On a PKF fact-finding tour of Vietnam in August 2017, I was deeply impressed by the nation’s potential and foresaw its energetic young workforce emerging as a force in one of the world’s fastest-growing economies.
I was not driven astray, since last year Vietnam’s GDP grew by 8%, beating a forecast of 7.7% but still falling short of the government’s target of 8.3-8.5%, which would have needed an extraordinary boost in the final quarter.
For the uninitiated, let me give some historical background to this phenomenal country, now counting 102 million citizens (its superficial area is 1,000 bigger than us).
Over the 20 years leading up to 1975, the country endured a heavy burden of war, which led to stagnation. Its economy was primarily agricultural, underdeveloped, and struggling with widespread poverty, largely due to years of centralised economic planning under Communist rule. It also faced international isolation with limited access to foreign markets. It comes as no surprise that its low GDP reflected significant poverty and underdevelopment, with the economy heavily reliant on subsistence agriculture, particularly rice-farming, which attracted little foreign investment.
A typical Communist style of a centrally-planned economic system, linked to post-war isolation; resulted in further restricted foreign investment and trade relations. By the mid-1980s, Vietnam’s GDP per capita was stuck between $200 and $300. Gradual reforms in the economy saw rapid economic growth. It led to substantial reductions in poverty and growth of a middle-class with rising discretionary spending. However, significant changes were implemented such that the government introduced “Đổi Mới”, a series of economic and political reforms, that shifted the nation towards a “socialist-oriented market economy”.
This was a miracle cure for a mainly agrarian economy. The export basket shifted from being almost exclusively focused on garments and footwear toward higher value-added products such as electronics, mobile phones, components, and machinery, as well as more complex manufacturing. Vietnam actively courted export-oriented Foreign Direct Investment (FDI) and became an assembly and manufacturing hub for global brands. Multinationals established large factories that brought jobs, capital, and technology transfer. The creation of industrial parks, special economic zones, and logistics infrastructure (ports, roads, and power) provided turnkey locations for investors.
Swift accession to the WTO in 2007 was pivotal for investor confidence and market access. The importance of more recent trade agreements (for example, the CPTPP, the EU-Vietnam FTA, and numerous bilateral FTAs) should not be underestimated, as they further opened markets and encouraged exporters to climb the value chain. Its most dynamic economies were subjected to bold economic reforms, starting with the attraction of FDI, faster integration into global trade, and diligent educational programmes to upgrade its relatively young generation of workers.
Massive FDI inflows, especially from Korea, Japan, Taiwan and China invested in electronics, consumer goods and component manufacturing facilities. Now, it is focused on digital transformation, high-value manufacturing, and sustainable development, such that industry and construction account for around 38% of Vietnam’s GDP, reflecting a profound structural shift in the economy. The country has emerged as a major manufacturing hub in southeast Asia.
A new generation of domestic conglomerates such as Vingroup, Viettel, Masan, FPT, Hoa Phat, and Vinamilk has scaled up, investing in property, telecommunications, manufacturing, technology, and services, while rapidly integrating into the global supply chains of firms such as Samsung, LG, Intel, and Foxconn. This digital transformation has emerged as a key growth accelerator. The digital economy reached an estimated 18.3% of GDP in 2024, expanding at over 20% annually. At the same time, Vietnam’s startup scene is booming in fintech, e-commerce, logistics, AI, and green technology, attracting billions of US dollars in venture capital each year and ranking among the most vibrant in the region.
Malta’s growth since 1964, when it functioned as a fortress economy, has been driven by specific sectors such as tourism, gaming, and finance, with little or no venture capital, whereas Vietnam benefits from a broader industrial base supported by a substantial investment sector. Back home, Castille is proudly baking a roadmap styled Vision 2050. This is our magical carpet to sweep us into the promised AI wonderland. It identifies seven strategic, high-value sectors, selected not for their ability to employ large numbers of low-skilled workers. It tells us how the country wishes to address the flood of TCNs and plan for a 4% growth target in 2026.
Last September, we welcomed the Deputy Minister of Foreign Affairs Le Thi Thu Hang who was greeted by Deputy Prime Minister, Minister of Foreign Affairs and Tourism of Malta Ian Borg. Both parties agreed to continue effectively exploiting the Vietnam-EU Free Trade Agreement (EVFTA), promoting EU countries to soon ratify the Vietnam-EU Investment Protection Agreement (EVIPA), thereby enhancing investment attraction between Vietnam and the EU in general, and with Malta in particular. As a country with strengths in maritime economy and shipping, Malta affirmed its readiness to enhance cooperation with Vietnam in training sailors and crew members to international standards, developing tourism, and promoting the signing of maritime cooperation agreements.
In conclusion, can Malta, a tiny island with no natural resources, grow its economy by 2026 at a pace matching Vietnam’s target of over 8%? Only time will tell, barring the usual trade disruptions that often accompany election years.
George M. Mangion is a senior partner at PKF Malta
