What Vietnam needs to do for digital economy to play a greater role

A recent report on Southeast Asia’s internet economy by Google and Temasek showed that Vietnam’s digital economy is estimated at US$12 billion in 2019 and could rise to US$43 billion by 2025. In an earlier report, Google and Temasek rated Vietnam’s digital economy at US$9 billion, behind Indonesia, Malaysia, the Philippines, Singapore and Thailand. But Vietnam’s digital economic growth rate is remarkably high at 25%, second only to Indonesia in Southeast Asia.

In another forecast by Data61, an Australian agency, Vietnam’s GDP could increase by US$162 billion by 2045 under a normal scenario and by US$544 billion if Vietnam succeeds in digital transformation.

To put it simply, the digital economy is an economy based on digital technology with electronic transactions conducted via the internet. The digital economy encompasses all sectors of the economy where digital technology is applied, including industry, agriculture, services, manufacturing, distribution, transport, logistics, finance and banking.

It should be noted that the Google-Temasek report only takes into account four areas: e-commerce, online travel, online media and ride-sharing, without counting the values brought by digital transformation to the economy. Therefore, the real value of Vietnam’s digital economy is certainly higher.

Regardless of the actual level and size of Vietnam’s digital economy, there remains a great deal of room for it to grow further. According to experts, Vietnam needs to address the three barriers in order to raise the digital economy’s contribution to GDP.

The three barriers are: the lack of database synchronicity between 63 provinces and centrally-governed cities as well statistical discrepancies between the central and local governments; the feasibility of policies in digital technology development and application; and a business culture that does not facilitate the formation of value chains.

Among them, the lack of synchronicity and linkage between databases is a thorny issue because even within a government agency, different data systems are existing together, let alone sharing and using shared data between ministries, agencies and local authorities.

For instance, at the Ministry of Planning and Investment, there exists different data systems about business registration, bidding and foreign enterprises but they are not linked together.

Data is considered the fuel of a digital economy. While data between different ministries and agencies has yet to be connected, it is out of the question to develop the digital economy to where it makes a greater contribution to Vietnam’s overall growth.