The Digital Economy Boosts Vietnam’s Economic Growth
As one of the most fast-growing economies in the world, Vietnam’s next major footmark will land on the digital economy-related fields, such as smart agriculture, e-commerce, manufacturing, etc.
According to the Ministry of Planning and Investment (MPI) of Vietnam, the total social investment into research and development (R&D) will amount to the equivalent of 1.5 percent of GDP by 2025. The Government officially projects the GDP growth target to hit a range of $28.5-$62.1 billion by 2030, generated from the participation in digital-related industrial revolution.
Digital economy is the major focus of Vietnam in the next decade. Not only eyes the exports of high-tech products, the Vietnamese government also places great importance on Industry Revolution 4.0, a concept first introduced in 2011.
The idea behind Industry 4.0 is to create a social network where machines can communicate with each other, called the Internet of Things (IoT) and with people, called the Internet of People (IoP). It also includes cyber-physical systems (CPS), cloud computing, cognitive computing and artificial intelligence.
E-commerce industry, the fastest-growing sector of the digital economy, achieved 30 percent growth in 2018 and the industry is projected, by the Vietnam E-commerce Association, to reach $10 billion by 2020. Apart from that, the number of online shoppers will increase by 52 percent in the next ten years, according to Vietnam Today’s report.
To bolster the development of e-commerce industry, the government plans to introduce the 5G networks within the ten-year window, which will serve as a stimulation to other industries such as healthcare and industrial IoT, prompting them onto a more efficient level.
Moreover, the country sees great potential in the smart agriculture sector. Through the newly developed technologies such as advanced GPS systems, sensor web, and internet that collectively forms a cyber-physical biological system, farmers can nurse the farmland in real-time conditions, covering the factors of soil, climate, animals and most importantly, crops. Coupled with the advantageous weather condition, it is foreseeable that this technology will become the driving force of the country’s agricultural sector in the next two decades and more.
Echoing to Goodwin Gaw’s remark on Vietnam being “where southern China was 10 to 15 years ago”, many businesses sense the upcoming boom of consumption in Vietnam. The Industry 4.0 Revolution and the influx of foreign companies entering the Vietnamese market create an up-to-1.3-million-vacancy labor demand, sparking the enthusiasm and commitment from highly educated youngsters to enter the high-technology industry. This demographic change also leads to the rise of middle & high class, which possess the strong buying power.
However, according to the World Economic Forum, Vietnam is deemed underdog in terms of the prospect of Industrial Revolution 4.0. Vietnam, who looks to catapulting itself into the top 30 in the Global Innovation Index, needs to focus on the betterment in education, labor rights, innovation and technology, etc.
Despite the country’s efforts in keeping up with the worldwide trends, the lack of seasoned managers and well-established infrastructures in rural area will hinder the expansion of the IoT related implementation and limit the development of supporting digital networks that facilitate the adoption of Industry 4.0. Therefore, the basic infrastructures are the prerequisite of the success of digital transformation. Meanwhile, the country also needs to have the privacy & security supporting regulations and laws in place, to protect the growing companies.
Nevertheless, undoubtedly, these recent emerging digital-related industries will be the steadfast driving force of Vietnam’s economy for many years to come.
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