Enormous Potential for Internet-based Economy in Vietnam

The forum is held by the Vietnam Chamber of Commerce and Industry (VCCI) in cooperation with the Technology Research Project Corporate (TRPC). This was part of the project "Supporting businesses, handicraft villages to apply e-commerce to boost sales and exports", led by VCCI.

 

Mr Vinh said about 40 percent of the global population uses the internet every day. With 30 percent of population using the internet, Vietnam has been ranked among the Top 20 countries in the world for internet use since 2010. The country expects 45 -50 percent of its population will have access to the internet in 2020. The internet boom, powered by the popularity of smart phones or tablets, enables people to effortlessly connect and interact with each other from anywhere in the world. No country can stand outside this technological globalisation trend. Some believe that smart technologies can replace human workers, thus causing unemployment to rise. But in fact, new technologies, including the Internet, help people to improve knowledge with open, abundant data sources, almost free of charge, and create more jobs. It is estimated that every technology-related work will create 5-7 related jobs. A 20 percent growth in information and communications technology (ICT) investment will increase national GDP by 1 percent.

 

According to the report "Digital economic potential in Vietnam - Lessons from Asian nations", Vietnam had 40 million internet users by 2014. As in many other Asian developing economies, the internet-based economy is mainly in e-commerce, online games, internet content services, mass media and online advertising. With each example above, a supporting ecosystem is being established around them. However, Vietnam has restrictive policies on internet services like social networking, mobile games and over-the-top.

 

Also according to the report, Vietnam will quickly become one of the largest mobile-use countries in the world and the 3G network coverage investment is an important factor to the rapid internet boom in Vietnam, thus comparable to many developed countries with transmission speed at 42Mbps. With US$10, or less than 5 percent of disposable income, for 3GB of mobile data is absolutely affordable. Although not all can afford to buy a computer, almost everyone has a mobile phone and more and more people have smartphones.

 

Thus, the leading role of e-commerce in transforming the Vietnamese economy is very clear. Revenue from B2C e-commerce in Vietnam approximated US$3 billion in 2014, accounting for more than 2 percent of total retail sales for the country. An online shopper spent US$145 on average. Although cash payment was still a top priority and 64 percent of online customers opted for payment in cash, about 47 percent were willing to pay with electronic wallet and 14 percent used online banking services. Behind the success of e-commerce is an ecosystem comprising of logistics, support, payment and delivery companies, among others.

 

However, according to the Global Connectivity Index 2015 (GCI 2015), 50 economies were surveyed for connectivity index, ICT application and digital transformation, with a higher score signifying higher level of development. Vietnam was ranked 45^th in the digital transformation, near the bottom. Chile, China, and the United Arab Emirates (UAE) lead the developing markets.

 

Vinh said these results may not fully reflect the digital economic development status in Vietnam, but they still are a concern for policymakers, experts and companies. What are the causes and what are specific solutions and actions to overcome?

 

TRPC Director John Ure said Vietnam can convert into a fully digitalised economy and society as nations like Japan and South Korea have done. To achieve this goal, in addition to facilitating infrastructure for internet access, Vietnam should focus on human resource development and enhancement of technical mechanisms. Vietnam also needs to develop a digitised ecosystem, including the establishment of support branches, such as developing design skills and operational capacity for the digital economy, while attracting the involvement of industries that understand the multidisciplinary impact of the Internet.

 

“For example, the agriculture, health care and education sectors need to work directly with relevant authorities to support and provide better information for national policy planning to create a digital society. Then, encouraging the widespread adoption of sectoral standards on performance, safety and security, as well as a code of conduct on social security will also be necessary,” he said.

 

Besides, according to the report, although laws and regulations on e-commerce are designed to stimulate the development of this industry, definitions of obligations and responsibilities of e-commerce companies, especially those with connection to foreign partners and investors, are still unclear. This issue is probably the most serious in content and social media fields. Authorities need to cooperate more closely with the sector to ensure transparency and circumvent legal risks for investors. The Government can promote this process by easing regulations to loosen restrictions on companies seeking to exploit internet-based business, as well as eliminate uncertainty and encourage internet use in all companies.

 

The report also said that Vietnam does not lack planning capabilities, but it is still in the early stage of human resource development, especially skills and knowledge directly related to information management systems, and procedures and processes for use of networking resources such as cloud and online administration. Awareness raising, knowledge development and the adoption of these skills can be digitally and industrially prioritised. Online e-learning is an important field that needs to be supported and promoted for further development.