free from the constraints of habit or prejudice.

Bối Thuỷ wrote this article in Vietnamese and published it in Luật Khoa Magazine on Dec. 16, 2025. Đàm Vĩnh Hằng translated it into English for The Vietnamese Magazine.