Vietnam has more than doubled its gross domestic product over the past eight years, becoming a high performer in the world’s fastest-growing region.
However, the famous finace paper also warned about the cost that Vietnam would have to pay for being the “Asia’s newest tiger economy”.

"One consequence is it’s now well-enough off to be disqualified from getting development funding from international institutions on a “concessional” basis at well below market rates. The country graduated from most concessional financing from the World Bank at the end of June, and it’s currently rated a “blend” borrower from the Asian Development Bank -- one step up from solely getting the cheapest financing. As the discounted funding rolls off, Vietnam will need to turn more to the bond market -- boosting the supply of emerging-market securities that global investors have been happy to snap up in recent years.", according to Bloomberg.
“This is a clear sign of Vietnam’s remarkable development success -- it’s now a middle-income country,” Sebastian Eckardt, the World Bank’s lead economist in Hanoi, said in an interview with Bloomberg. “Vietnam’s financing needs are growing rapidly, and official financing will not be enough to meet the development needs of the country -- so an increasing share of the financing will have to be mobilized from capital markets.
According to data compiled by Bloomberg, About 70 percent of Vietnam’s $13.2 billion worth of outstanding bonds are onshore, with the rest issued in dollar-denominated notes. Its most recent offshore issue was in November 2014, when it sold $1 billion of 4.8 percent 10-year securities.
“They will probably rely more heavily on the external bond market in the future than they have done in the past,” said Mark Baker, investment director for emerging-market fixed income at Standard Life Investments Ltd. Baker said last month that he had sold his holdings of the dollar debt due in 2024 as they were “performing so well,” but is hanging on to notes due in 2020 that have a higher coupon, at 6.75 percent.
Alongside greater tapping of the capital markets, Vietnam probably will also look at asset sales and tax reforms, according to Andy Ho, chief investment officer and managing director at VinaCapital Group, the nation’s largest fund manager. “Vietnam can borrow in the international markets, but if they borrow too much it becomes dangerous,” he said.
“It’s good news for Vietnam" to move off concessional financing, Ho said. It means "You’ve done well, you’ve been recognized, you don’t need any more handouts. It’s like a kid growing up.”