HO CHI MINH CITY, Vietnam — During the COVID-19 pandemic, Vietnam’s gross domestic product (GDP) growth rate managed to rise by 2.9% or the highest in Asia. Nevertheless, since the Delta variant permeated the country in the third quarter of 2021, Vietnam’s economy has become slack while detrimentally impacting businesses and the people. To adapt to the situation, the Vietnamese people shifted to a digital economy. The digital economy in Vietnam has opened up opportunities for the nation to recover from COVID-19’s economic effects and to boost global exchanges.
A digital economy is any kind of economic activity that occurs through digital technology and online platforms. The Internet is a primary operational space of the economy.
There is a total of three elements in a digital economy including:
- ICT Digital Economy: Information technology and telecommunications industries, namely the manufacturing of electronic products, development of software and hardware and provisions of telecommunications services.
- Internet Digital Economy: Economic activities completely on the Internet like digital services, algorithmic economy and other forms of Internet-based business.
- Industries’ Digital Economy: The digital integration in conventional industries such as smart agriculture, digital banking, e-commerce and e-government.
Digital Economy in Vietnam
The obstacles of the pandemic, especially in late 2021, have enabled digital incorporation in ministries, agencies and organizations across Vietnam. Below are impressive sectors that have reaped benefits from the digital economy in Vietnam:
- ICT industry: In spite of the COVID-19 pandemic, Vietnam’s digital technology firms have been significantly expanding, with many switching from assembly and processing to digital product manufacturing and development. To date, 64,000 digital technology companies are running in the nation, a rise of 5,600 in comparison with 2020. Moreover, domestic and international markets sell approximately 1,000 ICT items and services from Vietnamese brands. In 2021, the revenue of the industry reached $136,153 million, far more considerable compared to $124,678 million in 2020.
- Smart Agriculture: Countering COVID-19’s influences, Vietnamese farmers stressed digital technologies to maintain productivity. By November 2021, the capital city of Vietnam operated greenhouses with automatic watering systems, cooling systems to help stabilize temperature and humidity, automatic feeding lines, artificial insemination, as well as biological products and automatic oxygen generators. This could result in a higher quality of produce, reduced pollution and increased income for farmers. With the help of technology, 2021 witnessed a 2.85% growth in the agricultural sector and a $7.4 billion increase in export revenue.
Digital Banking and E-Commerce in Vietnam
- Digital Banking: Digital banking has been flourishing thanks to its convenience in the pandemic. A 2021 report by Mambu, a SaaS (Software as a Service) banking platform, showed that about 85% of Vietnamese preferred digital financial services to traditional types, with 70% increasing their use of online banking and 54% trying for the first time. Transactions conducted through mobile banking rocketed to 76.2% in volume and 88.3% in value. At the same time, the figures for Internet banking were 51.2% and 29.1% in turn. The revenue of mobile payments stands a high chance of going up by 300% until 2025, according to the Internet Data Center (IDC).
- E-Commerce: Along with digital banking’s growth, e-commerce in Vietnam has experienced a noticeable upward trajectory, specifically in the COVID-19 era. E-commerce sustained the supply chain and enhanced the sales of agricultural products, providing manufacturers and farmers with stable earnings. In 2021, overall sales on e-commerce pages stood at $13 billion, and are expected to rise to $39 billion by 2025. The industry has also enabled women and low-income groups to start up their businesses and enrich their earnings.
With its rapid development, the digital economy in Vietnam has proved to be worth investing in.
In 2021, the sum of foreign investments made into Vietnam startups was more than $1.3 billion. Fintech (Digital Banking) was the most invested sector, with two contracts worth more than $100 million each. The digital economy in Vietnam has facilitated a rising startup hub with high technological applications in Southeast Asia.
Thanks to the improvement in quality with aid from technologies, Vietnam’s agricultural products are currently welcomed in various demanding markets, especially the U.S., the EU and Australia. “Australians are very open to Vietnamese farm produce, which means the chance for Vietnam to export more agricultural products to the market is high,” said David John Whitehead from the Australian Business Association in Vietnam (Auscham) at the Vietnam Agriculture Digital Transformation International Forum 2021.
Since Vietnam citizens jumped into e-commerce as sellers or buyers, foreign e-commerce apps have enjoyed a substantial profit opportunity. As of October 2021, on Lazada (a Chinese e-commerce platform), the figure for new sellers went up by 30% monthly. Additionally, its revenue and orders were twice as high as they were in 2020. Grab (a Malaysian e-commerce company) saw a high growth rate in orders for GrabFood and GrabMart, the firm’s two branches.
The digital economy has paved a new path for Vietnam to economically thrive in both domestic and global markets.
– Lan Nguyen