Vietnam

How Vietnam can avoid the middle-income trap

Will Vietnam’s growing domestic private sector help or hinder it to avoid a middle-income trap?

How Vietnam’s domestic private sector evolves over the coming decade will mould the country it becomes for generations to come. “It’s what we discuss internally all the time,” said Chad Ovel, a partner at domestic private equity firm, Mekong Capital. “It predicates where our investment goes.”

What is very clear is that Vietnam has reached a crucial tipping point. The domestic private sector accounted for 43.3% of GDP in 2018 and has outstripped both state-owned industries SOEs and multinationals as the economy’s dominant force. By 2020, the government wants it to contribute 50% and in recent years has been much more proactive about directing capital its way.

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