Old growth model cannot make Vietnam rich: World Bank official

Vietnam needs a new growth model focused on productivity and better jobs to achieve high-income status by 2045, according to Mariam J. Sherman, World Bank country director for Vietnam, Cambodia and Laos.

Speaking at the U.K.-Vietnam Business Forum in Ho Chi Minh City on Oct. 29, Sherman said the country had made major progress since the Doi Moi (Renovation) reforms, rising from one of the world's poorest nations to an upper-middle-income economy.

GDP per capita has increased sixfold to more than US$5,000, driven by trade liberalization, foreign investment, the shift of workers from agriculture to manufacturing and capital accumulation. Vietnam's capital stock has doubled about every 6.5 years.

"But the formula that brought Vietnam to where it is today will not take it to high-income status," Sherman said, warning that the country's three main growth drivers — a large workforce, rapid capital accumulation and deeper trade integration — were nearing their limits.

Mariam J. Sherman, World Bank Country Director for Vietnam, Cambodia, and Laos, speaks at the U.K.-Vietnam Business Forum in HCMC on Oct. 29, 2026. Photo courtesy of BritCham

Vietnam's working-age population peaked in 2014, while the share of people aged over 65 is projected to double to 14% by 2035. The country risks growing old before becoming rich, making productivity gains increasingly important, Sherman said.

A manufacturing worker in Vietnam generates about $6.70 in value added per hour, less than half the level in China.

Sherman also described a "dual economy," in which foreign-invested companies account for 73% of exports and generally have higher productivity and wages than domestic firms, while links between the two sectors remain limited.

"This is the heart of the challenge. Vietnam's exports have become more sophisticated, but jobs for Vietnamese workers have not kept pace," she said.

Four priorities for the next growth phase

The World Bank has identified four priorities to help Vietnam reach high-income status by 2045.

The first is to improve job quality and close the skills gap, particularly in digital and technical fields. The rise of artificial intelligence makes it more urgent to align education and training with labor market needs, Sherman said.

The second is to improve connections between markets, people and regions. High logistics costs and pressure on electricity supplies highlight the need for transport and energy infrastructure upgrades, which the World Bank estimates will require about $400 billion.

The third is to turn climate risks into economic opportunities. Vietnam is highly vulnerable to climate change, which could reduce GDP by 12.5% by 2050 without adequate action. Its energy intensity is twice the East Asian average, while emissions linked to exports account for more than a third of national emissions.

A well-designed decarbonization strategy could increase GDP by nearly 3% by 2040, according to the World Bank.

The fourth priority is institutional reform. Sherman said the government needed to shift from directly planning and producing to enabling and regulating economic activity as the economy becomes more complex and innovation-driven.

British Ambassador to Vietnam Iain Frew said the global economy was undergoing major changes, with the shift to cleaner energy creating new industries and geopolitical developments highlighting the need for resilience and reliable partnerships.

He said Vietnam's Resolution 68 on private sector development, Resolution 57 on science, technology and innovation, and Resolution 10 on attracting high-quality investment set out an ambitious vision for the country's next growth phase.

The U.K. is ready to support Vietnam in capital market development, workforce training, technology, innovation and green growth, he added.

Bilateral trade in goods and services has reached £10.5 billion (US$13.9 billion), double the 2020 level. The U.K.-Vietnam Free Trade Agreement and both countries' membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are creating business opportunities by reducing trade barriers and helping diversify supply chains, Frew said.

Denzel Eades, chairman of the British Chamber of Commerce Vietnam (BritCham), speaks at the forum on Oct. 29, 2026. Photo courtesy of BritCham

Denzel Eades, chairman of BritCham, called Vietnam's economic transformation "one of Asia's most impressive growth stories" and said British investors were committed to expanding their presence in the country.

"With our strengths in finance, innovation, education, and sustainability, we look forward to working with the government and industry partners to help realize Vietnam's vision of becoming a prosperous, high-value, and globally connected economy by 2045," he said.

The U.K.-Vietnam Business Forum, BritCham's largest annual economic dialogue, was held in partnership with the Ho Chi Minh City Center for the Fourth Industrial Revolution (HCMC C4IR) as part of the 2026 Autumn Economic Forum.