Vietnam’s digital economy will likely reach US$52 billion in value by 2025. With the gross merchandise value (GMV) of its Internet economy accounting for over 5% of the country’s GDP in 2019, Vietnam is emerging as the most digital of all economies in the region, according to a recent report.
Last year, the Vietnamese internet economy continued to record double-digit growth, at 16% year-on-year, the highest in Southeast Asia. The report noted all sectors except travel continued to grow in 2020, of which transport and food, and online media grew 50% and 18% compared to 2019. Only online travel dropped 28% in terms of GMV but is expected to grow 25% by 2025. The report noted that this year’s seismic consumer and ecosystem shifts have advanced the Internet sector in unimaginable ways, putting it in a stronger position than ever.
Nguyen Quang Dong, the Director of the Institute for Policy Research and Communication Development, said that the digital service industry is recording the fastest growth. Digital technology and the digital economy will be key drivers helping Vietnam increase workplace productivity, escape the “middle-income trap”, and realise the objective of becoming a middle-developed economy by 2040.
Vietnam’s Internet infrastructure and digital payment services remain limited, however, while the country still lacks a legal framework for digital assets, he said, stressing that the legal model of the 20th century no longer suits the digital economy.
Dong also underlined the need to promote international cooperation, especially in joining the building of new regulations and their enforcement through legal frameworks for the region. A study by the Institute for Global Leadership under the US-based Tufts University revealed that Vietnam ranks 48th out of the 60 countries and territories globally in terms of rapidly switching to a digital economy. It is 22nd in digitisation development.
Over the last five years, with the boom of smartphones, the Internet, and social networks, digital technology, and digital transformation have developed rapidly in Vietnam, shaping a dynamic digital economy with great potential. Vietnam’s digital economy is made up of four main groups: e-commerce, online tourism, digital communications, and logistics technology. The country, together with Indonesia, holds the lead in digital economy growth in Southeast Asia.
The two pacesetters are both posting growth of over 40% a year. Vietnam’s Internet economy is also booming, reaching US$12 billion in 2019 and recording a 38% annual growth rate since 2015. Another study forecasts that Vietnam’s GDP may add US$162 billion in 20 years if the country’s digital transformation is successful.
Experts said Vietnam possesses strengths in human resources and government support, so the country could create a dynamic wave to further strengthen the development of its digital economy.
The Party and State have outlined orientations for building policies and programmes to actively join Industry 4.0, focusing on applying and developing science and technology, promoting innovation, and improving the quality of human resources.
Last year, the Prime Minister issued the National Strategy on the Industry 4.0 by 2030, to fulfil the goals set in a Politburo resolution, which outlines policies guiding Vietnam’s active involvement in Industry 4.0. The strategy’s objectives are to take full advantage of opportunities presented by Industry 4.0, fundamentally master, and broadly apply advanced technologies in different social and economic fields.
Under the strategy, Vietnam will be the top 40 performers in the Global Innovation Index (GII), the top 30 in the International Telecommunication Union (ITU)’s Global Cybersecurity Index (GCI), and the top 50 in the United Nations’ e-Government Development Index (EGDI) by 2030.
The country also aims to raise the proportion of the digital economy in national GDP to 30% and boost productivity by 7.5% annually on average. Other targets are to achieve universal access to fibre-optic internet and 5G services; complete digital government development; and establish smart cities in key economic zones as well as connect with regional and global networks of smart cities.
