A method of manufacture of an integrated circuit packaging system includes: providing an integrated circuit die having an active side and a passive side; providing a contact pad having a top side oriented in a same direction as the passive side; connecting an inner bond wire to the contact pad and the integrated circuit die; and molding a stacking structure around the contact pad, the inner bond wire, and the integrated circuit die with the passive side and the top side exposed, and the stacking structure having a top structure surface on top and adjacent to or below the integrated circuit die, and a horizontal member under the integrated circuit die and forming a cavity.