Digital economy: The way to the future of Viet Nam

The 13th National Party Congress’ Resolution affirmed that, the digital economy will account for 20% of GDP by 2025 and about 30% of GDP by 2030. (Photo:Twitter)

Great potentials

The 4th industrial revolution (Industry 4.0) takes the emphasis on technological breakthroughs in all fields, creating a premise for the digital economy to flourish.

The emergence of technological advances of Industry 4.0 such as the Internet of Things (IoT), artificial intelligence (AI), 3D printing, etc., resulted in a wave of digital transformation and it helped to spread the digital economy across all economic sectors.

Over the world, the digital economy is growing fast, becoming the key for many economies to reach out to the world.

Taking China for example, in 2008, the digital economy accounted for about 15% of China’s GDP, but by 2019, the number has raised to about 37%. Plenty of Chinese enterprises have become tech “giants”, with strong development capabilities and robust global competitiveness.

In the Asia-Pacific region, the digital economy accounted for about 6% of GDP in 2017 and 25% in 2019. Against the backdrop of the Covid-19 pandemic, it is predicted that by 2021, the digital economy could account for more than 60% of the GDP of this region.

In Viet Nam, it is estimated that the digital economy accounts for about 8.2% of GDP (equivalent to 163 billion USD). There is a huge potential for developing Internet and digital economy. Unleashing this resource will contribute to socio-economic growth and improve national competitiveness.

According to experts, Viet Nam possesses good conditions to build a digital economy.

Firstly, revenue from IT companies is estimated at 110 billion USD in 2019. IT products in the field of hardware and electronics, such as phones and computers are always in the top 10 export products of Viet Nam.

As of August 2021, the export of phones and components reached 35.33 billion USD, up 11.9% over the same period in 2020.

Secondly, Viet Nam has more than 1 million people working in the field of IT.

Thirdly, Viet Nam's creativity has improved a lot. According to the World Intellectual Property Organization (WIPO)’s report which was published on September 20, Viet Nam ranked 44th out of 132 countries and economies in the global innovation index ranking. Therefore, Viet Nam becomes one of 3 innovative countries grouped by income, ahead of India and Ukraine.

Fourth, policymakers have become aware of the importance of the digital economy through improving the legal framework, encouraging the development of the digital platform, and approaching Industry 4.0.

As Prime Minister Pham Minh Chinh said at the 2021 Global Trade in Services Summit, Viet Nam is ready to work with other countries to formulate an appropriate legal framework, with a view to promoting the healthy, rapid, suitable, extensive, effective and harmonious development of the digital economy, for the common interest of the whole society.

Commenting on Viet Nam’s development of digital economy, the World Bank's chief economist Jacques Morisset said that Viet Nam's digital infrastructure is quite modern, covering all provinces and cities, and mainly invested by domestic telecommunications companies.

Besides, Viet Nam is also the destination of some of the world's leading information technology giants such as Apple, Samsung and Intel.

This demonstrates Viet Nam's competitiveness and creates a special platform for businesses and domestic development units - the model adopted by Japan and Korea in the 1970s, 1980s and most recently, in China.

Mr. Morisset also pointed out that, before the Covid-19 crisis, Viet Nam's innovation capacity was at average level, but the pandemic has changed the game for the private sector. Many Vietnamese businesses have embraced technology to facilitate remote working and reach customers during social distancing and travel restrictions.

Vietnam needs to accelerate the development and application of new technologies. (Source: Medium)

Surveys by the World Bank show that the rate of using digital platforms, e-commerce sites, online social networks and specialized applications increased sharply in response to the Covid-19 pandemic, from 48% of enterprises in June 2020 to 73% in January 2021, the proportion of enterprises investing in digital solutions increased more than 4 times from 5% to 21%.

The future of Viet Nam’s economy

For most countries in the world, including Viet Nam, the future for economic growth lies in making the most of digital technologies and digitizing the economy. Therefore, Viet Nam needs to accelerate the development and application of new technologies.

On June 3, 2020, the Prime Minister signed Decision 749/QD-TTg to approve the national program on digital transformation until 2025, with a vision toward 2030, aiming to make Viet Nam among the world’s top 50 countries in terms of the E-Government Development Index (EGDI).

By 2025, the digital economy is expected to make up 20 percent of the country’s GDP, with its proportion in each economic sector accounting for at least 10 percent, and annual labor productivity is expected to increase by at least 7 percent. By 2030, the digital economy will account for 30% of GDP and will form at least 20% of each sector.

In particular, human resources, especially in IT, are still limited in quantity and quality.

In order to overcome these difficulties and realize the goals, the resolution of the 13^th Party Congress emphasized, Viet Nam needs to improve the business environment, promote innovative start-ups, develop industries and businesses on the basis of strong application of scientific and technological achievements, especially Industry 4.0; focus on perfecting institutions, policies and laws in line with the market mechanism and international practices to develop the digital economy and digital society.

At the same time, strongly develop information technology infrastructure, synchronously build and develop national, regional and local data infrastructure, creating a foundation for the development of the digital economy and digital society, etc.

Dr. Dang Thi Viet Duc from the Institute of Post and Telecommunications Technology said that Viet Nam needs to ensure and improve the quality of infrastructure, human resources, finance, and data sources; improve the quality of the workforce, recruit experts with knowledge and high qualifications in information technology.

Simultaneously, it is necessary to build and maintain network equipment for data transmission, knowledge of data systems and computers as well as knowledge of other machinery and equipment associated with the digitized network, supporting IoT.

In addition, Viet Nam needs to actively implement the vision and strategy for the development of information and communication technology (ICT) and the digital economy; continue to be consistent, maintaining and promoting the ICT development strategy for economic development and the strategy for the development of the knowledge economy; prioritize infrastructure development and support ICT application for the digital economy; support the development of research and application of digital technology and human resources to serve the digital economy.

According to Dr. Bui Thanh Tuan of the Department of Science, Strategy and History, Ministry of Public Security, Viet Nam needs to speed up the reform of administrative procedures, and forge perfect mechanisms and policies to regulate the activities of organizations, individuals and enterprises.

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