Digital Platforms Shape Digital Economy

2:09:05 PM | 5/3/2020

Mr. Nguyen Duc Thanh, Director of the Vietnam Institute of Economic and Policy Research (VEPR), said that the digital economy is part of the national economy.

Therefore, to enhance competitiveness for Vietnam, first of all, platforms themselves must become more competitive.

Sharing the same point of view, Mr. Tran Thanh Hai, former CEO of Be Group and Co-founder of VNG Corporation, emphasized that, compared to other countries in the region, Vietnam's information technology space is very good. This is the time for Vietnam to build a digital economy and it should not miss this opportunity.

Equity in a digital platform

Dr. Nguyen Duc Thanh, Director of VEPR, said, the digital economy has been very strongly present in the context of globalization.

The platform economy is changing the pattern of commodity use. It does not own resources but only provides the foundation for people to provide and use services and products.

However, as a result of this industrial revolution, these platforms are originated from more developed countries in terms of technology, connectivity, institutions and innovations, among other things. When they evolved in less developed countries, they will instigate unfair competition among businesses. Apparently, companies from more developed countries are more experienced and richer than those in less developed countries.

A good example is Be and Grab. Former Be Group’s CEO Tran Thanh Hai said that Be Group planned to spend VND1-2 trillion to develop the market but Grab was willing to “pump” up to VND3 trillion to compete with Be. Thus, two key matters that caused Be Group to struggle with its competitors are policy and finance, not market acceptance.

When financial resources are not suitable factors of competition, we are forced to use many other factors, from innovation and technology to local market characteristics - where the government plays a very important role in creating a level playing field.

A fair playing field does not mean that everything is the same. When a foreign company can put billions of US dollars into the market, Vietnamese enterprises will find it very hard to compete with them by money.

Therefore, the role of the Government is very important in creating mechanisms and legal frameworks to support businesses to compete by the creation of future value instead of using current money.

Which choice?

The current platform economy will keep going on. This is an unchangeable trend in the world. In the current context of the flat world, Vietnam, whether it wants to or not, must participate in the platform economy.

In fact, Vietnam has many policies to promote digital platforms to support businesses to grow. However, some policies give an upper hand to foreign businesses and trigger unfair competition.

Typically, when Grab entered Vietnam, the transportation services, customers, vehicles, drivers and finances were all of Vietnam, but the technology platform is foreign. Profits for Vietnam are very little and this causes damage to Vietnam. In reality, technology is always developing faster than the regulatory framework. With respect to technology, it is clear that Vietnam cannot compare it with tech powers of the world.

Therefore, Vietnam should choose human factors, namely user database, to focus on digital economy development. User database is also the most important asset in the technological field.

Boosted by 100 million people, Vietnam can completely build a billion-dollar company with domestic resources by utilizing its innovations and local characteristics.

Mr. Do Hoai Nam, Chairman of the Board of Directors of UPGen Vietnam, suggested redefining what platforms mainly base on resources, assets and domestic customers to develop them to control the platform economy. As for highly global platforms, the expansion gives them a great advantage, it is not necessary to create a similar platform for Vietnam, but put resources, intelligence and money to do other more significant things.