The northern midland and mountainous region of Vietnam is undergoing a gradual transformation, with industry emerging as a primary growth driver.

However, to truly accelerate economic development, the region must fast-track the expansion of deep-processing industries, strengthen regional linkages, and upgrade infrastructure systems.

Boasting rich natural resources, the region holds favorable conditions for a diverse economic base. Key strengths include mineral mining and processing, hydropower, and agriculture adapted to tropical and subtropical climates.

Economic restructuring takes shape

According to the Ministry of Planning and Investment (now the Ministry of Finance), despite challenges in 2024 - particularly the impact of Typhoon No. 3 - the region recorded notable economic recovery. The gross regional domestic product (GRDP) grew by over 9%, the highest nationwide.

The GRDP structure showed promising progress: industry accounted for 44.15%, agriculture, forestry, and fisheries for 16.59%, and services for 34.82%. The shift toward an industrial-led economy demonstrates initial success in strategies focused on manufacturing, energy, and regulated resource exploitation.

The region’s total budget revenue in 2024 reached approximately VND 89.243 trillion (USD 3.51 billion), exceeding central projections by 13%. Local budget revenue stood at VND 73.846 trillion (USD 2.9 billion), 11% above estimates. As of November 2024, exports surpassed USD 72 billion. The region now hosts 37 industrial parks, 26 of which are operational, and attracted 90 new FDI projects with registered capital of about USD 1.8 billion.

The need for speed

While socio-economic transformation is evident, the northern midland and mountainous region still faces significant obstacles. Inadequate infrastructure remains a major bottleneck, with poor connectivity to the capital region, seaports, and rail links to China and beyond.

The absence of large-scale, high-tech processing plants has also limited the region’s agricultural exports. Key products like tea, cinnamon, star anise, and medicinal herbs are mostly sold raw or minimally processed, often requiring branding from lowland enterprises for international export.

Despite being Vietnam’s second-largest forested area with abundant timber, the region’s wood-processing industry contributes only a small share to the national total. While the sector recorded an average annual value-added (VA) growth of 18.7% between 2015 and 2023 - higher than the national average - it has yet to achieve scale or impact.

Prime Minister Pham Minh Chinh’s Decision No. 369/QD-TTg, issued on May 4, 2024, approved the master plan for the northern midland and mountainous region for 2021–2030, with a vision to 2050. This comprehensive roadmap aims not only to reorganize the economic landscape but also to tackle inter-sectoral, inter-regional, and inter-provincial bottlenecks. The new approach moves beyond resource exploitation to prioritize growth pillars, institutional reform, and the effective mobilization of all resources - from the state budget and FDI to community-based funding.

Given the region’s strategic political, economic, and security importance, transitioning from a small-scale agricultural economy to an industrial one is essential. But this shift cannot happen overnight. It requires strategic infrastructure investments, labor upskilling, technology adoption, and policy reform aimed at attracting high-quality processing and logistics investments. Only then can the region achieve sustainable growth and greater competitiveness.

Economists argue that the region must undertake a strategic leap - transitioning decisively into deep-processing industries, especially in agroforestry and selective mineral processing.

PV