Digital Economy Development in Vietnam: Challenges and Solutions
Digital economy is known as all economic activities based on digital platform and digital economic development is the use of digital technologies and data to create new business models. Digital economy has been playing a vital role in economic development of many countries in the world, including Vietnam. With a population of nearly 100 million people, Vietnam is considered as one of the countries with a good digital economy growth rate in the ASEAN. Although Vietnam has just started to develop digital economy in recent years, it has obtained some achievements.
According to E-Conomy SEA 2021 – Roaring 20s: the SEA Digital Decade report by Google, Temasek, and Bain & Company (2021), in 2021, Vietnam’s digital economy is worth about 21 billion USD, which is 7 times higher than that of 2015 and is expected to reach 220 billion USD in gross merchandise value (GMV) by 2030, ranking second in the region after Indonesia. Under the influence of the Covid-19 pandemic, Vietnam remains an attractive innovation hub in the region and the world with skyrocketing trade and investment activities, reaching a high record of 1.37 billion USD, focused on e-commerce, finance, health and education, etc.
Vietnam is also one of the first countries to have a clear strategy for digital transformation with three pillars: 1) develop digital government, improving operational efficiency and effectiveness; 2) develop the digital economy, improve the competitiveness of the economy; 3) develop digital society, narrow the digital gap. Over the past years, the digital transformation process in Vietnam has achieved remarkable results. Over 50% of ministries, sectors and localities have developed and started implementing programs, projects and plans based on digital transformation. Many Vietnamese technology enterprises have mastered core technologies and developed technology platforms for digital transformation, including about 40 ‘Make in Vietnam’ platforms. The application of digital technology and digital transformation in the business community has also been strongly promoted.
Some challenges still facing
Despite the above mention achievements, Vietnam still meets some challenges in the digital economy development process, namely:
First of all, the awareness of the people and a part of state management staff about the benefits as well as opportunities and challenges of the digital economy for socio-economic development is still uneven at all levels and industries. Therefore, the synchronization of the database on the digital economy is still fragmented and scattered; and there is no connection and link between ministries, industries and localities.
Secondly, the legal and institutional environment for the digital economy development is still weak and inconsistent, so the potential for digital economy development has not been fully exploited. Typically, despite the rapid development of science and technology, with the outbreak of the Covid-19 epidemic, state management agencies in Vietnam still met some difficulties, for example, in managing and collecting taxes for online commercial activities or ensuring the interests of employees and consumers through e-commerce, etc.
Thirdly, foreign digital technology enterprises with strong potential as well as creation of innovative products and high technology content are big challengers for domestic enterprises. While the competitiveness of many domestic enterprises is still limited due to the mostly small and medium size of Vietnamese enterprises, the lack of capital and low technology level.
Fourthly, Vietnamese people still favor traditional shopping habits, using cash instead of e-money, which greatly influences the digital transformation process of enterprises. The business behavior and consumption habits between the urban and rural, mountainous and ethnic minority still have a large gap, causing difficulties for enterprises to perform synchronous digital transformation.
Fifthly, human resources, especially those in information technology are still lacking and weak in both quantity and quality. Vietnam currently lacks highly qualified technology engineers and management capabilities that can meet the development needs of current and future technology enterprises.
Last not least, the problem of network security, privacy and information safety are increasingly affecting the digital economy development in Vietnam. Because digital economy is based on information technology and the internet, there are so many risks in terms of security, information safety, financial safety and privacy of data. In Vietnam, it has been recorded to have so many cyber-attacks, including Malware, Phishing and Deface ones.
Solutions to take up
In order to promote digital transformation and develop digital economy in the future, Vietnam should:
Firstly, promote propaganda to raise awareness of the whole society about digital transformation and development of the digital economy.
Secondly, supplement, amend institutions, as well as create a legal framework for digital transformation and digital economy development. The entire society needs to fully participate in the digital economy development process.
Thirdly, pay more attention to network security, enhance security and information safety.
Fourthly, develop and perfect digital infrastructure, especially technical infrastructure, digital payment infrastructure and 5G networks.
Fifthly, accelerate the progress of digital transformation in industries and fields that can be digitized.
Sixthly, encourage the development of high-quality human resources, especially human resources in the technology industry.
Image Courtesy: World Bank
(The views expressed are those fo the author and do not represent views of CESCUBE.)
Thao Bui is a researcher at Ho Chi Minh National Academy of Politics, Vietnam. She is currently pursuing PhD in Finance at the Faculty of Management and Economics, Tomas Bata University in Zlín, Czech Republic (2022-26).
