With global supply chains undergoing a period of restructuring, Vietnam must take advantage of its strengths and address its weaknesses.

Addressing the
“Adapting to Global Green Supply Chains – Challenges and Opportunities for Vietnam’s
Export Goods” workshop held recently by the Vietnam Chamber of Commerce and Industry
(VCCI), Ms. Tran Thi Thanh Tam, Director of the SME Support Center under VCCI, offered
a panoramic view of a market undergoing profound transformation.

According to Ms.
Tam, changes are coming rapidly, creating a worldwide race towards rebalancing.
Within this race, multinational corporations are urgently seeking new locations
to diversify supply chains, reduce costs, and improve optimization and efficiency.
Thanks to its geopolitical position and production advantages, Vietnam has been
emerging as a leading strategic destination in the Asia-Pacific region.

Green pressure

However, behind
the impressive growth in export turnover lie core weaknesses that must be confronted.
Though the manufacturing and processing industry accounts for 80 per cent of total
export value, most of this value belongs to foreign-invested enterprises (FIEs).

Meanwhile, private
Vietnamese businesses primarily export raw materials or perform labor-intensive,
low value added tasks such as processing and assembly. This is an alarming reality
that reflects the limited capacity of Vietnamese enterprises to generate added value.
“We face the risk of being stuck at the bottom of the value chain if we refuse to
change,” Ms. Tam warned. “The biggest barrier today is not production capacity
but new standards in sustainable development.”

This pressure comes
directly from major markets such as the EU and the US, where indirect emissions
within the value chain account for 65-95 per cent of an organization’s total carbon
emissions. This means the burden of greening will fall directly on suppliers in
Vietnam.

The green transition
trend is no longer an empty slogan but a matter of survival, especially with the
introduction of the EU’s Carbon Border Adjustment Mechanism (CBAM) and new supply
chain due-diligence requirements. Environmental and social data transparency,
meanwhile, is becoming a “mandatory passport.” Ms. Tam therefore urged businesses
to shift their mindset from defensive to proactive. ESG (environmental, social,
and governance) practices should not be viewed merely as a compliance cost, but
as a driver of value creation, growth, and competitive advantage, particularly in
attracting investment capital and building customer trust.

Maze of barriers

To illustrate the
concrete challenges, Associate Professor Vu Anh Dung, who boasts expertise in strategy
and international business, presented a vivid picture of the wooden product export
industry, one of Vietnam’s key export pillars. With export value nearing $15 billion
in 2024, including 70 per cent from furniture, Vietnam ranks fifth globally and
first in Southeast Asia for wooden products.

However, market
distribution reveals vulnerabilities. The US is the dominant destination, accounting
for 55 per cent of export value, or nearly $9 billion, while the EU accounts for
only 3.6 per cent, or some $500 million. This disparity is rooted in complex trade
barriers.

“With the EUVFTA
[EU-Vietnam Free Trade Agreement], export tariffs to the EU are essentially zero,
but the biggest challenges come from technical, or non-tariff, barriers,” the
Associate Professor explained. “Regulations on forests, chemicals, and inspections
are extremely strict. This requires that businesses make major investments in forest
certification, traceability, and chemical testing. Meanwhile, EU orders are often
small and fragmented, increasing per-shipment costs and limiting economies of scale,
which is especially difficult for small and medium-sized enterprises (SMEs).”

In the US, though
tariff levels are more stable under WTO commitments, risks arise from unilateral
protectionist measures and anti-dumping investigations targeting products of Chinese
origin that indirectly affect Vietnam. In addition, strict rules-of-origin monitoring
increases compliance costs and uncertainty, forcing many firms to include “contingency
costs” in their pricing.

Environmental regulations
add further layers to this “maze.” The EU Deforestation Regulation (EUDR) requires
geolocation of planting areas and full traceability; an enormous technical barrier
that forces companies to invest in monitoring systems to prove the legality and
sustainability of their wood sources. Though the US Lacey Act offers a more stable
and less overlapping legal framework, compliance costs remain burdensome.

The EU’s CBAM also
looms large. Though currently applied to five product groups, wooden and agricultural
products are expected to be added in the future. Associate Professor Dung highlighted
that indirect impacts are already visible: accessories used in furniture (iron hinges
and aluminum frames, etc.) will fall under CBAM. If manufacturers import these materials
from high-emission sources such as China, the final wooden product will be penalized.

Domestically, Vietnam’s
carbon market pilot is scheduled for 2026-2028 with full operations by 2030, meaning
businesses will be required to conduct greenhouse-gas inventories and incur
higher transaction and compliance costs. Faced with these pressures, the
Associate Professor recommended that businesses adopt digital technologies for traceability,
manage risks through insurance, and proactively calculate carbon footprints to build
both national branding and corporate reputation internationally.

Rethinking the transition

Dr. Vu Thi Phuong
Lien, Lecturer at the Academy of Finance, acknowledged that the pressure to “go
green” is often perceived as a tool used by developed countries to create barriers
for poorer nations. After years of scrutiny and skepticism, she affirmed that the
answer today is clear: the green transition is the mandatory path to elevate trust
and market standing.

SMEs, though not
required to conduct greenhouse-gas inventories, play a vital role in the Scope 2
and Scope 3 emissions (indirect emissions from purchased energy and supply chains)
of large corporations. If they fail to meet emission reduction standards, they will
be excluded from supply chains. This underscores the importance of proactively
“greening” to maintain and expand markets.

Regarding green
finance, Dr. Lien noted that although many preferential funds exist, access is difficult.
“The State always has a lot of money, but not everyone can reach it,” she said.
Transparency and sound business practices are prerequisites, and businesses should
not wait for assistance and instead “stand on their own two feet.”

On support programs
such as the “1,000 pioneering businesses” initiative or tax and interest incentives,
she argued that the revenue criteria, of over VND200 billion, or $7.69 million
a year, are unrealistic for most SMEs. She urged businesses to actively contribute
feedback to draft laws and regulations to ensure policies are effective in practice.

“The global green
race is no longer a choice, it is an imperative,” Dr. Lien emphasized. Despite challenges
from technical barriers, carbon taxes, and the lack of resources and information,
Vietnamese businesses must proactively transform their mindset, leverage available
tools and resources, and continually strengthen their capacity not only to survive
but to break through. This is a golden moment to turn challenges into opportunities
and build a green, sustainable, and prosperous economy.

VET-Vu Khue