The world’s largest soccer stadium, designed to resemble a Vietnamese drum with space for 135,000 fans, began to take shape outside central Hanoi in February, a few weeks before the United States and Israel attacked Iran.
Despite the global economic turmoil brought about by the war, and perhaps even because of it, construction on the arena and a surrounding urban development has expanded and accelerated.
The Vietnamese government is leaning on big projects to make up for potential economic slowdowns caused by the war and President Trump’s tariffs. Huge, state-favored firms like Vingroup, which is building the stadium, are booming. So are foreign manufacturing giants that have made Vietnam an export hub, all while smaller businesses are struggling to survive and often being pushed aside.
“For small companies like us, it’s so challenging, it’s harder, and it’s not fair,” said Pham Thi Mui, 36, as she stuffed a Spider-Man comforter into a bag at her family’s bedding factory near the stadium, on land that is soon to be redeveloped. “We pour our hearts into everything, and we’re the first to suffer.”
The dynamic exemplifies how the war in Iran, and the economic shock waves it precipitated, are accelerating a trend in Vietnam, and around the world: Big businesses find a way to get bigger, while smaller, local companies are being squeezed by spiking inflation or energy shortages. The Vietnamese government and banks, overinvested in certain industries, especially real estate, have not been much help.
Too Big to Fail?
Experts have expressed both optimism and concern for this ambitious country of 100 million. The World Bank’s most recent report on Vietnam referred to an “uneven growth model,” where global firms drive exports but generate limited local benefits, because wages are low and few Vietnamese companies are integrated into higher-value supply chains.
Jonathan Pincus, an economist at Fulbright University in Ho Chi Minh City, described it as “a two-track economy.” Essentially, the wealthiest firms rarely interact with the smaller businesses that represent 95 percent of the country’s companies.
Vietnamese officials have acknowledged the problem for years, noting that sustainable development requires a strong domestic business base. But with Communist Party leaders pushing hard for 10 percent annual growth, and managing only 7 so far this year, officials still chase scale. Big-ticket foreign investment is seen as an elevator to career promotion in the party, and the turmoil of the past few months has only intensified the government’s go-big and globalist focus.
While Hanoi remains concerned that Washington will punish it for exporting far more to the United States than it buys, Vietnam continues to successfully recruit companies fleeing China partly to avoid and circumvent U.S. tariffs.
Shipping data shows that in the first quarter of this year, China’s container traffic to the United States fell by 14 percent, while Vietnam’s rose by 19 percent. Some of those shipments might be Chinese exports, relabeled or barely altered — which the Trump administration has threatened to treat as an illegal effort to bypass tariffs — but experts report a deeper shift, with Chinese firms opening more factories in Vietnam.
“The main takeaway is that Vietnam is gaining market share,” said Soren Pedersen, a vice president at SSA Marine, a large global port operator.
The war in Iran initially seemed to threaten that shift. After Iran effectively closed the Strait of Hormuz, the critical shipping route for much of the oil and gas headed to Asia, worries about manufacturing and transportation disruptions dominated business discussion — until Vietnam found a lifeline in countries that were well-established economic partners.
South Korea, Vietnam’s top source of foreign investment, increased its refined petroleum exports for Hanoi in March and April by 60 percent compared to January and February, according to Vietnamese customs data.
China, another major investor, also sent 120 million tons of refined petroleum to Vietnam in March, despite a publicly declared ban on such exports. And Vietnam’s imports from China of liquefied petroleum gas, an energy source for manufacturing, more than doubled in March and April over the two prior months, as supplies from the Middle East fell to nearly zero.
Despite this, family-run, local businesses that need a lot of energy for basic staples — such as rice mills — have had to shut down for a few hours a day to avoid surging electricity prices.
High-tech industrial parks in northern Vietnam have reported less trouble, at least so far.
‘No One Listens to Us’
The smallest companies are facing the toughest math.
From Ms. Mui’s bedding factory, you can see cranes hovering over former farmland. She said the cost of materials and transportation, as well as fees for the use of e-commerce platforms, have risen since the war in Iran started. To keep up, she said her company recently doubled the price of budget comforters.
With the government forcing the factory out to make room for the stadium and a mixed-use urban district, she and her family are desperate for a business loan or government grant. They said they already invested nearly $40,000 of their own money in the business, and used up all their collateral for loans for an expansion last year, before the stadium was announced.
“We’re small, we’re supposed to get more support,” Ms. Mui said, noting that the government has promised to do more for domestic enterprises. “In fact, we’re facing harsher treatment with everything while bigger companies get access to loans and tax incentives.”
Her mother-in-law, taking a break from packaging blankets, fought back tears. “We’re at the lowest level,” she said. “No one listens to us.”
Economists generally agree that Vietnam is, like many countries, too quick to serve well-connected behemoths. It welcomes factories from foreign investors, which provide jobs, if little opportunity for homegrown innovation, and supports large state-run or state-favored conglomerates with low productivity and large debt loads.
Critics often point to Vingroup. The stadium and accompanying urban development are projected to cost $35 billion, to be financed with government and private debt. And even as Vingroup’s electric-vehicle subsidiary, VinFast, reported a net loss of $3.9 billion last year, the company remains the builder of choice for an increasingly wide range of projects, including the country’s first bullet-train network.
In response to emailed questions, Vingroup said the stadium development “not only serves the needs of local residents but also enhances Vietnam’s national sports infrastructure, supports economic and tourism development, and strengthens Hanoi’s position as a destination for international events.”
The company denied receiving any special treatment from the government and insisted that its debt levels remain manageable.
Still, there is much about the company’s balance sheet that concerns experts. And Vingroup’s dominance is indicative of deeply entrenched problems in Vietnam’s economy.
The World Bank, in its report, found risky levels of exposure to real estate across Vietnam’s financial sector. Last year, despite warnings from experts, money was poured into real estate loans at more than twice the rate of industrial and agricultural lending — which the World Bank called “a structural credit misallocation.”
Those loans, economists say, can limit what is available to productive domestic industries.
A few miles from the Vingroup stadium, Techcom Industry makes heavy-duty vacuums and other products for companies like DeWalt, a subsidiary of Stanley Black & Decker.
Tran Thi Thuy, 40, the company’s founder and chief executive, has built exactly what Vietnamese officials have said they want — sophisticated, domestic manufacturing, plugged into global supply chains. With 100 employees, the business is hardly tiny, but it is still being buffeted by geopolitics and Vietnam’s indifference to anything but the largest of the large.
Orders are down 40 percent this year, Ms. Thuy said, blaming tariff uncertainty and weak demand in the United States. Because of the war in Iran, she added, transportation, energy and plastics costs are up.
She’s still anticipating future growth, but has struggled to line up financing. Vietnamese banks wanted too much collateral for short-term loans with double-digit interest rates, she said. Her attempts to secure credit from government funds for smaller businesses also ended up mired in confusion.
“There’s lack of access to information,” she said. “The funds normally are managed by banks, so they keep information away from us — because they want to only give out commercial loans for their own interests.”
Vietnam’s Ministry of Finance recently promised to help, possibly by guiding banks to grant loans based on business performance (as is common in other countries).
And yet, large foreign companies are still driving the biggest news. Samsung recently said it plans to invest about $1.5 billion in a semiconductor testing facility north of Hanoi. Its first in Vietnam, the site is set to open in 2027.
Tung Ngo contributed reporting from Hanoi.
