Swift digital revolution drives Vietnam’s economic growth
Vietnam’s rapid digital transformation demand is building new pathways for businesses. However, in order to translate these into real success stories, numerous obstructions will need to be removed.
The latest report on Vietnam Digital Marketing by Andrews University showed that 64 million Vietnamese people use the internet, an increase of 28 per cent compared to 2017. There are 143.3 million mobile subscriptions and, on average, each person owns 1.4 mobiles.
In 2019, mobile payment growth increased by 232 per cent in value and 98 per cent in volume over the same period last year. In particular, the proportion of consumers paying with mobile in Vietnam has risen to 61 per cent from 27 per cent in 2018.
Meanwhile, the latest report on the digital economy in Southeast Asia published by Google, Temasek, and Bain & Company showed that Vietnam’s digital economy would reach $12 billion in 2019, leading the area along with Indonesia.
According to the Ministry of Science and Technology, in 2015, the digital economy in Vietnam was worth $3 billion, and now has reached $9 billion. The ministry predicts this figure will reach $30 billion by 2025. It is forecast that Vietnam’s GDP may see an addition of another $162 billion if digital transformation is successfully carried out.
Issues regarding digital transformation and relevant opportunities will be discussed at the Vietnam Business Summit 2019 which will take place in Hanoi on October 16.
Working in Vietnam for more than a decade, Denis Brunetti, president of Ericsson in Vietnam, Myanmar, Cambodia, and Laos, has witnessed the fast development of Vietnam over the years. “Digital transformation in the country has been developing quickly. The Vietnamese government and network carriers have co-operated to build a mobile broadband network, formerly 3G and 4G and soon 5G, to build infrastructure and promote the digital economy, allowing data to flow smoothly,” Brunetti said.
“In addition, they have been building Internet of Things (IoT) applications running on that network, helping the economy improve and operate efficiently.”
Mentioning the establishment of the Vietnam Innovation Network and the National Innovation Centre, as well as sustainable economic growth of around 7 per cent, Brunetti stated, “I won’t be surprised if Vietnam surpasses many other countries in the next few years.”
In the field of banking, one of the pioneering fields in the Fourth Industrial Revolution, digitalisation has been widely carried out with the application of fintech advances such as mobile payments, standardised QR codes, digital wallets, and chip cards for payment.
Nguyen Kim Anh, Deputy Governor of the State Bank of Vietnam, said that the bank would support and accelerate digital transformation in the sector. It will complete mechanisms and policies to adapt to Industry 4.0, creating favourable conditions for promoting business models and governance in banking, along with focusing on network security and consumer rights protection while limiting risks.
At the Vietnam ICT Summit in August, the Vietnam Digital Transformation Alliance was officially launched with the participation of many telcos and IT enterprises in the country. In addition, the Ministry of Information and Communications (MIC) has created the National Digital Transformation initiative with the aim of implementing breakthroughs towards a digital Vietnam.
What lies ahead
At the recent Industry 4.0 Summit, MIC Minister Nguyen Manh Hung stated that digital technology companies in Vietnam are playing a core role.
“We need the help of hundreds, even thousands of ICT enterprises all over Vietnam to promote digitalisation and ‘Make in Vietnam’,” he said, adding he expected that the process will open up vast opportunities for the country, helping to comprehensively change every business, field, and citizen.
As a unit implementing many digital projects around the country with the motto of promoting “Make in Vietnam”, state-run VNPT finds that Vietnam is a good place for blockchain, IoT, and AI to be developed.
According to Nguyen Duc Kien, director of VNPT’s System Integration Solution Centre, most cities and provinces are now aiming to build smart cities in which smart management systems are used. Furthermore, next month, the national public portal will be launched.
“This is a really good chance for VNPT and many other technology companies to contribute to the digital transformation of thousands of public services around the country,” Kien said.
Setting the target of reducing the time on implementing related projects for organisations by using its comprehensive platforms and products, Nguyen Van Khoa, general director of FPT, said that the National Digital Transformation Project aims to cut 30 per cent of administrative procedures, develop 20 per cent of new services based on data, and move 50 per cent of small- and medium-sized enterprises towards a digital platform.
“The demand for IT human resources will be high. This is massive for us in terms of IT engineers, and we have a plan of training 50,000 high-quality IT engineers,” Khoa added.
Meanwhile, according to Brunetti from Ericsson, there will be many new technologies related to altering telecommunications infrastructure.
Vietnam has set the goal of being one of the top four digital countries in the ASEAN, developing at least 80,000 Vietnamese tech enterprises, and growing the digital economy to account for 25 per cent of GDP.
In addition, the MIC has looked at cutting 2G as 100 per cent of Vietnamese people own smartphones. According to a 5G developer, broadband systems allow data to flow across all sectors and all industries of the economy. Therefore, 4G and 5G will be the driving force for the development of Vietnam’s digital economy.
Along with technology providers, many other companies can also find opportunities through digitalisation, from simpler administrative procedures for e-government to faster and more convenient banking services. It will also be safer and faster with e-commerce services.
According to Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry, digital transformation is actually a revolution of policies and institutions. “While digital transformation drives economic growth, the biggest drivers remain the institutional reforms and the enterprising spirit of Vietnamese people,” Loc stated.
According to him, institutional reforms are always the first channel for improvement to match new technological conditions.
On education, Brunetti from Ericsson noted, “Education and training are very important. People must be the owners, the handlers, and the decision makers. They need to have skills to manage technologies.” Brunetti pointed out that 70 per cent of Vietnam’s workforce is likely to be displaced by automation within the next three decades. “It will be the digital age where data, science, technology, engineering, and mathematics are going to be the key capabilities and competencies,” he stated.
To Pham The Truong, general director of Microsoft Vietnam, developing the digital economy comes with tough hurdles, especially in terms of personal security. “How many of us using smartphones can confirm that we are not being monitored?” Truong questioned. “And when a citizen has money to buy a phone, whose responsibility is it to ensure personal freedom?”
Truong believes that the responsibility belongs to the state to deliver a legal framework as well as measures to ensure the safety of the people in the digital economy.