BOOSTING DOMESTIC CONSUMPTION AND PUBLIC INVESTMENT – NEW GROWTH DRIVERS OF VIETNAM’S ECONOMY

In the context of global economic uncertainty, Vietnam’s government has made stimulating internal growth drivers a top priority. Two key pillars – public investment acceleration and domestic consumption stimulation – are being implemented in parallel, forming a dual momentum for sustainable economic recovery and development.

Public Investment: Building Strategic Infrastructure Foundations

Vietnam is actively accelerating public investment disbursement, particularly in major infrastructure projects. In the first half of 2025, nearly USD 12 billion in public capital was disbursed, up 8% year-on-year.

Key projects receiving capital include:

• North–South expressways,
• Long Thanh International Airport,
• Urban belt roads in Hanoi and Ho Chi Minh City.

Such infrastructure not only reduces logistics costs and enhances interregional connectivity, but also lays the groundwork for private and foreign direct investment (FDI). Public investment acts as a catalyst, stimulating private sector development and creating value chains across construction, materials, and supporting services.

Stimulating Consumption: Tax Policy and Coordinated Measures

Alongside public investment, the Vietnamese government is actively implementing domestic demand stimulus measures, with a key policy being the 2% VAT reduction on selected goods and services. This policy took effect on July 1, 2025, and will last until the end of 2025.

This VAT cut directly reduces retail prices, encourages consumer spending, and consequently boosts production and business. A positive economic cycle is created: higher demand leads to increased production, more employment, higher income, and further consumption.

Additional support measures include:

• Maintaining a loose monetary policy with low interest rates to facilitate access to capital.
• Launching nationwide promotional campaigns, encouraging domestic tourism and cashless payments with attractive incentives.
• Continuing social welfare packages to stabilize living standards and sustain purchasing power.

Opportunities for Foreign Investors

With stable policies, improving infrastructure, and growing domestic demand, Vietnam is positioning itself as an attractive destination for international investors.

FDI businesses can now:

• Benefit from new infrastructure and reduced logistics costs.
• Take advantage of tax incentives and stimulus packages.
• Integrate into local value chains and expand efficiently.

Long-Term Vision: A Dynamic and Sustainable Economy

Vietnam is demonstrating strong leadership in implementing and monitoring economic stimulus policies. The tax authority plays a vital role in ensuring timely and accurate VAT reductions, thereby supporting both enterprises and consumers.

With bold actions and sound strategies, Vietnam is laying a solid foundation for new growth drivers – paving the way for a dynamic and sustainable economy.