Digital Economy: Vietnam

The digital transformation wave has swept through every aspect of Vietnamese society, revolutionizing the way people live and work. The digital economy has emerged as the driving force behind Vietnam’s future economic growth. Recognizing its potential, the Vietnamese government has implemented policies, guidelines, and legal frameworks to support and accelerate the development of the digital economy. This article provides an overview of the digital economy in Vietnam, highlights key stakeholders driving its growth, explores rising opportunities for investors, and emphasizes the importance of prioritizing investment and regulatory reforms.

I.Overview of the Digital Economy in Vietnam

Vietnam’s digital economy is experiencing remarkable growth and has become the second fastest-growing market in Southeast Asia. The Ministry of Information and Communications (MIC) projects that the value of Vietnam’s digital economy could reach USD 57 billion by 2025, accounting for 25-30% of the country’s GDP.

With a large population and a high percentage of young and dynamic individuals, Vietnam offers an immense market with significant potential for new business models. The country’s growing number of smartphone and Internet users has created attractive opportunities for the digital economy to thrive.

II.Key Stakeholders Creating the Digital Economy in Vietnam

The Vietnamese government has demonstrated a strong commitment to fostering digital economic activities across all sectors and industries. National digital platforms have been established with government support, acting as the foundation for the digital economy’s rapid growth. The government has also set strategic objectives in information security, including the establishment of 2-3 research and development centers in this field, ensuring robust information security across all ministries, branches, and localities.

Vietnam’s startup ecosystem contributes to the growth of the digital economy through various support programs and services. These initiatives are based on five thematic pillars: responsive government, entrepreneurial human capital, access to finance, access to markets, and innovative business support.

Digital transformation has permeated all types of enterprises in Vietnam, ranging from B2C to B2B and even B2G. Both client-facing activities and internal operations have embraced digital technologies. A report by Cisco, titled “Digital Development Index of Small and Medium-sized Enterprises in Asia-Pacific,” highlights that Vietnamese small and medium enterprises are investing in cloud computing technology, network security, and software and hardware upgrades for digital transformation.

Vietnam has made significant progress in achieving financial inclusion, with nearly 70% of Vietnamese adults having bank accounts. Electronic account openings, mobile money accounts, and the use of bank cards have seen substantial growth, particularly in rural and remote areas.

III.Rising Opportunities for Investors in Developing Vietnam’s Digital Economy

Vietnam’s e-commerce sector is an attractive market for foreign investors and is rapidly catching up with its ASEAN peers. While B2B e-commerce presents unique challenges due to larger order sizes and complex contracts, several successful B2B e-commerce businesses anticipate strong growth in the coming years. Identifying niche markets and tailoring offerings to fit Vietnamese culture and consumption habits can provide significant advantages to small businesses, allowing them to tap into hidden potential without directly competing against major players with extensive financial resources.

However, one of the main barriers to the expansion of e-commerce lies in serving rural consumers. Currently, approximately 80% of e-commerce activity is concentrated in urban areas such as Hanoi and Ho Chi Minh City. The scattered nature of the rural population poses logistical and cost challenges for rapid delivery and limits access to e-commerce services.

Blockchain technology has also gained traction in Vietnam, with a growing number of individuals owning cryptocurrencies. As of 2021, more than 4.22 million Vietnamese individuals (4.28% of the population) owned cryptocurrencies, and this number is projected to reach 7.46 million people by 2026. Vietnamese users of crypto trading websites and platforms are among the top five worldwide.

In conclusion, the digital economy holds immense potential for Vietnam’s sustained and inclusive economic growth.

Key Points Summary:

• Vietnam’s digital economy is experiencing rapid growth and is the second fastest-growing market in Southeast Asia.
• The government of Vietnam has implemented policies, guidelines, and legal frameworks to support and accelerate the development of the digital economy.
• Vietnam offers a large and dynamic market with a young population, making it attractive for new business models in the digital economy.
• National digital platforms and strategic objectives in information security have been established to drive the growth of the digital economy.
• The startup ecosystem in Vietnam provides support programs and services based on key thematic pillars to foster digital economic activities.
• Digital transformation has been embraced by enterprises across all sectors, from B2C to B2B and B2G.
• Financial inclusion in Vietnam is improving, with a significant percentage of the population having bank accounts and access to mobile money accounts.
• E-commerce in Vietnam presents opportunities for foreign investors, especially in niche markets and B2B e-commerce.
• Challenges remain in serving rural consumers due to the concentration of e-commerce activities in urban areas.
• Blockchain technology has gained traction in Vietnam, with a growing number of individuals owning cryptocurrencies.

We are ready to support and guide businesses looking to tap into the country’s thriving digital economy. Contact our Vietnam team today to explore the opportunities and navigate this exciting landscape.