Construction of the world’s largest soccer stadium—a design inspired by a Vietnamese drum and capable of seating 135,000 spectators—has progressed rapidly outside Hanoi since February, coinciding with heightened geopolitical tensions following U.S.-Israel strikes on Iran.
Amid economic instability linked to the conflict and concurrent U.S. sanctions, the Vietnamese government has prioritized large-scale infrastructure projects to offset potential downturns. State-aligned enterprises like Vingroup, spearheading the stadium’s development, are experiencing growth, alongside foreign manufacturers leveraging Vietnam’s export-friendly environment. Conversely, small-scale businesses face mounting pressures, often operating on limited resources.
“Small enterprises like ours are struggling under unfair conditions,” explained Pham Thi Mui, 36, as she prepared a Spider-Man-themed comforter at her family’s declining bedding factory near the stadium site. “We invest our effort without proportional support, and our challenges are escalating.”
The Paradox of Scale
This situation mirrors a broader global pattern: dominant corporations expand while smaller entities face marginalization. The World Bank’s recent analysis highlighted Vietnam’s “unbalanced growth model,” where multinational corporations dominate exports but fail to cultivate a robust domestic industrial base due to low wages and limited integration into high-value supply chains.
Jonathan Pincus, an economist at Fulbright University, described Vietnam’s economy as a “dual-track system,” where the top 5 percent of firms rarely engage with the 95 percent of smaller businesses that constitute most of the national economy.
Recognizing this disparity, Vietnamese authorities have emphasized the need for a stronger local business ecosystem. However, with official growth targets at 10 percent annually—currently unmet at 7 percent—the government remains fixated on large-scale foreign investments, viewing them as a roadmap for political advancement amid ongoing economic pressures.
While Hanoi seeks to avoid U.S. trade retaliation for its $19 percent surge in container exports to America—up from a 14 percent decline in Chinese shipments—Vietnam is actively attracting Chinese manufacturing firms seeking to bypass tariffs. Experts note this trend reflects a strategic shift rather than mere tariff evasion.
Initial disruptions from the Iran conflict appeared to threaten this momentum. The closure of the Strait of Hormuz—a critical oil and gas route to Asia—sparked fears of supply chain breakdowns. However, Vietnam mitigated risks by expanding partnerships with established economies. South Korea, Vietnam’s largest investor, increased refined petroleum exports to Hanoi by 60 percent in early 2023. Similarly, China circumvented export bans by redirecting 120 million tons of refined petroleum and doubling liquefied petroleum gas shipments to Vietnam in March and April.
Despite these developments, energy-intensive local businesses—such as rice mills—have faced operational constraints due to electricity price hikes, forcing temporary shutdowns.
The Struggle for Survival
Small businesses confront insurmountable economic challenges. Ms. Mui’s family, for instance, has poured $40,000 into their factory and exhausted collateral for loans, only to face displacement due to stadium construction. They now seek government aid or credit, but bureaucratic hurdles and preferential treatment for large corporations have left them without recourse.
“We’re at the bottom,” Ms. Mui lamented. “Larger companies receive tax breaks and loans, while we’re sidelined despite our efforts.” Her mother-in-law added, “No one considers our plight.”
Economists concur that Vietnam’s focus on multinational corporations and state-backed conglomerates like Vingroup exacerbates structural issues. Vingroup’s $35 billion stadium project, financed through debt, exemplifies this trend. Despite generating $3.9 billion in losses last year through its electric-vehicle subsidiary VinFast, the conglomerate continues to dominate national projects.
Vingroup defended its role, stating the stadium “enhances national sports infrastructure and tourism.” However, critics argue such initiatives divert resources from domestic industries. The World Bank identified Vietnam’s financial sector as overly exposed to real estate, with credit allocation to this sector doubling industrial lending in 2022—a “structural misallocation” that stifles productive sectors.
Near the stadium, Techcom Industry manufactures industrial equipment for global clients like DeWalt. Founder Tran Thi Thuy, despite operating a 100-person factory integrated into international supply chains, reported a 40 percent drop in orders due to U.S. tariff volatility and soaring material costs. Access to financing remains a barrier, as banks demand excessive collateral for short-term loans with high interest rates.
