Digital Transformation in Vietnam Today: Emerging Issues and Solutions

Ảnh minh họa - Nguồn: Internet

1. The Current Situation of Digital Transformation in Vietnam
1.1. Mechanisms and Policies on Digital Transformation in Vietnam
Digital transformation in Vietnam is currently reflected in numerous legal documents, specifically as follows:

Resolution No. 52-NQ/TW dated September 27, 2019, of the Politburo on several guidelines and policies for proactively participating in the Fourth Industrial Revolution — striving that by 2030, Vietnam will have completed the construction of a digital government, with the digital economy accounting for about 30% of GDP and ranking among the top 50 countries in the world, as well as third in the ASEAN region in terms of e-Government and digital economy development.

Decision No. 749/QĐ-TTg dated June 3, 2020, of the Prime Minister approving the “National Digital Transformation Program to 2025, with orientation to 2030,” sets out six tasks and solutions that lay the foundation for digital transformation, including: (1) Transforming awareness and institutional design; (2) Developing digital infrastructure; (3) Developing digital platforms; building trust and ensuring cybersecurity and safety; (4) International cooperation, research, development, and innovation in the digital environment.

Decision No. 1658/QĐ-TTg of the Prime Minister on the “National Strategy on Green Growth for the period 2021–2030, with a vision to 2050” dated October 1, 2021, identifies green growth as a driving force for economic restructuring associated with renewing the growth model, enhancing competitiveness, and improving resilience against external shocks. Green growth is based on modern institutions and governance, advanced science and technology, and focuses on investment in advanced technology, digital transformation, smart and sustainable infrastructure.

1.2. Achieved Results
With a population of nearly 100 million and one of the fastest-growing economies in Asia, a young and dynamic population capable of rapidly adopting advanced technologies, Vietnam is considered to have significant potential for digital transformation. This is an excellent opportunity for Vietnamese enterprises to make breakthroughs in the market through digital transformation.

In 2020, the value of several domestic technology companies increased by about 200% on the Ho Chi Minh City Stock Exchange, including Digiworld Corporation — a market development services provider — and Vien Lien Telecommunications Equipment Company, which saw growth rates of 252.1% and 189.4%, respectively (World Bank, 2021). According to the United Nations’ 2020 E-Government Development Survey, in 2021, the revenue of digital enterprises in Vietnam grew by nearly 10%. Vietnam’s e-Government Development Index ranking rose by three positions compared to 2016.

According to a 2020 survey of 400 enterprises on “The Status of Digital Transformation in Enterprises in the Context of the COVID-19 Pandemic” conducted by the Vietnam Chamber of Commerce and Industry (VCCI), Vietnamese businesses have begun to recognize and apply digital technologies in areas such as internal management, procurement, logistics, production, marketing, sales, and payments. The widespread impact of COVID-19 and the resulting restrictions on physical contact and social distancing measures compelled enterprises to adopt more digital technologies in their operations, particularly in internal management, e-payments, and online marketing. Within a short time, the proportion of businesses applying digital technologies increased rapidly compared to before, specifically in remote personnel management, online meetings, e-learning, and internal approval processes.

In internal management, cloud computing has become the most widely used technical tool among Vietnamese enterprises, with 60.6%, marking an increase of 19.5% compared to the pre-pandemic period. This is followed by online conferencing systems and workflow management systems, with approximately 30% of enterprises having adopted these tools before the pandemic and about 19% starting to use them since the onset of COVID-19.

The survey also revealed the high expectations of the majority of Vietnamese enterprises toward digital transformation. Up to 98% of enterprises expect changes in their production and business activities when implementing digital transformation, of which the greatest expectation is cost reduction (over 71%), followed by paperwork reduction (61.4%), and enhancement of product and service value and quality (45.3%).

In sectors such as Finance, Tourism, and Transportation, digital transformation trends have been taking place vigorously. For instance, in the Banking sector, enterprises have been researching and implementing initial digital transformation strategies using IoT applications that allow customers to access banking services and connect with other digital ecosystems on Internet platforms (such as VPBank’s Timo, TPBank’s LiveBank, BIDV’s E-Zone, etc.), or to provide banking services through applications installed directly on mobile devices (Mobile Banking, etc.).

In the transportation sector, the rapid development of foreign ride-hailing services such as Grab and Uber has catalyzed the strong growth of domestic ride-hailing companies such as Be and FastGo — new business models entirely based on technological platforms.

VinGroup has also developed a unified customer management system with VinID, helping customers integrate and manage information when engaging with various VinGroup services such as household bill payments, electricity bills, shopping, or resort services.

In addition, more than 30 cities have been invested in developing elements of Smart Cities, integrating multiple advanced technologies to serve human activities and welfare.

The Government and local authorities have also been making great efforts in building an e-Government, moving toward a digital government in the future. Vietnam focuses on building e-Government to promote the digitalization of the economy. The initial efforts began with the establishment of the National Committee on E-Government (in 2018), tasked with proposing strategies and policies to create a legal environment for establishing e-Government. Vietnam is among the top 10 countries with the fastest growth in the e-Government Development Index and aims to be among the top 4 ASEAN countries in e-Government development by 2025 and among the world’s top 50 by 2030.

With well-developed telecommunications and information technology infrastructure, wide coverage, and high user density (about 70% of the population using the Internet) — ranking 13th among the top 20 countries with the largest number of Internet users — Vietnam is one of the fastest-growing digital technology nations globally. Currently, about 72% of the population uses smartphones, and 70% of mobile subscribers use 3G–4G services. Vietnam is accelerating the deployment of 5G services, which provide Internet speeds many times faster than 4G, to keep up with global trends. 5G technology will create a robust infrastructure for IoT connectivity, opening vast business opportunities for Vietnamese enterprises.

1.3. Emerging Issues
First, technological barriers. Digital transformation involves the application of technology to all business activities in an era of explosive technological advancement on the Internet platform; therefore, it requires a high level of technical and human resource capacity. However, Vietnam still lags behind the world in technology and has not yet mastered the core technologies of digital transformation or the essential foundational systems. Consequently, digital transformation in Vietnam currently relies primarily on technologies already developed internationally.

Second, investment capital challenges. Investment in digital transformation means investing in change — from awareness, strategy, human resources, and infrastructure to technological solutions — thus requiring substantial financial resources. However, large capital and human resource investments have become significant barriers for Vietnamese enterprises. Due to capital shortages, many businesses believe that digital transformation is a “game” for large corporations. Because of this financial limitation, small and medium-sized enterprises (SMEs) in Vietnam often choose “cloud computing” as their main investment technology, as it allows them to expand rapidly when necessary without investing heavily in IT infrastructure.

Third, challenges from business awareness. Digital transformation affects the entire structure and operations of an enterprise, creating pressure for managers — from recognizing the importance of digital transformation for business growth to mobilizing financial resources, achieving consensus, and engaging employees in the transformation process. The effectiveness of digital transformation depends on changes in leadership thinking — from traditional business strategies toward modern, technology-driven strategies.

Fourth, the application of new technologies and the emergence of new business models and financial services require an updated and comprehensive legal framework to match these innovations. The use of artificial intelligence (AI) in algorithmic trading generates high-frequency transactions, while big data and mobile technologies have led to new financial services such as investment analytics, mobile trading, customer data collection and analysis, and compliance reporting support. Therefore, the legal framework for managing and supervising high-frequency transactions and ensuring data security has become an urgent issue.

Fifth, Vietnam’s digital service and technical support trade sector remains relatively small compared to other countries in the region, such as Indonesia, Malaysia, the Philippines, and Thailand. Moreover, infrastructure for digital transformation still faces many limitations, particularly in the sharing of passive infrastructure among sectors — such as fiber optic cables and transmission towers — which has not yet been effectively established or managed.

Sixth, the skill level of Vietnam’s workforce poses a challenge to the digital transformation of the economy. Vietnamese workers are mostly low-skilled, accounting for over 40% of the labor force (the highest in Southeast Asia), while only about 10% are high-skilled (compared to over 20% in Malaysia and the Philippines, and more than 50% in Singapore). However, adapting to both basic and advanced skills required by digital transformation and automation demands a large number of highly skilled workers.

2. Proposed Solutions
First, improve institutions and create a legal framework to accelerate the development of the digital economy. Develop platforms and institutional frameworks for digital business models, including revising and supplementing legal regulations in sectors with many emerging business models such as e-commerce, digital finance, and digital banking; reform institutions to attract digital technology investment in venture capital sectors, maximizing convenience for digital technology equity participation, mergers, and acquisitions; revise and supplement legal documents on information and communication technology; and establish management mechanisms suited to digital business environments, regulating new relationships arising during digital transformation and digital economy development.

Second, strengthen digital education and promote the training of a high-quality workforce. Education in the digital economy not only raises general awareness of opportunities and challenges but also prepares a skilled workforce ready to adapt and seize opportunities.

Third, invest in upgrading digital infrastructure. Develop a comprehensive and synchronized national digital infrastructure system capable of meeting requirements for data connection, storage, and processing, as well as functions for monitoring, cybersecurity, and safety assurance; build and expand high-quality broadband infrastructure; upgrade 4G networks and develop 5G mobile networks to keep pace with global trends. 5G technology will create a strong foundation for IoT connectivity, opening vast business opportunities for Vietnamese enterprises, especially SMEs; expand domestic, regional, and international Internet connectivity; transition the entire Vietnamese Internet system to next-generation Internet Protocol (IPv6); integrate sensors and digital applications into transportation, power, water, and urban management infrastructure systems; and build a unified national digital payment infrastructure to promote cashless transactions.

Fourth, strengthen user trust by ensuring data security, cybersecurity, and transparency in legal frameworks governing enterprise systems.

Fifth, ensure cybersecurity and safety. Increase investment in modern infrastructure with sufficient bandwidth to withstand network congestion attacks; establish backup data storage systems to reroute and recover data during cyberattacks; regularly review and fix security vulnerabilities across systems; add specialized hardware and software for network security monitoring and control across telecommunications, Internet, and radio frequency environments; and implement technical solutions for detecting and mitigating information security threats promptly to prevent potential risks in Vietnam’s digital environment.

Sixth, accelerate the implementation of e-Government. The government must take the lead in the digital transformation process. Its active leadership and guidance in the digital transformation of the economy will be the key to the overall success of this endeavor.

REFERENCES:

Prime Minister (2020). Decision No. 749/QĐ-TTg dated June 3, 2020, approving the “National Digital Transformation Program to 2025, with orientation to 2030.”

United Nations (2021). E-Government Development Survey Report 2020.

Vietnam Chamber of Commerce and Industry (VCCI) (2020). Survey results: “The Status of Digital Transformation in Enterprises in the Context of the COVID-19 Pandemic.”

World Bank (2021). Taking Stock: Digital Vietnam – The Path to Tomorrow. Madani, Dorsati H. & Morisset, Jacques. Working Paper, USA.