Neighbouring Vietnam Suddenly Rolls Out 'Baby Bonus', Risks Growing Old Before Growing Rich

Vietnam has officially launched a family-friendly incentive package and a national ‘baby bonus’ allowance policy to encourage its citizens to have more children. This emergency measure was taken exactly one year after Hanoi abolished its decades-old two-child restriction policy, haunted by the risk of population ageing before the country can become wealthy.

According to a report by Channel News Asia, this is stipulated in a new population law, which officially came into effect on Wednesday (1/7/2026). The government is extending maternity leave from six months to seven months, offering free pregnancy check-ups, and providing special financial assistance of up to US$228 (Rp 4.09 million), equivalent to two-thirds of the average monthly salary there.

“I can stay at home one more month with my baby, and my husband can stay at home a few more days,” said local resident Nguyen Kim Bich, a 32-year-old woman. The government is indeed struggling hard to reduce the risk of becoming an “old country before rich.” Head of Population and Development at the United Nations Population Fund (UNFPA) in Vietnam, Pham Thi Lan, said this marks a significant shift in approach in the country. “We are moving from family planning control to a focus on population development,” she stressed.

Rising life expectancy and declining birth rates have turned Vietnam into one of the fastest-ageing countries in the world. These trends reflect the success of development in recent years, but a stagnant population could lead to labour shortages and burden the social safety net. The new population law aims to slow this demographic shift. However, for Bich and her husband Lai, an accountant and an advertising professional, persuasion alone is not enough. Nearly half of their US$1,000 monthly income is used to raise their first child. Moreover, they have to share a small house with their parents. “The benefits are good but not enough,” she said. “One more month of leave and US$75 will never entice us to have a second child,” she added, referring to the bonus amount she would expect to qualify for.

Vietnam’s preference for a two-child family has actually existed since the 1960s, when authorities in the north sought to curb explosive population growth during the war. The official limit was adopted in 1988, though its enforcement was not as strict as in neighbouring China, where forced sterilisations and abortions accompanied the repeal of the one-child policy in 2016. Vietnam has also not yet fallen into a demographic death spiral like South Korea or Japan. South Korea’s total fertility rate is 0.80 children per woman, while Japan’s is 1.14 children per woman.

Vietnam is actually one of the fastest-growing economies in Asia, but the country is still relatively poor. Its GDP per capita is recorded at US$5,000, half of Japan’s GDP per capita when its birth rate was similar to Vietnam’s in the early 1980s, and that figure has not been adjusted for inflation. “This means Vietnam will have less time to adapt to an ageing society compared to other developed countries,” wrote the World Bank in a 2021 report, warning that “the country has a narrow window to implement reforms before facing a major slowdown in growth.”