To become a dragon, Vietnam can’t afford to idolize tech
Vietnam’s digital economy is among world’s fastest-growing but to truly sprout wings decisive tech sector action is needed
The 13th National Congress of the Communist Party held in 2021 set a goal of transforming Vietnam into a developed, high-income country by 2045, identifying science, technology and innovation as the primary engines for this journey.
However, for the nation to truly “turn into a dragon,” this technological drive cannot stand alone. It must be intrinsically linked to institutional reform, human resource development and a robust industrial foundation.
Policymakers must therefore remain clear-headed and avoid an overreliance—or “idolization”—of technology, especially when institutional frameworks and implementation capacity remain underdeveloped.
Growing digital economy
An assessment of Vietnam’s technological capability reveals a complex picture. According to the World Intellectual Property Organization (WIPO), the country ranked 44th out of 133 countries in the 2024 Global Innovation Index and was praised for its promising development potential.
However, this high-level ranking is tempered by low foundational investment; Vietnam’s spending on research and development reached only about 0.43% of GDP in 2021, significantly lower than that of Asia’s leading technology economies. This reflects a pattern in which the country’s strengths lie in output indicators such as high-tech exports, while its weaknesses are concentrated in human capital and institutional quality.
Despite these challenges, the digital sector has become a notable bright spot. In 2024, the Ministry of Information and Communications reported that digital technology enterprises generated approximately US$158 billion in revenue.
The country had about 73,788 digital tech firms, with foreign market earnings estimated at $11.5 billion, while hardware and electronics exports alone accounted for roughly $133.2 billion. These figures show that “Vietnamese digital enterprises are gradually shifting from assembly and outsourcing to creation, self-design and mastery of core technologies.”
The macroeconomic momentum from this shift has also become clearer. In 2024, the digital economy was estimated to account for 18.3% of GDP, growing at an average annual rate above 20%—the fastest in Southeast Asia. With Vietnam among the ten fastest-growing e-commerce markets in the world, the digital economy is undeniably playing an increasingly important role in national development.
Concerning limitations
Alongside these positive signals, Vietnam’s technology sector faces clear and serious limitations.
First, the country still relies heavily on assembly within the technology value chain. According to the General Statistics Office, the electrical and electronic sector exported about $126.5 billion in 2024. However, domestic value-added remains thin, as local enterprises control few stages involving design, standards or intellectual property.
Second, the semiconductor industry—the backbone of the digital economy—remains nascent. Recent foreign direct investment from multinational corporations such as Amkor Technology, Hana Micron and Intel has spurred growth in assembly, testing and packaging (ATP), but domestic capacity remains limited.
A 2024 report by the Semiconductor Industry Association and Boston Consulting Group projected that Vietnam could increase its global share of ATP from about 1% in 2022 to 8-9% by 2032. However, domestic capability in high-value areas such as design and front-end fabrication remains embryonic, with the outlook depending heavily on the execution of effective technology transfer policies.
Third, the bottleneck in high-quality human resources remains unresolved. The government has announced a goal of training 50,000 semiconductor engineers by 2030, supported by a long-term development program.
However, translating these ambitions into practical capability will require internationally standardized research programs, hands-on training opportunities and open mechanisms to attract foreign experts.
Regional lessons
To capitalize on its latecomer advantage, Vietnam can draw crucial lessons from the focused strategies and policies of its regional neighbors.
South Korea offers a lesson in the scale of investment required. The country maintained one of the highest R&D intensities in the OECD, spending 5% of its GDP in 2023. In April 2025, the South Korean government announced plans to expand semiconductor investment to 33 trillion won (about $23.2 billion) and unveiled a plan to construct a “mega semiconductor cluster” by 2047, supported by significant tax and infrastructure incentives.
Taiwan, meanwhile, provides a model for technological depth and dominance. The island’s R&D expenditure reached NT$937.3 billion ($30.63 billion) in 2023, with 78.1% driven by its electronics and optoelectronics industries.
This decades-long strategy—focused on core technology and close industry-academia collaboration—has enabled firms like TSMC to produce about 90% of the world’s most advanced chips and to create a “silicon shield” by attracting foreign R&D centers.
Singapore, in contrast, demonstrates the value of building a symbiotic ecosystem. Rather than investing in massive factories, it targets resources to connect R&D with enterprise. R&D spending was 1.8% of GDP in 2022, guided by a S$25 billion plan focused on “promoting technology transfer and strengthening firms’ innovation capacity.”
While Singapore spends less than South Korea, its policy consistency and discipline have turned it into a global hub for tech startups, entrepreneurs and investors.
What should Vietnam do ?
From the experiences of East Asian economies, two crucial areas of investment stand out for Vietnam.
The first is the “depth” of knowledge investment. With Vietnam spending only about 0.43% of its GDP on R&D—a fraction of the 2.62% world average—expecting breakthroughs in core technology is unrealistic.
This challenge is compounded by a substantial gap between research and application. A study by two lecturers at Hanoi Law University describes the country’s R&D ecosystem as “fragmented,” with little collaboration among government regulators, private firms and research institutes, limiting the commercialization of innovation.
Second, regional policy models offer clear lessons. South Korea employs large, stable support packages; Taiwan focuses on core technologies; and Singapore prioritizes institutional connectivity.
Drawing from these examples, Vietnam should pursue a more feasible roadmap with specific, prioritized objectives rather than spreading resources too thin. This requires action across several interconnected fronts.
On institutions and supply chains, Vietnam needs to refine mechanisms for selecting national-level science and technology missions and link public funding with corporate sponsorship. South Korea’s use of credit incentives and streamlined procedures offers a model for stimulating employment and attracting talent.
At the same time, the country should identify sectors of relative advantage—such as assembly, testing and packaging (ATP)—for deep investment. FDI incentives must be tied to technology transfer commitments and co-development with domestic firms, not just tax holidays.
On human resources, the target of 50,000 semiconductor engineers by 2030 must be accompanied by standardized benchmarks and industry co-designed training programs. Taiwan’s experience underscores the value of tight “government–university–industry” linkage, where students and engineers gain hands-on experience on real production lines. Without such links, even large-scale training efforts will struggle to generate competitive capability.
Effective governance also requires better data and a stronger focus on inclusivity. While the digital economy’s 18.3% share of GDP is encouraging, the next step is to disaggregate these contributions by sector and region to design more effective policies. This is crucial for addressing the wide gap in technological literacy between adaptive urban centers and lagging rural regions, ensuring national initiatives are inclusive.
Ultimately, policymakers must avoid “idolizing” technology when institutional foundations and execution capacity are not yet in place. Around the world, major semiconductor projects have collapsed due to bureaucracy, infrastructure gaps or labor shortages.
South Korea’s success stems not only from financial capacity but from disciplined implementation and strong domestic enterprises. Taiwan does not just have TSMC—it has a “TSMC ecosystem” supported by a highly educated, well-paid and prestigious workforce.
The lesson for Vietnam is to patiently build reliable and transparent supporting industries and institutions that instill investor confidence, while concurrently training competent specialists with solid skills.
Vietnam’s potential for technological breakthroughs is evident in its expanding digital economy, high-tech exports and rising semiconductor investment. However, to translate this promise into reality and truly “become a dragon” by 2045, a series of decisive actions is required.
The country must elevate R&D spending, concentrate resources on high-priority clusters, standardize training in semiconductors and AI to international levels, and intrinsically link FDI incentives directly to technology transfer and localization. Only then can technology genuinely serve as the engine propelling Vietnam toward stronger development and deeper global integration.
By Nguyen N Hanh – Asia Times – October 18, 2025