Channeling capital flows into production

Notable Figures

In the first eight months of 2025, credit growth reached more than 11%, a highly positive basis for meeting – or even surpassing – the 16% full-year target as set at the start of the year. Bank loans as a backbone of the economy continue to be reinforced.

According to the State Bank of Vietnam (SBV), of the VND 17.2 quadrillion in total outstanding loans as of July 2025, about VND 4.08 quadrillion went into real estate. Bank loans to the property sector grew 16.95% compared to the end of 2024, higher than overall credit growth, and accounted for 23.68% of the total outstanding debt of the economy.

Capital flowing into production has been slower than into real estate and even securities. This is not unique to 2025. Looking at the broader period of 2021–2025, the Government’s midterm report submitted to the National Assembly Standing Committee shows average annual credit growth of 7.15% in agriculture, forestry, and fisheries; 10.63% in industry and construction; and 16.46% in trade and services. Priority sectors also grew steadily: agricultural and rural lending expanded 12.64% annually; lending to small and medium-sized enterprises (SMEs) rose 10.88% a year.

The data spanning the Covid-19 period and the subsequent recovery reveal that production slowed, capacity to absorb capital weakened, and international factors such as supply chain disruptions, geopolitical conflicts, and global realignment of supply chains further hindered investment absorption. The surge in credit into the stock market—over 57% during the same period—reflected a phase when equities became a “super-magnet” for money.

This highlights that only when manufacturers expand output does credit absorption accelerate. SBV Governor Nguyen Thi Hong emphasized the need for coordinated solutions: trade promotion to increase export orders, stronger exploitation of domestic demand, and measures to ensure firms have viable projects to qualify for credit. She also stressed improving SME access to credit, including through enhanced loan guarantees.

Directing Capital Flows

Statistics show that the supporting industries and high-tech sectors recorded capital growth rates close to the average for real estate—around 18% between 2021 and 2025. These sectors are key components of the private economy, focused on manufacturing and exports, while also aligning with new drivers such as innovation, the digital economy, and the green economy.

According to the Government’s report, the VND 500 trillion credit program for enterprises investing in infrastructure and digital technology has been backed by 21 banks committed to providing funding under Decision No. 1490/QD-TTg. By the end of June 2025, pilot banks had disbursed VND 5.2 trillion.

To accelerate disbursement, the Government issued Decision No. 1131/QD-TTg on June 12, 2025, which set out a list of strategic technologies and products eligible for support. However, proposals from banks—such as more flexible provisioning for infrastructure loans or temporary relaxation of capital adequacy ratios—have not yet been considered. At a time when banks are being required to raise capital to Basel III standards to qualify for the lifting of lending caps, this creates a “paradox” that makes it harder to release large volumes of credit.

For priority sectors tied to rural livelihoods and billion-dollar export categories such as agriculture, forestry, and fisheries, the SBV recently expanded the credit program ceiling from VND 100 trillion to VND 185 trillion. This package has proven effective in meeting targets, but channeling funds could face new challenges as Vietnamese wood and furniture products confront steep tariffs in the U.S. market. The problem circles back to the need for market diversification, requiring joint efforts from both the Government and enterprises.

In the context of a volatile global economy, with Vietnam’s production still heavily dependent on exports, economist Nguyen Duc Kien noted that in the final months of 2025, weakening demand in major markets, high inventory levels, and intensifying competition as many countries ramp up exports will weigh heavily on growth. He emphasized that Vietnam should increasingly focus on domestic consumption to meet its growth targets. Stronger domestic demand is also expected to serve as a pillar for absorbing and effectively channeling capital into growth objectives from 2026 onward, along with job creation through public investment and income improvement.