Vietnam’s Economic Powerhouse Has a Baby Problem — and It Looks a Lot Like Tokyo

For decades, Vietnam’s southern megacity was synonymous with hustle: a young, fast-moving population that powered some of the region’s most impressive economic growth. Today, that same city is confronting a deeply inconvenient truth. Young people are choosing not to have children, and the numbers are now impossible to ignore.

At a policy workshop held on April 9 to discuss Vietnam’s new Population Law, officials revealed that Ho Chi Minh City’s total fertility rate in 2025 stands at just 1.51 children per woman, far below the 2.1 replacement level needed to maintain a stable population. The city has held the unwanted distinction of recording the lowest birth rate in the entire country for more than twenty years running.

The numbers behind the reluctance

The picture emerging from the data is one international investors and urban planners will find immediately familiar. The average age at first marriage in Ho Chi Minh City has risen to 29.8 years, compared to a national average of 27.3. Young professionals, squeezed between stagnant minimum wages and soaring property prices, are simply doing the math and deciding that parenthood does not add up.

Former Ho Chi Minh City Party Secretary Nguyen Thien Nhan, a professor who has become one of Vietnam’s most prominent voices on demographic risk, put it bluntly at the workshop. He argued that the core issue is financial pressure, particularly the cost of housing, education, and healthcare. “They are behaving rationally,” he said of young couples who delay or forgo having children, noting that the old Vietnamese proverb roughly equivalent to “where there’s a will, there’s a way” no longer resonates with an urban generation that plans carefully and spends deliberately.

A warning from East Asia

Nguyen Thien Nhan drew direct comparisons to South Korea and Japan, both of which saw similar patterns of urban fertility decline before the consequences became structurally embedded. Japan’s working-age population contraction is widely cited as a central factor in the country’s three decades of economic stagnation from 1996 to 2025, following 33 years of exceptional growth. For foreign businesses and investors operating in Ho Chi Minh City, a city of over 14 million people, the parallel carries real weight.

The demographic squeeze is already producing visible effects: accelerating population ageing, a tightening labour supply, and mounting pressure on social welfare systems that were designed for a much younger population profile.

The gap no policy has bridged

One of the most striking findings from local surveys is the wedge between minimum wage and what economists call a “living wage.” The minimum wage in Ho Chi Minh City covers basic personal expenses for a single individual, but the financial calculus of raising a child, particularly in a city where competitive schooling is seen as non-negotiable, pushes that number far higher. Many low-income workers surveyed said they had postponed or abandoned plans to have children entirely.

What the city is doing about it

The municipal government has begun rolling out incentives, including a one-time payment of five million Vietnamese dong (approximately USD 200) to women who have two children before the age of 35. A comprehensive healthcare programme covering the period from 2025 to 2030 is also underway.

Longer-term proposals on the table include housing subsidies, childcare services for infants as young as six months old, extended parental leave, tax relief for families, and targeted programmes to attract migrant workers to offset labour shortfalls.

Critics, however, note that financial micro-incentives of this scale are unlikely to move the needle in a city where a modest apartment can cost upward of USD 100,000 and international-standard schooling runs tens of thousands of dollars per year.

Why this matters beyond Vietnam

For the expatriate community, multinationals, and investors with a long-term stake in Ho Chi Minh City, the demographic trajectory is a strategic variable worth watching. A shrinking and ageing workforce will shape everything from labour costs and consumer spending patterns to real estate demand and social infrastructure over the next two decades.

Vietnam has long been positioned as a younger, cheaper alternative to China for manufacturing and services. That narrative depends heavily on maintaining the demographic dividend that has powered the country’s rise. Ho Chi Minh City, its wealthiest and most globally connected urban centre, is now the clearest signal that the dividend is not permanent, and that policy action cannot wait.

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Source: Vietnam Insider