“Three sectors — digital technology and software services; semiconductors and integrated circuit design; and artificial intelligence and robotics — need to be recognized and seized as foundational technological solutions. In other words, they are key instruments for penetrating, restructuring and upgrading all sectors of the economy, based on a decisive shift from a mindset of administrative management to one of developmental, enabling governance,” said Prof. Vu Minh Khuong, lecturer at the Lee Kuan Yew School of Public Policy, National University of Singapore, in an interview with The Saigon Times.
Vietnam is set to enter a new phase of accelerated development The Saigon Times: About two years ago, when many observers were concerned that Vietnam might fall into the middle-income trap, you expressed confidence that the country was standing at the threshold of an era of economic takeoff to become a developed nation. That assessment became a major topic of discussion in 2025 and the debate is likely to remain so in the coming years. How do you reflect on this today? How confident are you that Vietnam can achieve high-income developed country status by 2045? Prof. Vu Minh Khuong: The assessment I made several years ago was in fact based more on strategic foresight than on forecasting in the technical sense. It was shaped primarily by systems thinking and long-accumulated practical experience, rather than by purely quantitative calculations based on data or econometric models. In the course of my research, I conducted broad surveys among citizens and officials from various social groups, asking them to assess Vietnam’s likelihood of becoming a developed, high-income industrial nation by 2045 on a scale of 1 to 5 (with 5 meaning very high, 4 fairly high, 3 dependent on the effectiveness of reforms, 2 low, and 1 very low). The results showed that most assessments fell between 2 and 4, with a strong concentration around 3, and an overall average slightly above 3. This reflects a social mindset that is both hopeful and cautious. My confidence stems from a clear recognition that Vietnam is entering a phase of development that represents a historic turning point, characterized by opportunities and challenges on an unprecedented scale. In particular, Vietnam’s regional position — neighboring China — bears certain similarities to the position of Canada and Mexico towards the United States. As China is all but certain to rise to become a power on par with the U.S. within the next two decades, rational analysis and strategic choice dictate that Vietnam cannot accept a development trajectory trapped in a middle-income equilibrium like Mexico’s. Instead, it must aspire to the path of an advanced industrial nation akin to Canada. In terms of implementation capacity, with the strong potential, momentum and driving force accumulated over nearly four decades of Doi Moi, together with bold and decisive reforms initiated in 2025, I hold a deep conviction that Vietnam will enter a new phase of accelerated development after the 14th National Party Congress. Vietnam is unlikely to receive allied-style assistance in terms of capital and human resources from the U.S. and the West, as Singapore, Japan or South Korea once did. Vietnam’s internal strengths today also do not appear to surpass those three countries at the time when their economies made rapid leaps forward. In the coming development journey, what do you see as Vietnam’s favorable “timing, geography and human factors”? - It must be said that the potential, momentum and driving forces currently at Vietnam’s disposal are stronger than those of the aforementioned countries prior to their takeoff phases that produced so-called “economic miracles.” Moreover, over the next two decades, the artificial intelligence revolution — advancing at a breathtaking pace — will enable latecomer countries like Vietnam to make developmental leaps that were previously extremely difficult to achieve. In comparative international analysis, a country’s development trajectory is typically determined by five key factors: (i) Geography — favorable when a country is located in a peaceful, stable region and borders advanced or rapidly growing economies; (ii) Demographics — advantageous when the population is sufficiently large, relatively young, socially cohesive, and supported by a diligent workforce; (iii) Technology — especially favorable when new foundational technologies emerge that allow latecomers to enter the global innovation frontier and capture value; (iv) Culture — positive when society possesses strong aspirations for advancement, a high degree of cooperation, and a determined will to build a prosperous nation; and (v) State apparatus and development strategy — effective when the public administration is lean, elite, and capable of formulating and executing development strategies under a developmental-state model. Assessed against these five determinants, Vietnam performs at an excellent level in the first four pillars, while the fifth — the capacity of the public sector and the quality of strategic execution — remains at a moderate level. Therefore, if during 2026 and the 2026–2030 period Vietnam prioritizes a fundamental upgrade of this fifth pillar, the prospect of achieving a truly breakthrough transformation in development is entirely realistic. A multi-objective pathway Vietnam could rapidly raise labor productivity while accelerating overall economic growth if it restructures its industrial base toward higher value-added activities, focusing on five to seven spearhead sectors. You have previously argued that sectors with the greatest potential for Vietnam include digital technology and software-as-a-service; semiconductors and integrated circuit design; and AI and robotics — all of which require a solid industrial foundation to develop. Could you elaborate on this assessment? - First, digital technology and software-as-a-service; semiconductors and integrated circuit design; and AI and robotics are three sectors of particular strategic significance for Vietnam. However, if they are viewed merely as “industries with expansion potential,” similar to many others, Vietnam will find it very difficult to go far or achieve major breakthroughs. To truly break through, Vietnam needs to recognize and harness these three sectors as foundational technological solutions — that is, as key instruments for penetrating, restructuring, and upgrading all sectors and domains of the economy. Their core value lies not only in generating additional growth, but in their capacity to simultaneously drive four structural transformations: upgrading technological capabilities; accelerating AI adoption and digitalization; advancing green transformation; and enhancing the ability to participate in higher-value segments of international markets. For example, in agriculture, the application of AI and robotics makes it possible to optimize farming processes, sharply reduce pesticide residues, raise productivity and quality, and significantly lower production costs. If implemented effectively, Vietnam could raise the value of agricultural and aquatic exports from around US$70 billion in 2025 to nearly US$100 billion by 2030, while not only meeting increasingly stringent environmental and food safety standards in high-end markets but also reducing export costs, thereby delivering growing benefits to workers and the broader economy. By successfully addressing major challenges of the domestic economy through AI, robotics, and semiconductors — from agriculture and processing industries to logistics, energy, urban systems, and public services — Vietnam can gradually develop integrated technological solutions with its own distinct imprint. These solutions would serve not only the domestic market but could also be exported globally, especially to developing economies with similar structural characteristics. This is the pathway that allows Vietnam to maintain high growth rates while upgrading the quality of growth and strengthening national competitiveness. If pursued consistently, Vietnam could realistically expand the size of its economy from roughly US$500 billion today to around US$1.8 trillion by 2045, on a competitive foundation far superior to that of traditional growth models. Crossing the “breakthrough threshold” From a business perspective, how do you assess the readiness of domestic enterprises operating in these three sectors to move to a higher level? If domestic firms in general require guidance and support, which group should shoulder this role — Vietnam’s large corporations or foreign-invested enterprises (FDI)? - It must be frankly acknowledged that at present, the majority of Vietnamese domestic enterprises are not yet ready to break into the high-tech segments of the global market. Most remain stuck at lower rungs of the value chain, such as contract manufacturing, low-cost service provision, or technology adoption at the user level, without mastery of core technologies. The reasons lie not only within the enterprises themselves, but also in the fact that Vietnam has yet to fully establish a modern industrial strategy and policy framework that is sufficiently focused and adequately resourced. In particular, we have not yet built a truly dynamic innovation ecosystem in which large domestic firms, FDI enterprises, small and medium-sized businesses, research institutes, universities, and the public sector are closely connected in a cooperative and mutually reinforcing structure. International experience shows that to cross the “breakthrough threshold,” governments need to proactively set mission-oriented development goals for key industries and technological platforms. These missions must be accompanied by sufficiently large-scale support, stable and long-term policy frameworks, and leadership teams with deep commitment and a strong grasp of global trends and technological advances, driven above all by the success of enterprises and the national economy. In 2025, Singapore exceeded growth expectations thanks to an economy tightly integrated with AI, digitalization, and semiconductors. Investment in AI applications and digital transformation has proven far more effective than investment in real estate. In this effort, Vietnam can draw lessons from Singapore. First, it has upgraded its national AI and smart nation strategies (version 2.0) to align with the latest advances of the digital revolution. Second, it has leveraged multinational corporations such as Google, Amazon, and Meta to build digital ecosystems and AI capabilities that enable enterprises across all sectors to rapidly absorb technological progress. Third, it has established platforms that connect supply and demand for innovation and digital transformation, with proactive, generous, and effective support from government agencies. Do the primary drivers that trigger the overall development of digital technology and software services; semiconductors and integrated circuit design; and AI and robotics lie mainly on the business side or on the governance side? And how, in your view, can these drivers be unlocked? - To generate breakthrough growth in digital technology and software-as-a-service; semiconductors and integrated circuit design; and AI and robotics, I believe the decisive driver does not lie purely with enterprises or with the state administration, but rather in the quality of development governance.
Governance here should not be understood as administrative management in the narrow sense, but as the capacity to support, activate, and amplify efforts to create new value by all actors in the economy — from enterprises, research institutes, universities, and startups to the public sector. If we lean too heavily toward “management,” focusing excessively on drafting laws, regulations, and compliance checks, the typical outcome is that resources are consumed in risk avoidance and fear of violations, rather than being unleashed to foster innovation and bold experimentation. In such a context, fear of making mistakes can easily overshadow the aspiration to move forward among enterprises and society at large.
In the case of AI, robotics, and semiconductors, Vietnam’s advantages are even clearer, as Vietnamese capabilities are not constrained by physical strength but depend primarily on intellect, organization, and the institutional environment. If properly “backed” — that is, given room for experimentation, allowed controlled risk-taking, and encouraged to move beyond outdated norms — Vietnamese enterprises and engineering talent can achieve remarkable advances within a relatively short period.
Therefore, the key to unlocking development momentum lies in a decisive shift from a management mindset to a developmental, enabling governance mindset: from control to support, from risk prevention to value creation incentives, and from “zero tolerance for mistakes” to “the courage to experiment in order to move faster.” This is precisely the foundation on which Vietnam’s strategic technology sectors can accelerate over the coming decade.
Reported by Hoang Hanh
