Vietnam’s economy is one of the fastest-growing in the world. Can it make the leap into the ranks of middle-income countries?

Hail a taxi in Vietnam’s busy Ho Chi Minh City, and you may be surprised to be picked up by a cyan-colored, modern-looking EV. Unlike the motorcycles and scooters that dominated the city’s streets for years, these electric taxis are both comfortable and homegrown; they’re made by VinFast, an ambitious (and expensive) project by Vingroup—one of Vietnam’s largest privately owned companies—that aims to turn the Southeast Asian country into a car manufacturer.

It’s not the only indicator of change on Vietnam’s city streets. Fancy Western-style coffee shops, luxury hotels, and high-end consumer brands dot Ho Chi Minh City, even as many Vietnamese continue to eat their lunch on plastic stools in hole-in-the-wall eateries right next door.

It’s the kind of vibe that’s only found in a country that’s growing—and growing quickly. And it’s not just the consumer economy. Manufacturing, real estate, infrastructure, and tourism are all expanding. “You license a project in six months, you build it in 12,” says Michael Piro, co-CEO of Indochina Capital and an investor in industrial real estate. “It’s so easy. I’ve never seen, in my 20-year career, an opportunity like this.”

Vietnam’s economy grew by 8% last year, almost double the rate recorded across the rest of Southeast Asia. (Malaysia, at 5%, was in second place.) With a GDP of $527 billion, Vietnam’s economy has already overtaken Malaysia and the Philippines, and is quickly catching up to Thailand. The VN-Index, the country’s benchmark stock index, has climbed more than 35% over the past 12 months. And this September, FTSE Russell will upgrade Vietnam to secondary emerging-market status, which could unlock billions of dollars in passive fund flows.

It has also, for now, stabilized its relationship with the U.S., its most important customer. In October, Vietnam secured an agreement from Washington that set U.S. tariffs at 20%, far below the 46% originally threatened on “Liberation Day” in April 2025 and roughly in line with rates imposed on other ASEAN economies. Over $190 billion worth of Vietnamese goods are bound for U.S. customers every year.

“Vietnam has done quite a lot of things right, no matter how you look at it,” says Alberto Vettoretti, a top ASEAN executive for Ascentium, an Asian business services firm that helps companies enter Vietnam.

Yet Hanoi isn’t content to rest on its laurels. The government wants Vietnam to grow by 10% annually by 2030, and reach high-income status by 2045, a feat that would require a near tripling of the country’s per capita gross national income from around $4,500 to $14,000. Only a handful of countries have pulled that off—and just one other country, China, has successfully changed from being a centrally planned economy to a manufacturing and consumption powerhouse.

Can Vietnam copy China’s playbook? It has a stable government that’s laser-focused on economic development; an export-oriented manufacturing sector that’s climbing up the value chain; a diplomatic strategy that’s friendly with Washington, Beijing, and Moscow at the same time; and a fast-growing middle class.

But on the ground, executives and investors who know the country best are asking harder questions about Hanoi’s ambitions. Can Vietnam get enough capital for the economy it wants? Does it have enough workers and human capital? And does it have enough time?

“We want to achieve the government’s target,” says Nguyen Thu Hang, CEO of Vinhomes, Vingroup’s real estate business. “But the most challenging thing isn’t just the short term, but whether we can achieve this high-growth rate and make it more sustainable.”

After reunification in 1976, the Vietnamese Communist Party tried to build a centrally planned economy, with nationalized enterprises, collective agriculture, and fixed prices. A decade later, things were coming undone, with hyperinflation and declining foreign aid from the Soviet Union forcing a change.

In 1986, General Secretary Nguyen Van Linh launched Doi Moi, or “renovation,” which was a sweeping package of reforms that allowed foreign investment, private ownership, and a new stock market. Vietnam also rebuilt ties with former enemies like China and the U.S., the latter of which lifted its trade embargo in 1994.

Still, things were difficult in those early days. “The private sector wasn’t really investable at that point,” remembers Chris Freund, founder of Mekong Capital. “The people you partnered with had no personal stake in the long-term success of the business. They didn’t receive bonuses based on the company’s value, and all they could get is how much they could siphon out.”

The pivot came in the mid-2000s, right as Vietnam joined the World Trade Organization. When Piro arrived in 2006, “there was a pervasive sense of optimism around the WTO and what it was going to mean for Vietnam. Back then, the whole market was in its infancy; people would say, ‘Wow, this restaurant has........

© Fortune