Country Risk

Country risk in Vietnam is moderate. The OECD has a country credit grade of 4. The three major ratings agencies have sub-investment grade sovereign credit ratings. This indicates a moderate risk that Vietnam will be unable and/or unwilling to meet its external debt obligations. Strong growth potential, ongoing commitment to pro-market reforms, robust FDI inflows and political stability support Vietnam’s ratings. But widespread corruption, weakness in the banking sector and inefficiencies in state-owned enterprises constrain risk ratings.

The World Bank ranks Vietnam 70th out of 190 economies in the ease of doing business survey. Vietnam outperforms emerging Asian peers in most areas of doing business, particularly access to credit and electricity and dealing with construction permits.

Vietnam’s scores on Worldwide Governance Indicators are broadly in line with, or stronger, than the average for emerging Asian countries. The notable exception is voice and accountability.

The risk of expropriation in Vietnam is low, consistent with the governance scores around the control of corruption and rule of law. The government can only expropriate investors’ property in cases of emergency, disaster, defence, or national interest. The government is required to compensate investors if it expropriates property.

Political risk in Vietnam is moderate. The political and security environment have a track record of stability. President Nguyen Phu Trong’s recent election to a third five-year term as general secretary supports policy continuity in the near term, including policies to attract investment. Territorial disputes in the South China Sea remains an ongoing risk to Vietnamese relations with neighbouring countries, including China.