Vietnam’s digital economy to reach 14 billion USD this year

Illustrative image (Source: Internet)

HCM City - Vietnam’s digital economy is expected to reach 14 billion USD in 2020, a year-on-year increase of 16 percent, and will likely reach 52 billion USD in 2025, re-accelerating to nearly 29 percent in compound annual growth rate, according to a report from Google, Temasek and Bain & Company.

According to the report, In Vietnam, with its various stages of social distancing, users turned to the internet for solutions to their sudden challenges. A significant number tried new digital services: 41 percent of all digital service consumers were new (higher than the SEA average), with 94 percent of these new consumers intending to continue their behaviour post-pandemic.

E-commerce has driven significant growth in the country, at 46 percent, alongside strong growth across most sectors, except for travel, it said.

The report also said that Southeast Asia’s digital economy remains resilient at 100 billion USD in gross merchandise value (GMV) despite headwinds and is on track to cross 300 billion USD in GMV by 2025.

Indonesia and Vietnam continued to grow at double-digit rates, and Singapore remains a regional enabler for growth, despite short term GMV decline due to the online travel sector.

The report, which covered Indonesia, Malaysia, Vietnam, Singapore, Thailand and the Philippines, showed that Internet usage in the region continues to multiply, with 40 million new users this year alone. That pushed the total number of internet users in these Southeast Asian countries to 400 million or nearly 70 percent of the population.

The coronavirus brought about a permanent and massive digital adoption spurt, with more than one in three digital service consumers (36 percent of total) new to the service. Of the number, 90 percent intend to continue their newfound habits post-pandemic, it said.

Many of the new users came from non-metropolitan areas in Malaysia, Indonesia and the Philippines.

The report looked at seven internet economy sectors in Southeast Asia, including e-commerce, transport and food delivery, online travel, online media, financial services, health technology and education technology, with health and education technology added to the 2020 version.

E-commerce is expected to grow by 63 percent to 62 billion USD in 2020 and is poised to hit 172 billion USD in 2025.

Digital financial services are also gaining momentum as more small-and-medium-sized businesses have become receptive to accepting online payments. Digital payments are set to grow from 600 billion USD in 2019 to 620 billion USD in 2020 and could reach 1.2 trillion USD by 2025.

The health technology and education technology sectors received a boost from the pandemic as many people turned to online health consultations while schools shifted to remote learning. Investments in those sectors are growing.

Online travel and transport sectors were hit the hardest as the pandemic ground international travel to a halt while many people began to work from home or became concerned about sharing transport. Still, the report predicted online travel to rebound to 60 billion USD by 2025.