Grooming New Champions: To Lam Prepares for Private Sector-Led Growth in Vietnam

INTRODUCTION

In May 2025, the Politburo of the Communist Party of Vietnam (CPV) under the leadership of General Secretary To Lam adopted Resolution 68 on the development of the private sector, marking a dramatic policy shift toward private sector-led economic development. At the heart of this ambitious initiative is the creation of “national champions” – large, globally competitive private conglomerates which can propel Vietnam’s economy into higher-value sectors and foster resilient domestic supply chains. This represents a notable departure from Vietnam’s historical reliance on state-owned enterprises (SOEs) and foreign direct investment (FDI), with the resolution explicitly positioning the private sector as the “most important force” of the economy while relegating SOEs to a supporting role. For a one-party state with communism as state ideology, this move is a remarkable innovation.

As with other reforms spearheaded by To Lam since his rise to power in 2024, including sweeping bureaucratic reforms, the ambition of creating new national champions has sparked debates both inside and outside the country. On the one hand, his supporters believe the plan will unleash the potential of the private sector, propelling Vietnam to the levels of development seen in the East Asian miracle. Critics, however, warn against unchecked cronyism from powerful, politically connected conglomerates. Whichever the case, one can without exaggeration describe To Lam as Asia’s “most consequential reformer”.

This article examines To Lam’s plan by first analysing the specific policies and contrasting them with past attempts. Second, it explores the feasibility of creating Vietnamese “chaebols” in light of the nation’s political and economic constraints. Third, it assesses the opportunities and structural obstacles facing implementation as well as the broader implications for Vietnam’s economic trajectory. Finally, the article discusses key implementation considerations, emphasising the transparent and equitable reforms needed to achieve sustainable, private-led economic success.

TO LAM’S PLAN FOR THE PRIVATE SECTOR

After the Doi Moi reforms in 1986, the private sector has played a crucial role in Vietnam’s transformation from a centrally planned system to one of the most dynamic economies in Asia. However, the private sector still played second fiddle to SOEs and FDI in an essentially three-tier economic system. Previous attempts at reform, including Resolution 09 in 2011 and Resolution 10 in 2017, had focused primarily on improving the general business environment but had failed to address the fundamental question of scale: how to transform Vietnam’s fragmented landscape of small and medium enterprises (SMEs) into globally competitive companies which can strengthen Vietnam’s economic autonomy.

Resolution 68 marks a clear break from gradual reform. To Lam has put the full weight of the state behind private business: a new law for the private sector, a prime minister-led national committee, easier access to land and credit, and strict limiting of business inspections to only once a year. This ambition goes far beyond previous reforms’ focus on removing barriers for SMEs. The aim is to reshape Vietnam’s corporate landscape, concentrating resources on nurturing large firms with the scale, technological capacity, and capital needed to compete internationally. To Lam’s push is not just about boosting the private sector’s role – it is a bold new industrial policy to create “national champions”. The resolution sets a clear target: developing at least 20 private enterprises capable of participating in global value chains by 2030.

This is a very different path compared to Vietnam’s champion-building exercise in the late 2000s, when the government attempted to forge massive SOE conglomerates as economic “iron fists” (quả đấm thép). Under Prime Minister Nguyen Tan Dung, the state poured resources into creating national champions like shipbuilder Vinashin, energy giant PetroVietnam (PVN), and Electricity of Vietnam (EVN), envisioning them as Vietnam’s answer to South Korea’s chaebols or Japan’s keiretsu. That experiment failed spectacularly. Vinashin’s near-bankruptcy in 2010, leaving US$4.5 billion in debts, exposed the fatal flaws of politically-directed capital allocation: soft budget constraints, rampant corruption, and expansion into non-core businesses based on political connections rather than competitive advantage.

To Lam’s vision turns this state-centric model on its head. Rather than picking winners from existing SOEs, Resolution 68 mandates creating conditions for private champions to emerge organically through market competition. The policy toolkit includes preferential access to credit for companies pursuing technological upgrading, priority in public procurement for firms meeting innovation benchmarks, and support for international expansion through the new “Go Global” programme. Most significantly, the resolution opens major infrastructure projects – traditionally dominated by SOEs like Vietnam Railways Corporation, Airports Corporation of Vietnam (ACV), Vietnam Expressway Corporation (VEC), and Electricity Vietnam (EVN) – to private bidders, creating opportunities for private firms to achieve the scale necessary for global competition. The US$67 billion North-South High-speed Rail Project exemplifies this shift, with private conglomerates including Vingroup and Thaco submitting bids to participate in what would have been an exclusive SOE domain just years ago.

Why this dramatic pivot now? Vietnam’s export-dependent growth model faces unprecedented pressures that transform private sector development from a policy option into an existential necessity. Trump’s 46% tariff threat starkly exposed the economy’s vulnerability to external markets, while rising labour costs steadily erode the manufacturing advantages that once attracted investors fleeing China. The global trading system that turbocharged Vietnam’s growth for three decades shows signs of fracturing into hostile blocs, making the country’s traditional balancing act increasingly untenable. Domestically, warning signs multiply: GDP growth has not yet fully recovered from the COVID-19 shock, businesses struggle with institutional obstacles, and without technological upgrading, Vietnam risks permanent entrapment in its middle-income status.

To Lam has put the full weight of the state behind private business: a new law for the private sector, a prime minister-led national committee, easier access to land and credit, and strict limiting of business inspections to only once a year.

To Lam has skilfully leveraged these vulnerabilities, adopting crisis rhetoric that warns Vietnam faces economic subjugation if urgent reform is not undertaken. In a conference early this year, he openly questioned the export-led model, asking: “How much value are we actually contributing? Or are we stuck at the lowest end of the value chain, merely doing outsourced work for foreign companies? … How much do we really earn? Perhaps just the labour cost – and the environmental pollution. I wonder if this is a ‘delusion’, a case of ‘self-deception’, of lulling ourselves to sleep”. More recently, he warned that without urgent reform, Vietnam risks falling short of its development goals and one should “foresee failure”.  This marks a sharp departure from predecessor Nguyen Phu Trong’s triumphalist narrative of socialist success. By invoking emergency – consciously echoing the existential language that preceded Doi Moi in 1986 – To Lam creates political space for heterodox policies while neutralising conservative opposition within the party. As Vu Thanh Tu Anh observes, significant private sector reforms have historically only emerged during periods of economic crisis, suggesting To Lam’s emergency framing serves as both a genuine alarm and tactical necessity for pushing through long-overdue structural changes.

WHO MAY BECOME THE NEW CHAMPIONS?

Among Vietnam’s one million registered enterprises, only 20,276 qualify as “large”, with annual revenues exceeding VND100 billion (US$3.8 million) and employing over 200 people. Private firms account for roughly a third of these, forming a pool of approximately 6,000 potential champions. Yet the government’s selection method for establishing 20 globally competitive corporations will likely narrow this field considerably, focusing on an even more exclusive club: the top 100 private conglomerates that already dominate Vietnam’s corporate landscape. Collectively, these paid VND173 trillion (US$6.63 billion) to the state budget in 2023, accounting for more than 30% of the contribution by the entire private sector. The top three alone – Vingroup, Thaco, and Hoa Phat – each generate more revenue for the government than half of Vietnam’s 63 provinces before recent mergers.

Given resource constraints, this article’s analysis only focuses on the 50 biggest private companies, using data compiled from Vietnam Report and the author’s own research. These firms fall into three distinct groups, each defined by its origins and its path to prominence.

Figure 1. Classifications of Vietnam’s top 50 private enterprises by industry and origins.

The first and most influential comprises the “Eastern European clan” – billionaires who returned from the former Soviet bloc with capital, connections, and crucially, relationships with Vietnamese officials who studied there during the Cold War. Pham Nhat Vuong, Vietnam’s richest man and Vingroup’s chairman, epitomises this group. Having made his fortune selling instant noodles in Ukraine, he returned to build Vietnam’s largest private conglomerate spanning automobiles, healthcare, education, and property. Nguyen Thi Phuong Thao, founder of budget airline Vietjet, and Ho Hung Anh, key shareholder and chairman of Techcombank, share similar trajectories. This network’s most striking feature is its dominance of Vietnam’s banking sector: 11 of the 14 commercial banks among the top 50 private enterprises belong to this group.

The second influential set consists of companies formerly state-owned and which were privatised during Vietnam’s extensive equitisation drive. Key examples include Vinamilk, REE Corporation, COTECCONS, and GELEX. Although formally independent, their rise often benefited significantly from insider deals and enduring political influence; they had managed to preserve privileged access to resources thanks to their state origin.

The third group comprises domestic tycoons who expanded from provincial power bases to national prominence. Tran Dinh Long built Hoa Phat into Southeast Asia’s largest steel producer from humble beginnings in construction materials. Do Quang Hien’s T&T Group and Tran Ba Duong’s Thaco followed similar paths, leveraging local government relationships and regional monopolies to become national conglomerates.

These three groups share notable characteristics critical for understanding their role as potential national champions. First, there is pronounced dominance in finance and property. Banking represents 28% of the top 50 firms, while 44% maintain significant property/resource extraction portfolios. This creates a powerful finance-property nexus quite distinct from the manufacturing-led growth observed in Korea or China.

Second, manufacturing remains underdeveloped. Only 22% of top private firms operate in manufacturing, and largely in traditional sectors like steel, textiles, and food processing rather than the high-tech industries that Vietnam needs for global value-chain integration. Unlike Korea’s chaebols, which began as manufacturers before expanding into finance, Vietnam’s conglomerates started with money and property, before moving into manufacturing, for example, Vingroup with its EV subsidiary VinFast.

Figure 2. Characteristics of Vietnam’s top 50 private enterprises.

Third, cross-ownership between banks and conglomerates is common; 93% of banks in the top 50 are linked to other conglomerates. This may enable easy access to capital for these companies, but it also creates systemic risks similar to what happened in South Korea before the 1997 Asian Financial Crisis. Despite regulations limiting individual bank ownership to 5% and institutional ownership to 10%, tycoons can still circumvent these rules through nominee arrangements and complex corporate structures. The Van Thinh Phat scandal, where property developer Truong My Lan manipulated the system to take de facto control over Saigon Commercial Bank and then allegedly siphoned U$12.5 billion from it, illustrates how these arrangements can spiral into significant financial troubles for the economy.

OPPORTUNITIES AND CHALLENGES

The timing of the initiative coincides with a favourable convergence of factors. On the surface, Vietnam already possesses a cohort of private conglomerates with proven international ambitions: FPT has evolved into Southeast Asia’s largest IT service provider, Hoa Phat is the region’s top steelmaker, while VinFast is the leading indigenous EV maker. These companies demonstrate that Vietnamese entrepreneurs can build sophisticated businesses capable of competing well beyond national borders.

The external environment also presents unprecedented opportunities, despite the escalating risks of US trade policy. Global supply chains are restructuring away from China, creating opportunities for Vietnamese firms to capture higher-value activities. Vietnam’s young, increasingly skilled workforce offers genuine advantages, with the country currently having over 600,000 STEM students, and ranking 47^th globally in the Global Innovation Index 2024, ahead of regional peers like the Philippines (56th) and Indonesia (60th). Foreign investors, seeking alternatives to China, bring not just capital but technology and know-how that ambitious Vietnamese firms can absorb and deploy. Targeted government interventions such as tax incentives for R&D, simplified processes for investment, and diplomatic backing in international expansions will create fertile conditions for these firms to scale up further.

Yet To Lam’s vision carries inherent risks that mirror the failures of Vietnam’s previous champion-building experiment in the 2010s. The key challenge remains unchanged: how to create globally competitive firms without spawning politically-connected rent-seekers. The growth of potential Vietnamese chaebols has often relied excessively on financial leverage: Vingroup’s debt-to-equity ratio, for example, stands at a worrying 4.23. Top Vietnamese firms typically have ratios around 2, while Korean chaebols like Samsung and Lotte have kept theirs near one since the 1997 financial crisis. In addition, complex and opaque corporate structures are common among these conglomerates, often intertwined with political backing, raising concerns about governance and transparency. High-profile scandals, such as those involving construction companies Thuan An and Phuc Son, underscore the problematic nature of state-private collusion, an issue that could persist or even intensify under the new policy push.

Fundamentally, To Lam’s approach risks replacing one form of rent-seeking with another. If poorly executed, Vietnam could transition from inefficient SOEs extracting resources through monopoly positions to private conglomerates doing the same through political connections. This would crowd out the SMEs that generate most employment and innovation, replicating South Korea’s current struggles with chaebol dominance but without having first achieved Korean levels of technological sophistication and manufacturing capabilities.

In addition, the political dynamics surrounding Resolution 68 hint at deeper challenges. Despite being formally released by the Central Committee, this transformative policy was notably adopted by the Politburo, which breaks with precedent for major economic reforms. This procedural anomaly suggests either To Lam’s concern about opposition within the party or his desire to accelerate implementation by bypassing potential resistance. Either interpretation bodes poorly for the consensus-building necessary for sustained reform.

As a result, opposition will likely emerge from multiple quarters. Conservative party members may view private conglomerates as threats to socialist principles, particularly the state’s role in controlling and distributing economic resources. SOEs must comply with party directives but their discontent will simmer beneath the surface. Concerns have already emerged, albeit muted, about private bidders like Vingroup and Thaco competing for the North-South High-speed Rail Project – a venture that Vietnam Railways Corporation would have monopolised just a few years ago. Provincial leaders may resist centralised champion-selection that reduces their discretion over local economic development with their own favourite “champions”. Even within the private sector, SMEs and medium-sized firms may push back against policies that concentrate advantages among established conglomerates.

Success hinges on institutional prerequisites that Vietnam has yet to establish. Champion-building without transparent governance mechanisms, external audits, and enforceable sunset clauses for state support merely creates a new class of rent-seekers.

Thus, while Vietnam’s private conglomerates possess significant potential to anchor the nation’s global economic ambitions, realising this potential requires cautious management of inherent risks. Without rigorous checks and balances, enhanced transparency, and a genuine commitment to competitive markets, To Lam’s vision might inadvertently cultivate politically connected giants rather than genuine economic innovators. Navigating these tensions successfully will determine whether this ambitious policy catalyses sustained economic growth or simply replicates the errors of past state-centric strategies.

CONCLUSION

Vietnam’s ambition to cultivate national champions is a bold gamble that offers both promise and peril. History shows that selecting corporate winners is fraught with risk. Korea’s chaebols succeeded initially through rigorous performance metrics tied to export targets, but later morphed into “too-big-to-fail” behemoths that required massive bailouts during the 1997 Asian Financial Crisis. Taiwan’s alternative path – fostering dense networks of specialised SMEs – proved more resilient but less capable of achieving the economies of scale necessary for certain capital-intensive industries that leaders in Hanoi hope for. Vietnam’s challenge is to craft a hybrid approach: nurturing select champions in strategic sectors while maintaining a competitive ecosystem for smaller firms.

For now, the tasks ahead are formidable. Vietnam’s prospective national champions skew heavily toward rent-seeking sectors such as property and resource extraction, rather than manufacturing – the true engine behind South Korea’s economic success. The innovation gap is also stark, with high-tech and IT representing a mere 2% of the largest firms. Shifting from a finance-property nexus to manufacturing excellence requires fundamental restructuring; without it, champions risk remaining trapped in low-value activities.

Success hinges on institutional prerequisites that Vietnam has yet to establish. Champion-building without transparent governance mechanisms, external audits, and enforceable sunset clauses for state support merely creates a new class of rent-seekers. Vietnam’s recent bureaucratic overhaul underlines its readiness for reform, but genuine economic transformation requires more than structural rearrangement. Historically, Vietnam’s relationship with private enterprise has swung between suspicion and co-optation, influenced heavily by the tension between ideological purity and economic legitimacy. Resolution 68 seeks to bridge this divide, rhetorically framing private enterprise as compatible with socialism – an approach that must outlast To Lam’s tenure to sustain lasting private-sector development.

South Korea’s experience offers Vietnam crucial lessons. Vietnam’s champions should embed transparency, regular external audits, and stringent performance monitoring from inception. Equally, global competitiveness—not mere size—should be the main benchmark of success. Moreover, champion-building must not overshadow the vibrant SME sector, Vietnam’s economic backbone, crucial for innovation and employment. Policies should bolster SMEs through accessible financing, tax breaks, dedicated technology parks, robust training infrastructures, and other incentives. National champions should integrate SMEs into their value chains rather than subdue them.

Navigating these challenges effectively positions Vietnam not only to replicate its East Asian neighbours’ successes but to craft a uniquely resilient economic model suited to its own development path amidst global uncertainties. The stakes could not be higher: whether To Lam’s initiative produces dynamic multinationals or entrenched cronies will determine if Vietnam can leapfrog to high-income status or, like many other developing economies, remains stuck perpetually in the middle-income trap.

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This is an adapted version of ISEAS Perspective 2025/50 published on 15 July 2025. The paper and its references can be accessed at this link.