- Your Consultant
- Green Growth
|Stephanie Davis - Vice president for Southeast Asia Google|
Before the pandemic emerged, Vietnam had been undergoing a far-reaching digital transformation, although the era of social distancing has undoubtedly accelerated the pace of change. In terms of consumer behaviour, scrolling through virtual shops and making purchases with QR codes and e-wallets is already the new normal, especially in metropolitan areas.
It has been said that Vietnam, like many Southeast Asian countries, skipped the desktop era and went straight to mobile – around 72 per cent of Vietnamese adults own a smartphone and 70 per cent of the Vietnamese population are connected to the internet.
In the eyes of digitally-minded investors, the country is an exciting and attractive market, and access to customers will only get faster – more than 80 per cent of households should have access to fibre optic infrastructure by 2025, according to Vietnam’s National Programme for Digital Transformation.
As Vietnamese industry moves away from low-tech manufacturing to a service-oriented economy, there is no doubt that fintech, AI, e-commerce, and software will all play a bigger role in the digital economy, creating opportunities for domestic and international investors as well as the government.
Today, digital trade in Vietnam is already generating up to $3.5 billion of economic benefits in Vietnam, equivalent to 1.7 per cent of Vietnam’s GDP, and there is huge room for growth. By 2030, the value of digital trade could reach over $41 billion, according to a report by Singaporean consultancy Alphabeta.
In fact, if digital goods and services were a sector, it would currently be the eighth-largest export category for Vietnam and by 2030 it is also expected to have grown by 570 per cent.
In general, the report highlights how digital trade can create a huge positive impact on Vietnam’s domestic economy, with some of the biggest beneficiaries coming from outside the digital sector.
Digital trade enables Vietnamese firms to achieve cost efficiencies (for example, from cloud computing, and storage of data), enter new markets, and generate richer insights from data. It also supports global collaborations, particularly where Vietnam may have skill gaps, and enables the adoption of more efficient business practices.
Aware that digital solutions can increase worker productivity, lower costs and create new sources of revenue, homegrown corporations and private enterprises throughout the country are eager to digitalise operations and services.
Indeed, if an enterprise from a traditional sphere is not adopting digital solutions and adapting to the times, they run the risk of being left behind. Enterprises in Vietnam with a high level of digitalisation could grow twice as fast as others.
With over 3,000 local startups, applying digital strategies across a range of sectors, such as fintech, food tech, healthcare, e-commerce, digital financial services, and online gaming, Vietnam has a reputation as a fast-rising tech star with a dynamic economy that can provide a suitable environment for piloting new tech.
However, there are still challenges that have limited the development of a startup ecosystem in Vietnam. Firstly, startups frequently lack financial support in their early stage of development (most ‘unicorns’ only receive funds after they have established a reputation in the market). Secondly, startups also lack manpower with the right skills. Third is the lack of a legal framework for innovative startups. Vietnam currently does not have an effective legal framework to manage innovative business models. If policymakers in Vietnam provide the right support policies, they would undoubtedly spur the growth of innovative startups.
Contrary to concerns of some that free digital trade will result in a select number of large multinationals capturing the lion’s share of economic benefits, the Alphabeta report notes that digital multinationals are key players as they make important contributions to the local digital ecosystem, which is still in its infancy but growing fast.
A survey of startups across Asia (including within Vietnam) found that 88 per cent considered it crucial to attract foreign technology investment to the country, with some of the most important channels including start-up financing, investments in the digital ecosystem and knowledge transfer.
It is well known that Vietnam’s small- and medium-sized enterprises (SMEs) account for 98 per cent of all enterprises, contribute 40 per cent of the country’s GDP, and employ half of the working population. Many still lack the human resources to digitalise their operations and services. This puts them at a significant disadvantage when large corporations invest in Vietnam.
At Google, we strongly believe in providing an educational platform that is not only helpful but highly accessible so each and every individual and all enterprises have an equal chance to learn and grow. That’s why, for the last few years, we have been working to provide digital opportunities for all Vietnamese people through free training courses in business and digital skills.
In 2018, we established the “Accelerate Vietnam Digital 4.0” programme, which aims to help SMEs embrace digital transformation solutions and tap online growth opportunities. When Google first started the programme, the goal was to train 500,000 Vietnamese in digital skills by the end of 2021. But that target has easily been surpassed with over 630,000 people benefiting from the initiative at the time of writing.
In June this year, the programme ran in conjunction with Vietnam’s Ministry of Industry and Trade, its Department of E-commerce and Economy Digital Marketing, and the E-commerce Development Centre under the theme of “small stores today, big businesses tomorrow: tips to increase revenue from online shoppers”.
We have also introduced a special initiative called ‘Coding for The Future with Google’, providing accessible programming and logical thinking training for 300,000 students at all levels in many provinces and cities across the country, helping them nurture their passion for creating products that help their lives, society, and economy.
Furthermore, with the help of products and services from Google, Vietnam is well placed to seize more opportunities to grow its economy. Advertising products such as Google Ads, Adsense, and YouTube have led to the creation of over 170,000 jobs in Vietnam, and there are approximately 71,000 jobs related to Android. On top of all that, Alphabeta’s report estimated that online video platforms supported over $16 million in advertising revenues from foreign markets for business in Vietnam in 2017, but this could potentially grow to over $167 million by 2030, based on the forecasted growth of the digital advertising market.
Last but not least, Think Games Vietnam and Google Developer Group have helped promote and support the striving startup and large talented developer community in Vietnam (one of the top markets globally for developer talent in cost-effectiveness and home to some 400,000 IT engineers), opening their quality products to the global market.
Meanwhile, there are also positive signs that Vietnam’s ongoing regulatory focus on digital transformation means the country’s nascent digital ecosystem will become increasingly accommodating for foreign investors who are seeking exposure to the country’s digital ecosystem in the hope of tapping lucrative opportunities across a range of sectors in coming years.