Thailand and Vietnam have pledged to significantly strengthen economic cooperation, unveiling ambitious plans to expand bilateral trade and deepen investment ties as both countries navigate mounting global economic challenges.
The commitment emerged following two days of high-level discussions in Hanoi between Thai Prime Minister Anutin Charnvirakul and Vietnamese leaders.
The talks concluded with an agreement to increase two-way trade to US$25 billion within the next four years, with longer-term aspirations to double that figure.
The partnership will focus on integrating supply chains in strategic sectors such as electronics and semiconductors while reducing barriers to trade.
The diplomatic engagement was marked by symbolism as well as substance. During a state banquet in Hanoi, Anutin played a traditional Vietnamese t’rung xylophone, a gesture that underscored the warm relations between the neighbouring Southeast Asian nations. Behind the ceremony, however, both governments were pursuing a pragmatic economic agenda shaped by external pressures.
The summit came shortly after Vietnamese President To Lam’s visit to Bangkok, creating a rare sequence of reciprocal meetings between the leaders of Southeast Asia’s second- and third-largest economies. The back-to-back engagements highlighted a shared determination to strengthen regional cooperation amid growing uncertainty in the global economy.
According to economist Pavida Pananond, an international business professor at Thammasat Business School in Bangkok, both nations are confronting similar challenges arising from shifts in the global economic landscape.
“Both countries face a shared external shock,” she said, citing “the fracturing of the rules-based trading order”, reconfigured global supply chains and intensifying US-China competition.
Pananond noted that greater collaboration would provide strategic advantages for both countries at a time when economic and geopolitical risks are increasing.
Closer ties afforded both nations “a degree of strategic hedging that neither can easily achieve alone”, she said.
Despite their shared objectives, Thailand and Vietnam enter the partnership from markedly different economic positions. Vietnam has been pursuing an aggressive modernisation programme under To Lam, who has emerged as the country’s most influential leader in decades. His administration has accelerated infrastructure projects, including ports, airports and high-speed rail networks, while also targeting bureaucratic obstacles that have long hindered foreign investment and economic expansion.
At the same time, Vietnam has adopted a more active diplomatic approach. To Lam has engaged major global powers, travelling between Beijing, Washington and New Delhi while promoting Vietnam as an attractive destination for international business and investment.
Thailand, by contrast, faces more difficult economic conditions. The country’s economy is projected to expand by only 1.6 to 2 per cent this year, weighed down by workforce challenges, household debt and years of political instability that have affected policy continuity and economic reform.
Vietnam’s rapid growth trajectory now places it on course to surpass Thailand as the Association of Southeast Asian Nations’ second-largest economy, a development that could materialise as early as this year.
The shifting economic balance comes as both countries remain under scrutiny from Washington over alleged forced-labour violations. Critics argue the accusations may serve as a justification for the reintroduction of tariffs after previous measures were struck down by the US Supreme Court.
Compounding these concerns, economists warn that the conflict involving Iran, the United States and Israel has triggered rising costs across global markets, including oil, gas, fertiliser and industrial feedstocks. Analysts say the full economic impact has yet to be felt.
Nevertheless, commercial activity between Thailand and Vietnam continues to gain momentum. Bilateral trade reached approximately US$8.6 billion during the first four months of the year, strengthening expectations that total trade could surpass the roughly US$22 billion recorded for all of 2025.
Investment flows have also intensified. Thailand ranks second only to Singapore among ASEAN investors in Vietnam, with registered investment exceeding US$15.4 billion.
“Vietnam and Thailand have good reasons to invest more in their own neighbourhood”
Nguyen Khac Giang, a Vietnamese political scientist.
Thai investment patterns have evolved considerably in recent years. While earlier investments focused heavily on retail and consumer sectors such as supermarkets and restaurant chains, major Thai corporations are increasingly directing capital towards manufacturing, industrial infrastructure and professional services.
Companies including SCG, CP Group, Amata and WHA have expanded their presence across Vietnam. New industrial developments in Nghe An province are attracting Thai capital, while Amata and SCG continue to grow operations within Vietnam’s Southern Industrial Belt surrounding Ho Chi Minh City. Meanwhile, electronics and semiconductor manufacturing have established a foothold in Thai Nguyen province, located north of Hanoi.
‘’Major Thai groups … are leading this charge,’’ said Jack Nguyen, CEO of InCorp Vietnam, a consultancy that helps foreign companies establish and scale their businesses in the country.
Observers say the recent exchanges between Anutin and To Lam reflect a broader strategy aimed at strengthening economic resilience. Both leaders were accompanied by senior business executives during their visits, signalling the central role of the private sector in the evolving partnership.
According to Nguyen Khac Giang, a political scientist and visiting fellow with the Vietnam studies programme at the ISEAS – Yusof Ishak Institute, the growing relationship is driven by both opportunity and necessity.
Anutin and To Lam’s reciprocal visits, he said, are about “economics and insurance”.
“Vietnam and Thailand have good reasons to invest more in their own neighbourhood,” he said.
“Vietnam gains from Thai capital, consumer brands and regional business networks. Thailand gains from Vietnam’s growth, its young market and its manufacturing base.”
