Tech can lead Viet Nam past the middle-income trap: forum
Supporting local tech firms as they strive for technological advancements is a vital part of Viet Nam’s efforts to beat the middle-income trap and become a developed economy, heard a forum on Thursday.
To escape the middle-income trap, Viet Nam must have a yearly growth rate of 6.5-7 per cent or individual income must grow 5.5-6 per cent each year, according to Nguyen Xuan Thanh from Fulbright University Vietnam.
It normally takes 30-50 years for a country to transform from a middle-income economy to a high-income one without using modern technologies, Thanh told the forum on developing Viet Nam’s technology companies.
“The use of technologies and support for tech companies allow an economy to leap-frog and achieve higher growth in a shorter period,” Thanh said.
In the past 10 years, the value of tech companies has risen and now accounts for 15 per cent of the global gross domestic product (GDP). Their average growth rate outperforms the world average by 2.5 times.
“Technologies can boost productivity of an economy by 0.8-1.4 per cent per year,” he said. That’s a high rate compared to an economy’s year-on-year growth target of less than 1 per cent.
However, 15 per cent of all workers will lose their jobs to technologies by 2030, he warned.
He took the example of software development firm MISA, which has successfully helped government agencies and businesses cut 97 per cent of their expenses by using electronic documents instead of papers.
But the problem for Viet Nam and other ASEAN nations is that tech firms have received little support despite their rapid recent proliferation.
In the Southeast Asia, there are 10-12 “unicorns” –start-up businesses with a value of more than US$1 billion.
“The number of unicorns and tech firms in developing middle-income economies is still small and most of them have remained unknown to the rest of the world,” Thanh said.
The Vietnamese Government should unite local tech firms and allocate them into clusters, as it has done for other industries and sectors, in order to lure capital, Thanh said.
One of the most pressing issues is the quality of schooling as top tech developers seldom learn skills at school. “Most of them acquire new skills and knowledge outside the school through practice and external training programmes,” Thanh said.
He suggested schools co-operate with tech companies to refresh their training programmes and improve the quality of education.
In addition, the Government needs to set up an assistance fund for start-up businesses as early as possible so that they are financed and able to make their ideas and initiatives a reality, Thanh added.
“The Vietnamese economy can only become a dragon when local firms get strong enough to compete against international companies,” Prime Minister Nguyen Xuan Phuc said.
Vietnamese businesses must learn to master new technologies, introduce creative products and services, and make high-quality offerings for the market, he said.
“The potential of Vietnamese companies is undoubtedly vast,” he said. “The Vietnamese people are smart and hard-working. The market of nearly 100 million people will make a smart economy if technologies are used in every corner of life.”
According to Pham Hai Van, director of retail-platform supplier Haravan, the digital transformation will help raise working efficiency and productivity.
Start-up businesses should test ideas to see if they work properly, he said. “Any mistake or failure would be valuable as it would be a foundation for future success.”
The Government must ensure policies are put in place to help the economy adapt to technological changes, Van said.
“Vietnamese firms must seek success in the international markets,” he said. “They shouldn’t wait for the world to come as they are strong enough to go abroad.”