Hanoi (VNA) – The acceleration of a digital economy is one of the Vietnamese government’s focuses to foster economic restructuring in combination with renewing the growth model and growth quality.
Vietnam needs to make the best use of the Fourth Industrial Revolution to build a digital society and develop a digital economy, towards an industrialised country by 2045.
Digital transformation will help hike Vietnam’s GDP by 1.1 percent each year. This requires Vietnam to conduct the process more strongly because digital transformation is the key to building a digital economy.
According to the General Statistics Office, labour productivity in the Vietnamese economy was estimated at 102 million VND (4,512 USD) per workhand in 2018, up 5.93 percent from the previous year. In the 10-year period (from 2007-2016), Vietnam recorded a high productivity increase compared to other ASEAN nations with an annual average increase of over 4 percent.
However, Vietnam's labour productivity was only equivalent to 7 percent of Singapore's, 17.6 percent of Malaysia's, and 36 percent of Thailand's. Vietnam has a chance to rise up and raise its labour productivity thanks to rapid development of digital transformation.
Three elements contributing to raise labour productivity include equipment investment, effective use of resources, and production method change. Digital transformation is a shift from a traditional production method to a digital production one with the digital application to create a bigger value chain for production. Thanks to the transformation, Vietnam’s labour productivity rose to 8-10 percent.
Minister of Information and Telecommunications Nguyen Manh Hung stressed the need to use technology, especially new, digital technology to solve problems of all sectors to raise labour productivity.
All equipment at the Thanh My 500kV transformer station is automated. (Photo: VNA) Lim Choon Tech, Director of HP Vietnam, predicted the Fourth Industrial Revolution would bolster Vietnam's economic output by 62.1 billion USD, equivalent to the GDP growth of 16 percent by 2030.
A Microsoft study said digital transformation increased labour productivity in Vietnam by 15 percent in 2017, which is expected to be 21 percent by 2020.
According to a survey of McKinsey Consulting Company conducted at 2,000 businesses in the world, with a digital transformation effort, a typical business can increase sales by 11.2 percent, raising pre-tax profits of over 7 percent.
Military Commercial Joint Stock Bank (MB Bank) is one of enterprises that catch up with the trend of digital transformation to apply new technologies in the management system to serve customers, and change management activities in in accordance with international practices.
Le Xuan Vu from MB said that after carrying out digital transformation, the number of customers using the bank's comprehensive digital transformation channel increased by nearly 2 million, raising the number of transactions by five-fold. In the first six months of 2019, the digital transformation model generated nearly 300 billion VND in revenue for MB Bank, a strong increase from previous years.
Besides, digital transformation helps increase operational efficiency in production, commercial services and public services, making it more transparent in all areas.
Associate professor Dr. Vu Minh Khuong from the National University of Singapore suggested Vietnamese businesses look into opportunities for global connectivity, from which they have investment plans to manufacture products in line with their strength.
The Prime Minister has assigned the Ministry of Information and Communications to develop a national digital transformation strategy to submit to the Prime Minister in this year.
Minister of Information and Communications Nguyen Manh Hung said that in building a digital economy, many countries around the world are adopting "sandbox". Sandbox is understood as an experimental legal framework in a limited time for new technology models to work and be protected.
According to a survey by the Vietnam Association of Information Technology Software and Services (VINASA), the three fastest digital transformation sectors in Vietnam are information technology with the readiness of up to 77.3 percent, finance-banking with 69.3 percent and e-commerce with 65.5 percent.
To develop a digital economy, many experts believe that Vietnam needs to focus on investing in Fintech (financial technology) development.
A system of Fintech companies and brands in Vietnam. (Photo: VietnamPlus) Since 2008, Fintech has developed rapidly and strongly, profoundly changing business ways and models, as well as affecting the behaviour of market stakeholders, including customers, client service suppliers, supporting service companies, and related state management agencies.
According to Ha Huy Tuan, Vice Chairman of the National Financial Supervisory Commission, many countries in the region and the world have specific policies to promote Fintech development to create breakthrough growth. Vietnam has great potential for Fintech development with the increasing number of Fintech companies across various fields.
Delegates visit and learn about the centre and booths at the ceremony to launch the IoT Innovation Hub at the Hoa Lac High-tech Industrial Park, Hanoi, in April, 2019. (Photo: VNA) The Fintech industry is thriving in Vietnam with the market value expected to increase from 4.4 billion USD in 2017 to 7.8 billion USD by 2020.
Commenting on the national digital transformation Project, technology experts said that the Sandbox legal framework both creates a fair competition for domestic businesses and those providing cross-border services to Vietnam, and helps Fintech companies in particular and startups in general test many new technologies, contributing to digital economic development.
The digital economy is a global trend of the technology 4.0 era, an opportunity and also a challenge of Vietnam's economy in the new period./.
