State Giants and Private Empires: Who Really Runs Vietnam’s Economy

The most useful way to understand Vietnam’s economy is as a negotiation between a state that still owns the commanding heights and a private sector that now generates most of the growth. Neither side controls the other. State enterprises supply the electricity, the credit, the airports and the network; private conglomerates build the housing, the cars, the shops and the software; foreign factories make the phones and shoes that pay for imports. This article maps the three groups, explains how power moved between them and asks what the 2025 turn toward private champions means. It is part of the Vietnam Company Stories hub.

Why does the state still own so much of the economy?

Because Vietnam reformed by adding a private sector beside the state one rather than by privatising the state one, and because the Communist Party’s doctrine still assigns state enterprises the leading role in the economy. The Đổi Mới reforms of 1986 freed farmers and traders, and the 1999 Enterprise Law let private companies form freely; neither dismantled the state groups built on the Soviet model.

The result is a state sector concentrated in what the Party calls essential and strategic fields. Electricity of Vietnam generates and distributes most of the country’s power; Petrovietnam produces its oil and gas and runs its refineries; Viettel and VNPT own the telecoms networks; Vinacomin mines the coal; Vietnam Airlines is the flag carrier; the Vietnam Rubber Group holds the plantations; and Vietcombank, VietinBank, BIDV and Agribank, all state-controlled, hold roughly half of banking assets. How the largest of these operates, and why a monopoly can lose money, is examined in the EVN story.

Equitisation, the Vietnamese term for partial privatisation, has been slow and shallow. Thousands of small enterprises were converted to joint-stock form in the 2000s, but the state usually kept a controlling stake, and the big groups were mostly untouched. The plan for 2016 to 2020 called for the state to sell out of dozens of companies and raise hundreds of trillions of dong; a fraction of that was achieved. The reasons are familiar: valuation disputes, fear of being blamed for selling state assets cheaply and the anti-corruption campaign that made officials reluctant to sign anything.

How did the private conglomerates grow so fast?

By moving into the sectors the state neglected, property above all, and by using land and bank credit rather than equity markets to finance themselves. The founders profiled in this pillar illustrate the pattern. Phạm Nhật Vượng returned from Ukraine to build resorts and malls in 2001; Trần Bá Dương moved to an empty economic zone in 2003; Nguyễn Thị Phương Thảo won the first private airline licence in 2007; Trương Gia Bình turned a research institute’s trading arm into a software exporter.

Property was the master key. Provincial governments allocated land to developers who would build what the province needed, and the developers pre-sold apartments, borrowed from banks against the land and used the proceeds to enter other sectors. Vingroup’s entire industrial programme was funded this way, as the Vượng profile describes. Masan built a consumer empire; Hoa Phat built steel mills that out-produced the state; Sun Group built Phú Quốc and Đà Nẵng’s tourism infrastructure. Bank credit did the rest, with private banks such as Techcombank, VPBank and HDBank often controlled by the same families that owned the developers they lent to.

The growth was real. The domestic private sector now accounts for roughly half of GDP and more than 80 percent of employment, most of that in small firms and household businesses, but with a top tier of perhaps twenty groups that together rival the state sector in revenue. Vietnam counted about a million registered enterprises in 2024, the majority tiny; the ambition of Resolution 68 is to double that number while producing the twenty global-scale groups the leadership believes the country lacks.

Where do the foreign investors fit?

As the third owner, and in exports the dominant one. Foreign-invested enterprises produce around 70 percent of Vietnam’s exports, led by Samsung, whose Vietnamese plants alone account for something like a fifth of the total, and by the electronics supply chain around Foxconn, Luxshare, GoerTek and Intel. Garments, footwear and furniture are also largely foreign or foreign-financed. The mechanism, and the risks of depending on it, are set out in the Samsung Vietnam story.

The foreign sector interacts with the other two in specific ways. It buys electricity from EVN, land from state-linked industrial-park developers and Becamex-style provincial companies, and logistics from a mix of state ports and private operators. It hires from the same graduate pool that FPT and Viettel draw on. What it largely does not do is buy from Vietnamese private suppliers, whose share of value added in electronics remains small, which is the localisation problem every government since 2000 has promised to solve.

Foreign investors also own large minority stakes in the private champions: GIC and KKR in Vinhomes, Jardine in Thaco, SK Group in Masan and Vingroup, ThaiBev in Sabeco, foreign institutions at the 49 percent limit in FPT. They provide capital and governance pressure but rarely control. The pattern is that Vietnam lets foreigners own factories and shares, keeps infrastructure and banks in state hands, and leaves the consumer economy to domestic families.

What did the state enterprises get wrong?

They borrowed to diversify, lost money and left the state with the bill. The clearest case was Vinashin, the shipbuilding group that in the 2000s was encouraged to become a conglomerate, borrowed around $4 billion including a $600 million international bond, invested in shipping, steel, property and finance and collapsed in 2010. Its chairman was jailed, its debts were restructured over years and the affair became the cautionary tale for the whole sector.

Vinalines, the shipping and ports group, followed with losses on second-hand vessels and a floating dock bought for far above its value; its chairman fled abroad and was later sentenced to death, commuted on appeal. Petrovietnam’s construction arm, PVC, lost heavily on projects it was not competent to build, and its former head Trịnh Xuân Thanh was abducted from Germany in 2017 to face trial in Hanoi, a case that also ended the career of a Politburo member. The state banks accumulated bad debt that had to be parked in a special vehicle, a mechanism described in Vietnam’s bad-debt machine.

The response was institutional rather than a retreat from ownership. In 2018 the government created the Committee for Management of State Capital at Enterprises to act as owner of nineteen of the largest groups, separating ownership from the line ministries that regulated them. The committee was itself dissolved in the ministerial consolidation of early 2025 and its groups returned to the Ministry of Finance and other ministries, a reminder that the state has never settled how it wants to hold what it owns.

Why did the Party decide to back private champions in 2025?

Because growth targets of eight percent and above cannot be met by state enterprises and foreign factories alone, and because the leadership that took power in 2024 wanted a visible break with the caution of the preceding years. Tô Lâm, who became general secretary in August 2024 after the death of Nguyễn Phú Trọng, made administrative streamlining and private enterprise the centre of his economic programme.

Resolution 68, issued by the Politburo in May 2025, stated that the private economy is the most important driving force of the national economy, a phrase that reversed decades of doctrine placing the state sector first. It promised equal access to land, capital and public contracts, a reduction in inspections, decriminalisation of ordinary commercial disputes and support for private groups to take on national projects. Within weeks Vingroup’s VinSpeed and Thaco had bid to build the high-speed railway, and private developers were being invited into airports, ports and power.

The resolution also set numerical ambitions: two million enterprises by 2030, a private-sector contribution to GDP of 55 to 58 percent, and at least twenty large private groups participating in global value chains. Those targets say something about the leadership’s model, which is closer to South Korea’s chaebol-led industrialisation than to the Chinese state-capitalist template. Whether Vietnam’s family conglomerates, most of them property-based, can play the role that Samsung and Hyundai played in Korea is the open question.

How does the Party actually control private companies?

Through credit, land, licences and personnel rather than through ownership. The State Bank of Vietnam allocates annual credit-growth quotas to each bank, which means the government decides in aggregate how much the private sector can borrow and can lean on individual banks about where it goes, a system explained in the credit quota story. Land is state-owned and allocated by provinces; every developer’s fortune rests on allocations that can be reviewed. Aviation, banking, telecoms, mining and education require licences that the state can decline to renew.

Party organisation reaches inside the firms. Large private companies are expected to host Party cells, and the founders of the biggest groups hold positions in state-sponsored business associations and advisory bodies. Trương Gia Bình led the private-sector development board; Trần Bá Dương and Phạm Nhật Vượng have been consulted directly by prime ministers. The relationship is one of mutual dependence: the founders need the state’s land and licences, the state needs the founders’ capital and execution.

The Vạn Thịnh Phát case shows what happens when control fails. Trương Mỹ Lan controlled Saigon Commercial Bank through nominees for a decade, used it to fund her property group and extracted, according to the court, something like $12 billion, an amount close to three percent of GDP, before the State Bank intervened in 2022. The affair, examined in the Vạn Thịnh Phát story, revealed that inspectors had been bribed and that the formal controls on related-party lending had been meaningless. It hardened the leadership’s conviction that private power must be supervised even as it is promoted.

What does the balance of power mean for founders and investors?

For founders, the practical rule is that the private space in Vietnam is defined by what the state chooses not to do, and that the space is now widening. Sectors formerly reserved for state groups, from power generation to rail, are opening to private bidders, but the terms are set by the state and the political cost of failure is high. The founders who have prospered longest, the four profiled in this pillar, all chose sectors where they complemented state enterprises rather than confronted them.

For investors, the mapping matters for valuation. State-controlled companies such as Vietcombank, Vinamilk and Petrovietnam Gas trade on stable earnings and policy support, with limited upside from restructuring because the state rarely sells. Founder-controlled groups trade on growth and carry governance and political discounts that widen whenever a billionaire is arrested. Foreign-invested exporters are mostly unlisted in Vietnam and are exposed to the tariff and origin disputes covered in the tariff shock story. A Vietnam portfolio is, in effect, a bet on the relationship between the three groups.

For operators, the most important development is Resolution 68’s promise to reduce inspections and decriminalise commercial disputes, which if implemented would lower the cost of doing business with private counterparties. Implementation in Vietnam lags decree; the test will be whether provincial officials, who have learned that inaction is safer than action during the anti-corruption years, respond to the new signal.

Will Vietnam end up with chaebol, state champions or something else?

Most likely a hybrid that the country has already half-built: a small number of family-controlled private groups operating alongside a few large state groups, with the state retaining control of credit and land and using both sets of companies for national projects. The chaebol comparison is popular in Hanoi, but Korea’s groups were manufacturers and exporters from the start; Vietnam’s largest private groups are developers that later entered manufacturing, and their export record, VinFast apart, is thin.

The state groups are not disappearing. Viettel, the army-owned telecom, is the most internationally successful Vietnamese company of any ownership, with operations in ten countries, and its model, told in the Viettel story, suggests that a state enterprise with commercial freedom and no soft budget can compete anywhere. EVN and Petrovietnam will carry the energy transition. Vietcombank remains the most valuable listed company. The leadership’s 2025 message was not that the state should retreat but that the private sector should catch up.

What would change the picture is succession and scale. The first generation of private founders is in its sixties and seventies, and none has yet handed over control. If their groups survive the transfer, Vietnam will have durable private conglomerates for the first time; if they fracture, as many Southeast Asian family groups have, the state sector and the foreign investors will fill the gap. The question of who runs the economy will be answered less by resolutions than by what happens inside a handful of families over the next decade.

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