A stronger digital economy ecosystem for Vietnam

How do the four pillars currently influence the development of Vietnam’s digital economy?

The ICT industry is a fundamental part of promoting the country’s industrialization and modernization, and is also a crucial pillar in the digital economy.

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

The digitalization of economic sectors acts as an important driver for new growth and stimulates labor productivity in traditional industries. This is essential for building the digital ecosystem. Moreover, the pillars of digital governance and digital data are integral forces that contribute to rapid and sustainable socio-economic development.

Currently, more than 60 percent of Vietnam’s digital economy is powered by the IT industry, with its products and services playing a central role. By 2023, IT industry revenues reached $138.5 billion, with more than 45,000 digital technology companies contributing to this growth. International IT industry revenues amounted to $7.5 billion, with more than 1,400 companies operating in foreign markets.

The remaining 40 percent of the value of the digital economy comes from sectors such as e-commerce, digital content, finance and banking. Although the services sector plays an important role, there is significant potential for further growth.

To achieve the goal of increasing the contribution of the digital economy to around 30 percent of GDP by 2030, an annual growth rate of 20 percent is needed. The greatest development potential lies in the digitalization of industries and sectors.

How has Vietnam’s digital ecosystem developed so far?

The digital ecosystem includes diverse applications across industries, creating new business models and boosting labor productivity in traditional industries. In the digital payments ecosystem, 87.08 percent of the population now has checking accounts. By the end of May 2024, the number of mobile money users had reached 8.8 million.

The ecosystem of digital platforms, which support the digital transformation of companies, now meets about half of the market demand. In e-commerce, the total turnover of the five largest online retail platforms exceeded VND97 trillion ($4 billion) in the first half of 2024, marking an increase of 80 percent compared to the same period in 2023.

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

Furthermore, Vietnam ranks 11th globally in mobile app downloads and 31st in app payment revenue. Downloads of paid applications increased 11 percent year-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 boosting growth in the digital economy?

To promote the development of Vietnam’s digital ecosystem, a number of important conditions must be met.

First, the digital infrastructure must be interoperable and open, using shared standards that enable the development of different applications and support different technologies and suppliers. This infrastructure must operate at scale and include key platforms such as citizen identification, electronic payments, digital signatures and data sharing.

The second crucial element is high-quality data. Digital platforms must prioritize 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 data exploitation scenarios are key priorities for 2024 and beyond. Various digital applications, such as traceability of agricultural products 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 to amend a decree on concentrated IT parks to facilitate their development in areas with strong IT talent, green energy infrastructure and good transport and tourism connections . The MIC is also drafting a law on the 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, Disabled and Social Affairs, efforts are being made to train professionals in emerging areas such as microchips, AI and data to meet global development trends .

In addition, ministries and local authorities are encouraged to involve digital technology companies that use state funds to solve digital transformation challenges. The aim is to ensure that there is at least one digital technology business for every 2,000 people.

In the field of sector-specific digital economies, the Ministry of Public Security is investigating a law on the protection of data and personal data. The MIC develops standards and regulations to facilitate the flow of data between sectors and guide the opening of data from government agencies to promote transparency without concerns about data accuracy or completeness.

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

The VIR conference highlights factors driving the digital economy The VIR conference “Enablers for Digital Economy Development in Vietnam” will take place in Hanoi on September 30 and will offer interesting discussions on the Vietnamese economy, market trends and the commercialization of 5G.

It is time to unleash the potential of 5G for the development of Vietnam’s digital economy In the next five to ten years, we can imagine a very different future, a world where we get coffee delivered by drone on our way to work, where we can run global organizations from our own homes, and where plants don’t die because they can tell their owners when they need water.

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