Vietnam Manufacturing Tracker: A First-Half 2026 Review

The manufacturing sector is the cornerstone of Vietnam's economic growth and resilience. The government has undertaken several initiatives to leverage the country's inherent strengths, resulting in tangible outcomes supported by compelling data. The Vietnam Manufacturing Tracker by Vietnam Briefing offers the latest data, insights, and policy updates to keep foreign investors and analysts informed about the industry.

Over the past few decades, Vietnam has effectively leveraged its key advantages to become a major player in global supply chains, with its role gaining even more prominence amid the "China Plus One" production relocation strategy.

This growing importance is primarily driven by Vietnam’s labor-intensive manufacturing sector, characterized by relatively low labor costs, well-developed export infrastructure, and a strategic location on major trade routes.

The Vietnamese government has been proactive at both national and provincial levels, implementing measures such as national schemes, generous corporate income tax breaks for high-tech companies, and the development of specialized industrial zones.

Vietnam's economic growth outlook

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As Vietnam achieved a notable 8.18 percent GDP growth in the H1 2026, international institutions have projected a positive outlook for the year, projecting growth between 7.2 and 8.5 percent.

The positive forecasts reflect Vietnam's resilient economic fundamentals, continued export recovery, and strong investment momentum despite ongoing global uncertainties.

Meanwhile, Vietnam’s government has also set an ambitious target of a 10 percent increase in 2026.

GDP and the value added by the manufacturing sector

Vietnam's GDP grew 8.18 percent year-on-year in the first half of 2026, up from 7.63 percent in the same period of 2025. The industry and construction sector expanded by 9.81 percent, contributing 47.20 percent to overall economic growth.

Industrial activity maintained strong momentum, supported by strengthened growth drivers, recovering export orders, and the positive spillover effects of public investment. Industrial value added rose 9.86 percent year-on-year in the first six months of 2026, accounting for 40.35 percent of total economic value-added growth.

Manufacturing and processing remained the economy's primary growth engine, with value added increasing 10.23 percent, contributing 33.07 percent to overall economic growth.

For further information, see: Vietnam Economic Performance in 2025: GDP, FDI, and Trade

Vietnam Manufacturing Purchasing Managers’ Index (PMI)

The S&P Global Manufacturing PMI reflects the manufacturing sector’s performance by surveying 400 firms in the industry. The PMI is built on five weighted sub-indexes:

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• New orders (30 percent)
• Output (25 percent)
• Employment (20 percent)
• Suppliers’ delivery times (15 percent)
• Stock of items purchased (10 percent)

A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month, below 50 represents a contraction, while 50 indicates no change.

Vietnam’s monthly manufacturing PMI data

Highlights from Vietnam’s PMI in June 2026:

• Marked rise in production amid sustained new order expansion
• Inflationary pressures ease sharply
• Employment continues to fall

Vietnam's PMI posted 51.8 in June 2026, down from 52.8 in May but still above the 50.0 no-change mark, maintaining the sector's positive performance. The month marked a continued improvement in Vietnam's manufacturing sector, with new orders and output continuing to expand, driven increasingly by improving customer demand rather than precautionary stockpiling.

Input cost pressures also eased significantly during the month, supporting a more favorable operating environment. However, employment declined for the fourth consecutive month, indicating that production workloads have yet to fully recover.

Looking ahead, manufacturers remain optimistic that the sector will maintain its growth momentum in the second half of 2026, provided the global business environment becomes more stable.

Index of Industrial Production (IIP)

The IIP is an indicator that evaluates the growth rate of industrial production monthly, quarterly, or yearly. It reflects industrial production growth in general and the growth rate of each commodity in particular.

The IIP is calculated as a percentage of the industrial production generated in the current and base periods.

Employment in manufacturing

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Vietnam's labor market remained resilient in the first half of 2026, supported by continued expansion in the industrial sector. The labor force aged 15 and above reached 53.7 million people during the first six months of the year, an increase of 690,700 compared to the same period in 2025.

Employment in Vietnam's industrial sector continued to increase in mid-2026, reflecting sustained manufacturing activity. As of June 1, 2026, the number of workers employed by industrial enterprises increased 3.1 percent year-on-year.

By ownership type:

• State-owned enterprises (SOEs): Employment was unchanged from the previous month and increased 1.4 percent year-on-year.
• Private enterprises: Employment rose 0.5 percent month-on-month and 2.4 percent year-on-year.
• Foreign-invested enterprises (FIEs): Employment recorded the strongest growth, increasing 1.3 percent month-on-month and 3.1 percent year-on-year.

By industry:

• Manufacturing: Employment increased 1.0 percent month-on-month and 3.2 percent year-on-year, continuing to drive overall job creation.
• Electricity, gas, steam, and air conditioning supply: Employment rose 0.1 percent month-on-month and 2.1 percent year-on-year.
• Water supply, waste management, and wastewater treatment: Employment increased 0.1 percent month-on-month and 3.8 percent year-on-year.
• Mining: Employment remained unchanged from the previous month but declined 0.6 percent year-on-year.

Also read: Vietnam Wages in 2025: Overview, Trends and Implications for Investors

Note: (*) Data from 2021-2023 were calculated following the ICLS19 standard. Under ICLS19, people working to produce self-sufficient products in the agriculture, forestry, and fishery sectors will not be identified as employed as per the ICLS13 standard.

Foreign direct investment in Vietnam’s processing and manufacturing industry

Vietnam’s merchandise exports

Vietnam's merchandise exports maintained robust growth in the first half of 2026, with total export turnover reaching US$266.52 billion, up 21.0 percent year-on-year.

By economic sector:

• Domestic enterprises: Exported US$53.51 billion, up 4.6 percent year-on-year, accounting for 20.1 percent of total exports.
• Foreign-invested enterprises (including crude oil): Exported US$213.01 billion, up 26.0 percent year-on-year, representing 79.9 percent of total exports.

Key export highlights:

• 29 export products generated more than US$1 billion in export value, accounting for 92.1 percent of total exports.
• Five products exceeded US$10 billion in export value, contributing 62.6 percent of total exports.

Export composition:

• Manufactured goods remained the dominant export category, reaching US$239.8 billion and accounting for 90.0 percent of total merchandise exports in the first half of 2026.

Incentives for investing in Vietnam

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Vietnam’s Law on Investment specifies the three forms of incentives that are available to companies operating within the country:

• Corporate income tax (CIT) incentives, including various preferential tax rates and tax holiday rates;
• Import duty incentives; and
• Exemption or reduction of land rents and levies.

The CIT incentives can be granted to investments based on whether they belong to prioritized or government-encouraged sectors and/or are established in economic zones or disadvantaged locations, etc.

New incentives to boost private sector growth

On January 15, 2026, the Vietnamese government issued Decree 20, which provides detailed regulations and implementation guidance for several provisions of Resolution 198 on special mechanisms and policies to promote private sector development.

These provisions collectively establish a framework of targeted incentives covering tax relief, access to land and business premises, support for innovation and digital transformation, and capacity-building measures for the private sector.

For a better understanding of these appealing policies, please read:

• Vietnam Private Sector to Enjoy Special Policies: Resolutions 198 and 139
• Driving Vietnam’s Private Sector Growth: Incentives under Decree 20/2026

New tax regime with amended CIT Law

The National Assembly’s approval of Vietnam’s amended CIT Law on June 14, 2025, marks an important change in the country’s tax regime. While the headline tax rate remains unchanged, the underlying structure of how corporate incentives are granted has shifted, especially for manufacturing companies operating in industrial parks.

For further information, see: 2025 CIT Law: Implications to Manufacturing Companies in Industrial Parks

Industrial park classification in Vietnam

Industrial parks in Vietnam fall under three categories according to Decree No. 82/2018/ND-CP on the management of industrial parks and economic zones. These are as follows:

• Export processing zones: Industrial parks focused on manufacturing goods for export and providing services to support production for export. These zones must comply with the conditions, processes, and procedures outlined in the Decree.
• Auxiliary industrial areas: Industrial parks specializing in manufacturing auxiliary products and providing related services. Up to 60 percent of the rentable industrial land within these parks can be leased or re-leased for auxiliary industry projects.
• Eco-industrial parks: Industrial parks that emphasize cleaner production, efficient use of natural resources, and cooperation among enterprises to enhance economic, environmental, and social benefits through industrial symbiosis.

Vietnam’s national policy framework for manufacturing development

Recognizing the importance of the manufacturing sector and industrial development to the health of the overall economy, Vietnam’s government has implemented several national schemes to further promote these areas.

Strategy on exports and imports for 2011-2020, with a Vision to 2030

Former Prime Minister Nguyen Tan Dung approved the Strategy on Exports and Imports for 2011-2020, with a Vision to 2030 in his Decision 2471/QD-TTg dated December 28, 2011.

This framework outlines specific targets and implementation strategies for the manufacturing sector:

• Export orientation: Focus on developing high-tech and advanced products in the processing and manufacturing industries.
• Production and economic restructuring: Encourage and attract investment in supporting industries to meet domestic needs and integrate into the global supply chain, particularly in manufacturing mechanics, electronics, automobile components, textiles, footwear, and high technology.

Industrial Development Strategy Through 2025, with a Vision to 2035

The Industrial Development Strategy Through 2025, with a Vision Toward 2035, was approved under Decision No. 879/QD-TTg dated June 9, 2014. This strategy set specific development priorities for the following processing and manufacturing sub-sectors:

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• Mechanical engineering and metallurgy;
• Chemicals;
• Agricultural, forestry, and fishery product processing; and
• Garments, textile, leather, and footwear.

National Industrial Development Policy by 2030 with a Vision to 2045

Resolution No. 23/NQ-TW, dated March 22, 2018, outlines the National Industrial Development Policy for 2030 with a Vision to 2045. The specific targets to be achieved by 2030 include:

• Industry is expected to contribute over 40 percent of GDP, with the processing and manufacturing sector accounting for around 30 percent and manufacturing alone for over 20 percent.
• The proportion of high-tech products in the processing and manufacturing sector will reach at least 45 percent.
• The industrial added value growth rate will average over 8.5 percent, with the processing and manufacturing sector growing over 10 percent annually.
• Labor productivity in the industry will grow by 7.5 percent per year.
• The Competitive Industrial Performance (CIP) Index will rank among the top three ASEAN countries.
• The proportion of labor in the industrial and service sectors will exceed 70 percent.
• Development of large-scale, multinational, and globally competitive industrial clusters and enterprises.

Socio-Economic Development Plan for 20216-2030

The government’s action plan, designated in Resolution No. 25/2026/QH16, implements the Socio-Economic Development Plan for the five-year period from 2026 to 2026. The action plan states its specific objectives related to the manufacturing sector, which are:

• Average annual growth of the manufacturing and processing sector: 12.4 percent
• Average annual growth in the Index of Industrial Production (IIP): 11–12 percent
• Localization rate for key industries by 2030: 40–45 percent
• Industrial Competitiveness Index (CIP) by 2030: Ranked among the top three ASEAN countries
• Manufacturing and processing share of GDP by 2030: 28 percent
• Per capita manufacturing value added by 2030: US$2,400
• Average annual growth in merchandise exports from manufacturing and processing industries: 15–16 percent
• Average annual growth in commercial electricity: 11–12 percent
• Renewable energy share of total primary energy supply by 2030: 26.1 percent

National Green Growth Strategy for 2021-2030, Vision Towards 2050

Aiming to empower the economy through a green growth transition, Vietnam’s government issued Decision No. 1658/QD-TTg approving the National Green Growth Strategy for 2021-2030 with a Vision Towards 2050. Key goals are:

• Reducing the level of energy consumption in manufacturing, transportation, commercial, and industrial activities
• Facilitating the conditions for the development of new green manufacturing industries; and
• Encouraging the application of green technologies along with manufacturing activity management and control systems.

This article was last updated July 14, 2026

This article first appeared on Vietnam Briefing, our sister platform.