Swift digital revolution drives Vietnam’s economic growth

October 18, 2019 | 16:03

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Vietnam’s rapid digital transformation demand is building new pathways for businesses. However, in order to translate these into real success stories, numerous obstructions will need to be removed. Phuong Hao reports.

swift digital revolution drives vietnams economic growth

Industry 4.0 technologies are revolutionising most of the countries economic sectors

The latest report on Vietnam Digital Marketing by Andrews University showed that 64 million Vietnamese people use the internet, an increase of 28 per cent compared to 2017. There are 143.3 million mobile subscriptions and, on average, each person owns 1.4 mobiles.

In 2019, mobile payment growth increased by 232 per cent in value and 98 per cent in volume over the same period last year. In particular, the proportion of consumers paying with mobile in Vietnam has risen to 61 per cent from 27 per cent in 2018.

Meanwhile, the latest report on the digital economy in Southeast Asia published by Google, Temasek, and Bain & Company showed that Vietnam’s digital economy would reach $12 billion in 2019, leading the area along with Indonesia.

According to the Ministry of Science and Technology, in 2015, the digital economy in Vietnam was worth $3 billion, and now has reached $9 billion. The ministry predicts this figure will reach $30 billion by 2025. It is forecast that Vietnam’s GDP may see an addition of another $162 billion if digital transformation is successfully carried out.

Issues regarding digital transformation and relevant opportunities will be discussed at the Vietnam Business Summit 2019 which will take place in Hanoi on October 16.

Working in Vietnam for more than a decade, Denis Brunetti, president of Ericsson in Vietnam, Myanmar, Cambodia, and Laos, has witnessed the fast development of Vietnam over the years. “Digital transformation in the country has been developing quickly. The Vietnamese government and network carriers have co-operated to build a mobile broadband network, formerly 3G and 4G and soon 5G, to build infrastructure and promote the digital economy, allowing data to flow smoothly,” Brunetti said.

“In addition, they have been building Internet of Things (IoT) applications running on that network, helping the economy improve and operate efficiently.”

Mentioning the establishment of the Vietnam Innovation Network and the National Innovation Centre, as well as sustainable economic growth of around 7 per cent, Brunetti stated, “I won’t be surprised if Vietnam surpasses many other countries in the next few years.”

In the field of banking, one of the pioneering fields in the Fourth Industrial Revolution, digitalisation has been widely carried out with the application of fintech advances such as mobile payments, standardised QR codes, digital wallets, and chip cards for payment.

Nguyen Kim Anh, Deputy Governor of the State Bank of Vietnam, said that the bank would support and accelerate digital transformation in the sector. It will complete mechanisms and policies to adapt to Industry 4.0, creating favourable conditions for promoting business models and governance in banking, along with focusing on network security and consumer rights protection while limiting risks.

At the Vietnam ICT Summit in August, the Vietnam Digital Transformation Alliance was officially launched with the participation of many telcos and IT enterprises in the country. In addition, the Ministry of Information and Communications (MIC) has created the National Digital Transformation initiative with the aim of implementing breakthroughs towards a digital Vietnam.

What lies ahead

At the recent Industry 4.0 Summit, MIC Minister Nguyen Manh Hung stated that digital technology companies in Vietnam are playing a core role.

“We need the help of hundreds, even thousands of ICT enterprises all over Vietnam to promote digitalisation and ‘Make in Vietnam’,” he said, adding he expected that the process will open up vast opportunities for the country, helping to comprehensively change every business, field, and citizen.

As a unit implementing many digital projects around the country with the motto of promoting “Make in Vietnam”, state-run VNPT finds that Vietnam is a good place for blockchain, IoT, and AI to be developed.

According to Nguyen Duc Kien, director of VNPT’s System Integration Solution Centre, most cities and provinces are now aiming to build smart cities in which smart management systems are used. Furthermore, next month, the national public portal will be launched.

“This is a really good chance for VNPT and many other technology companies to contribute to the digital transformation of thousands of public services around the country,” Kien said.

Setting the target of reducing the time on implementing related projects for organisations by using its comprehensive platforms and products, Nguyen Van Khoa, general director of FPT, said that the National Digital Transformation Project aims to cut 30 per cent of administrative procedures, develop 20 per cent of new services based on data, and move 50 per cent of small- and medium-sized enterprises towards a digital platform.

“The demand for IT human resources will be high. This is massive for us in terms of IT engineers, and we have a plan of training 50,000 high-quality IT engineers,” Khoa added.

Meanwhile, according to Brunetti from Ericsson, there will be many new technologies related to altering telecommunications infrastructure.

Vietnam has set the goal of being one of the top four digital countries in the ASEAN, developing at least 80,000 Vietnamese tech enterprises, and growing the digital economy to account for 25 per cent of GDP.

In addition, the MIC has looked at cutting 2G as 100 per cent of Vietnamese people own smartphones. According to a 5G developer, broadband systems allow data to flow across all sectors and all industries of the economy. Therefore, 4G and 5G will be the driving force for the development of Vietnam’s digital economy.

Along with technology providers, many other companies can also find opportunities through digitalisation, from simpler administrative procedures for e-government to faster and more convenient banking services. It will also be safer and faster with e-commerce services.

Obstacles

According to Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry, digital transformation is actually a revolution of policies and institutions. “While digital transformation drives economic growth, the biggest drivers remain the institutional reforms and the enterprising spirit of Vietnamese people,” Loc stated.

According to him, institutional reforms are always the first channel for improvement to match new technological conditions.

On education, Brunetti from Ericsson noted, “Education and training are very important. People must be the owners, the handlers, and the decision makers. They need to have skills to manage technologies.” Brunetti pointed out that 70 per cent of Vietnam’s workforce is likely to be displaced by automation within the next three decades. “It will be the digital age where data, science, technology, engineering, and mathematics are going to be the key capabilities and competencies,” he stated.

To Pham The Truong, general director of Microsoft Vietnam, developing the digital economy comes with tough hurdles, especially in terms of personal security. “How many of us using smartphones can confirm that we are not being monitored?” Truong questioned. “And when a citizen has money to buy a phone, whose responsibility is it to ensure personal freedom?”

Truong believes that the responsibility belongs to the state to deliver a legal framework as well as measures to ensure the safety of the people in the digital economy.

Truong Vincent Kinh – Chairman Sunny World Investment & Development Corporation

Digital transformation affects the way we live, work, and manage business activities across the entire Vietnamese economy from retail, banking, transportation to tourism and education.

Recognising that the application of Industry 4.0 technologies can help us restructure our apparatus, digitalise business governance, and increase competitiveness, we are giving top priority to this initiative by building a comprehensive strategy on technology application for our businesses.

To encourage Vietnam to take action and join Industry 4.0, the government should give priority to businesses to be at the centre of the national innovation ecosystem, develop the enabling government, and further improve the business climate.

They should have policies to support businesses in improving technology capacity, to enable them to develop new and key products, and advanced technologies. It is also important to renovate the education and training systems to meet the development demands in the digital age.

Jorge Martin-Martinez - General director DKSH Vietnam

E-commerce, a crucial part of Vietnam’s digital economy, has seen strong growth in terms of revenues and market scale, totaling around $4.6 billion. In such a dynamic e-commerce landscape, local market access and knowledge is key to tapping into the region’s potential. With more than 150 years of experience in Asia and Vietnam, DKSH offers a comprehensive portfolio of e-commerce services, including online channel management, digital marketing, e-fulfillment, and data analytics tailored to market needs.

Industry 4.0 also offers opportunities for DKSH across our value chain, transforming our operations, our services and how we collaborate with our clients, customers, and suppliers. DKSH Vietnam aims to leverage and develop our global digital platform to better serve our clients and customers, gain local insights, and uncover trends.

We are continually investing in our digital team to capitalise on the opportunities of Industry 4.0 and drive our e-commerce, analytics, and digital transformation agenda forward.

Patrick Architta – Chairman K2 Management Vietnam

Vietnam has vast potential and valuable natural resources, which represents an attractive open market for foreign investors. In the last five years, K2 Management has been involved in every step of numerous projects in the energy sector, from development and construction to asset management, and has a good insight into Vietnam’s current market.

For instance, the last feed-in tariff for wind electricity generation is inviting for both local and international financiers. With electricity demand growing 10 per cent a year, a bright future for wind projects is expected.

It is also pleasing to note how accessible the market is for overseas investors, who can develop projects in Vietnam in collaboration with a mix of international companies, local contractors, and Vietnamese authorities.

Regarding our involvement in the Dam Nai project, the first foreign-owned wind farm in Vietnam, we must highlight the hard work and skilled labour provided by our Vietnamese employees.

K2 Management continues to be optimistic as a lot of improvements have been made in a short period of time. K2 Management believes that renewable projects in Vietnam are competitive and the company will maintain their support for better energy projects.

Nguyen Manh Tuong - Managing director Wize Vietnam

Wize Solutions recognises that Vietnam can be a hub of innovation and creativity and not just a place for implementation.

We have always seen Vietnam as a highly inventive place, and we are committed to building our innovation hub here in Hanoi, expanding our space to accommodate growth.

Our global team is thriving but the innovative software solutions that come from Vietnam are differentiating us in the market, and that is why it makes sense for us to invest more in this location.

Pham Minh Tuan – CEO FPT Software

Although Vietnam has implemented different programmes on digital transformation, and many provinces and cities have actively participated in this practice, it still needs to take more specific action.

The decision makers on innovation should pay more attention and express more determination to carry out this process. They should find out how to start this course of action, with whom, and how to efficiently see it through. Technologies are just our tools for innovation, not magic wands. To ensure efficiency, business owners or unit leaders should be the direct captains of innovation programmes.

In addition, there should be co-operation between ministries, industries, and localities with synchronous and comprehensive plans. As a software provider, FPT Software has built a methodology on digital transformation called FPT Digital Kaizen. This is a collection of the practical experiences of a big US group.

Pham Duy Khuong - Managing director ASL Law

Vietnam is now embracing digital transformation, a comprehensive change that opens up great opportunities.

Digital transformation increases labour productivity by replacing manual labour with automation, replacing intellectual capital with data, and removing intermediate mechanisms in the value chain with direct connection tech. These factors will make Vietnam more attractive to overseas financiers when they are thinking about whom to back.

It is time for Vietnam to selectively accept investment flows with better quality, good scale, modern technology, environmental protection, and legal compliance.

Michael Sailer – CEO thyssenkrupp Vietnam

In a 2016 World Bank report on Digital Dividends, Vietnam’s Digital Adoption Index was scored at 0.46 on a scale of 0 to 1, above the global average of lower-middle income countries but below the average for the region. This could be a catalyst for Vietnam to push for further development of the ICT sector and enhance the country’s competitiveness. There are encouraging signs in the government’s strong and positive focus on Industry. For thyssenkrupp, we have developed digitalised expertise and are ready to support our business partners with digital transformation. Embracing this process will give major advantages to thyssenkrupp and our customers in Vietnam.

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