A stronger digital economy ecosystem for Vietnam

How are the four pillars currently influencing the development of Vietnam’s digital economy?

The ICT industry is a fundamental component to promoting the country’s industrialisation and modernisation, and is also a critical pillar in the digital economy.

Tran Minh Tuan, director of the Department of Digital Economy and Society under the Ministry of Information and Communications

The digitalisation of economic sectors serves as a key driver for new growth, boosting labour productivity across traditional industries. This is vital for building the digital ecosystem. Additionally, the pillars of digital governance and digital data are integral forces contributing to rapid and sustainable socioeconomic development.

At present, more than 60 per cent of Vietnam’s digital economy is driven by the IT industry, with its products and services playing a central role. In 2023, IT industry revenue reached $138.5 billion, with over 45,000 digital technology enterprises contributing to this growth. International IT industry revenues accounted for $7.5 billion, with over 1,400 enterprises involved in foreign markets.

The remaining 40 per cent of the digital economy’s value comes from sectors like e-commerce, digital content, and finance and banking. While service industries play a significant role, there’s considerable potential for further growth.

To achieve the goal of increasing the digital economy’s contribution to around 30 per cent of GDP by 2030, an annual growth rate of 20 per cent is required. The greatest development potential lies in the digitalisation of industries and sectors.

How has Vietnam’s digital ecosystem developed so far?

The digital ecosystem comprises diverse applications across industries, creating new business models and boosting labour productivity in traditional sectors. In the digital payment ecosystem, 87.08 per cent of the population now hold payment accounts. By the end of May 2024, mobile money users had reached 8.8 million.

The digital platform ecosystem, which supports digital transformation among businesses, now meets approximately half of market demand. In e-commerce, total sales from the top five online retail platforms in the first half of 2024 exceeded VND97 trillion ($4 billion), representing an 80 per cent increase compared to the same period in 2023.

The digital identity ecosystem has also grown significantly, with over 55.25 million electronic identity accounts activated – an increase of 5.55 million since December 2023. The VNeID platform, developed by the Ministry of Public Security, now offers 10 utilities and sees an average of 1.5 million visits daily.

In addition, Vietnam ranks 11th globally for mobile app downloads and 31st for app payment revenue. Downloads of paid applications are up by 11 per cent on-year, with seven Vietnamese apps surpassing 10 million active users, including Zalo, MoMo, and VNeID.

What are the necessary conditions for developing Vietnam’s digital ecosystem and driving growth in the digital economy?

To foster the development of Vietnam’s digital ecosystem, several key conditions must be met.

Firstly, digital infrastructure must be interoperable and open, using shared standards that allow for the development of various applications and support different technologies and suppliers. This infrastructure must operate at scale, encompassing key platforms such as citizen identification, electronic payment, digital signatures, and data sharing.

The second crucial element is high-quality data. Digital platforms must prioritise addressing specific challenges within each industry and sector. The data generated by these platforms should be shared and contribute to a national data warehouse.

The formation of data warehouses and the development of scenarios for data exploitation are key priorities for 2024 and beyond. Diverse digital applications, such as agricultural product traceability or early disease detection, will depend on this data.

How are policies and institutions being improved to create a complete legal framework for expanding the digital ecosystem and contributing to the digital economy?

Several legal documents are being revised or developed to support the expansion of the digital ecosystem. In the ICT industry, the Ministry of Information and Communications (MIC) is working on amending a decree on concentrated IT parks to facilitate their development in areas with strong IT talent, green energy infrastructure, and good transport and tourism links. The MIC is also drafting a law on digital technology industry to establish the industry as a fundamental sector.

In collaboration with other ministries, including the Ministry of Planning and Investment and the Ministry of Labour, Invalids, and Social Affairs, efforts are underway to train professionals in emerging fields such as microchips, AI, and data to meet global development trends.

Additionally, ministries and local authorities are encouraged to engage digital technology enterprises using state funds to solve digital transformation challenges. The goal is to ensure there is at least one digital technology enterprise for every 2,000 people.

In terms of sector-specific digital economies, the Ministry of Public Security is researching a law on data and personal data protection. The MIC is developing standards and regulations to facilitate data flow between sectors and guiding the opening of data from state agencies to promote transparency without concerns over data accuracy or completeness.

The aim is to develop high-quality datasets and scenarios for data exploitation in key sectors, including wholesale and retail trade, agriculture, manufacturing, tourism, and logistics, with plans to scale these models after successful implementation in selected localities.

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