Abstract Background Building on its National Tobacco Control Policy initiated in 2000, Vietnam is currently considering introducing a comprehensive law to strengthen the implementation of tobacco control policy. This study analyses the positions of key stakeholders in the development of tobacco control legislation in the context of a largely state-owned industry, and discusses their implications for the policy process. Methods Several qualitative methods were employed for the study including: literature review and documentary analysis; key informant interview; focus groups discussion; and key stakeholders survey. Findings The Ministry of Health, Ministry of Trade and Industry, and Ministry of Finance are key players in the tobacco control policy and legislation, representing competing bureaucratic interests over health, macro-economy and revenue. High-ranking officials, including the Communist Party and National Assembly members, take a rather relaxed position reflecting the low political stakes placed on tobacco issues. The state-owned tobacco industry is regarded as an important contributor to the government revenue and gross domestic product, and the relative weight on health and socioeconomic issues placed by stakeholders determine their positions on tobacco control. Overall, short-term economic interests have more immediate influence in setting policy directions, with the consequences of health gains perceived as relegated to a distant future. This was reflected in the position of tobacco control advocates, including MOH, that presented with reluctance in insisting on some tobacco control strategies revealing a mixture attitude of concessions to the socioeconomic uncertainties and a sense of bargaining to win the strategies that are more likely to be accepted. Conclusion The state-ownership of tobacco industry poses a major paradox within the government that benefits from manufacturing of tobacco products and is also responsible for controlling tobacco consumption. The perceptions of negative implications on government revenue and the macro-economy, coupled with the reluctance to challenge these issues from health perspective too directly, means that tobacco control has yet to secure itself a place on the priority policy agenda. The overall policy environment will shift in favour of tobacco control only if the economic framing can be challenged.