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Vietnamese Digital Economy Boosts Overall Growth

The digital economy in Vietnam accounts for about 8.2% of GDP. The potential for development for the Internet and digital economy components is large. Unleashing this resource will contribute to socio-economic growth and improve national competitiveness, said the Deputy Director of the Department of Enterprise Management, under the Ministry of Information and Communications (MIC).

There is no unified definition of the digital economy in the world, but most understand the digital economy as an economy based on digital technology and platforms, with economic activities on and by these solutions, created from the application of digital technology and data, using the Internet as an operating space.

According to a press release, MIC defines the digital economy as consisting of three components:

  • ICT digital economy: This is the field of the information technology industry and telecommunications services. It includes manufacturing electronic products and hardware, developing software and digital content, and providing IT and telecommunications services;
  • Internet digital economy: Economic activities based entirely on the Internet, including digital services and businesses and platforms, data, algorithmic, sharing, and gig economies.
  • The digital economy of industries: An economic segment created from digital transformation that applies digital solutions in traditional industries including e-governance, e-commerce, digital finance, digital banking, smart agriculture, smart manufacturing, and smart tourism.

The digital economy opens up new growth spaces, helps improve the competitiveness of the economy, and is the core driving force for national economic growth. It contributes to solving socio-economic problems, the Deputy Director said. In the world, the digital economy is growing very fast. This can be seen through data analysis in international reports, such as the United Nations Forum on Trade and Development (UNCTAD)’s Digital Economy Report.

For example, in 2008 China’s digital economy accounted for about 15% of GDP, but in 2019 the digital economy accounted for 37%. In the Asia-Pacific region, in 2017 the digital economy accounted for about 6% of GDP, but in 2019 it made up 25% of GDP, and with the current complicated COVID-19 pandemic, it is predicted that by 2021, the digital economy may account for more than 60% of the GDP of this region. Vietnam currently has no official data about this but based on many sources, the digital economy currently accounts for about 8.2% of GDP, with about US$163 billion, the press release claimed.

The ICT digital economy accounts for about 4.5% of global GDP, about 6.9% of America’s GDP, and 7% of China’s GDP. For Vietnam, the ICT digital economy is estimated to account for about 5.5% of the country’s GDP, with a revenue of about US$123 billion.

This number does not reflect the real potential of Vietnam’s Internet digital economy, because many cross-border digital platforms collect billions of dollars in Vietnam but do not make declarations. The supervision and management of online business forms have many loopholes. Measuring the digital economy is still difficult, but this figure shows that Vietnam’s Internet digital economy still has great potential for development. According to a recent report, although Vietnam’s internet economy is behind Indonesia and Thailand in total revenue, Vietnam has the highest growth rate with 16% per year, compared to 11%/year for Indonesia or 7%/year for Thailand.

Ministries, sectors, and localities can immediately implement tasks to promote the digital economy. They can implement training programmes, universalise digital skills for people and businesses, and at the same time build a network of consultants for digital transformation and digital economy in their industries and localities. Further, they can promote digital transformation for industries and priority areas, with the motto of digital transformation based on digital platforms, all on cloud services, the release noted.

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