Vietnam - Trusted Business Partner of the World

2:16:37 PM | 10/18/2019

Vietnam is a trusted business partner of the world. Dr. Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), confirmed this at the Vietnam Business Summit (VBS 2019) held in Hanoi on October 16.

“Vietnam - We mean business”

He said, in the mid-20th century, Vietnam was known to the world as a war. In the late 20th century, late Deputy Foreign Minister Le Mai, a celebrated Vietnamese diplomat and an architect of Vietnam-U.S. relations normalization, said a sentence that went into history: Vietnam is a country, not a war. And now, we say to the world: Vietnam is not only a country but also a reliable business partner of the whole world - “Vietnam - We mean business”. That is the inspiration and impulse for VCCI to theme “Vietnam - We mean business” for the annual Vietnam Business Summit. And, this summit is encouraged and directed by the Prime Minister of Vietnam.

VCCI President Loc said, “In 2017, the Vietnam Business Summit was first launched with the APEC Business Summit held on the sidelines of the APEC Economic Leaders’ Week in Da Nang City, Vietnam. Vietnamese Prime Minister Nguyen Xuan Phuc, U.S. President Donald Trump, Chinese President Xi Jinping, many high-ranking leaders and over 2,000 CEOs from 21 APEC economies and the world attended and addressed it and exchanged with the business community”.

In 2018, the Vietnam Business Summit was held on the sidelines of the World Economic Forum on ASEAN in Hanoi, and this year, the summit was held alongside the Asian Business Summit (ABS) held in Vietnam by VCCI for the first time with the Japanese Business Federation (Keidanren). “On behalf of the organizers, I heartily welcome and extend our sincere thanks to more than 800 delegates representing Asian and global business communities, leaders, scientists, international organizations and press agencies attending the event,” he said.

VBS 2019 was themed “Vietnam - We mean business - Partnership in digital era”, he noted. This was a deliberate choice for an insightful analysis of business opportunities with Vietnam with a vision to Vietnam's digital economy and a booming business space in the future.

He stated that, in Vietnam, renovation and the opening process are going at a rapid pace. Vietnam is the champion of market opening among developing countries when it signed up to 16 free trade agreements with most major economies in the world, including high-profile trade pacts like CPTPP and EVFTA. Vietnam is also the biggest advancer on the WEF Global Competitiveness Report 2019 when it added 3.5 points to climb 10 places in the rankings. Vietnam outstandingly endeavors to become a secure destination and a reliable business partner of the whole world.

Two particularly important international events greatly influenced Vietnam's development orientation. In 2015, at the 70th Congress of the United Nations General Assembly in New York, national leaders from around the world adopted the “2030 Agenda for Sustainable Development” with 17 sustainable development goals (SDGs) which pinned the global economy with the most basic directions and the most basic values for joint development. And, the second very important agenda was the “Fourth Industrial Revolution” at the World Economic Forum in Davos 2016. After these two events, sustainable development and Industry 4.0 became the two most important keywords in Vietnam's development strategies and plans. Vietnam is probably talking about Industry 4.0 most. Sustainable development and Industry 4.0 are two rails for Vietnam's economic train to move forward and two wings for Vietnam's economy to fly high. Economic development plans and strategic business development visions are being designed along these two main development axes, Dr. Loc analyzed.

Free trade agreements, especially next-generation ones, also imbued with the spirit of sustainable development and Industry 4.0. Sustainable development and Industry 4.0 are revolutions in Vietnam's perceptions and actions.

VCCI President Loc said, “We appreciated Keidanren for successfully organizing the B20 Business Summit, the gathering of the world’s 20 largest economies. As the President of VCCI, I was invited to attend in May this year, with a theme that could not be more inclusive than Society 5.0 towards sustainable development goals to align the biggest issues of the global economy. Towards inclusive sustainable development, taking innovation and digital technology as the driving forces, placing people at the center, taking enterprises as leading actors, taking transparent institutions as a fulcrum, taking public-private partnerships as operating mechanism, taking the synergy of FDI and enterprises as fundamental platform are characteristic features of sustainable development ecosystems of Vietnam's economy in the global economy and also our passport to the future. With these orientations, Vietnam is going with humanity.”

Promoting Industry 4.0

The Party and the State of Vietnam have issued many guidelines, policies, and action programs to develop digital technology and boost Industry 4.0. Vietnam is a developing economy but it has vast room for deploying Industry 4.0. It has a population of nearly 98 million, of which more than 64 million people are using the internet, higher than the world average. Vietnam’s innovation index climbed 12 places to rank 47th in the global economy, according to the World Intellectual Property Organization (WIPO). The e-government index rose by 10 places. According to the World Economic Forum, Vietnam went up 10 places in the global competitiveness rankings, importantly driven by information technology application index, which climbed 54 places in 2019.

Vietnam planned to deploy 5G technology in 2020. This is an important foundation for Vietnam to develop Industry 4.0. Many large Vietnamese technology companies such as Viettel, FPT and VNPT have invested heavily in technology infrastructure for the digital economy, both domestically and internationally. Never before have smart city development plans flourished as today. Last week, a US$4 billion smart city construction project was launched in Hanoi. Many other smart cities are also being deployed. Smart cities are the cradle of Industry 4.0.

In addition, Vietnam is applying many advanced technologies 4.0 to industry, agriculture and services. Cloud computing tools, artificial intelligence, blockchains, big data, artificial intelligence and automatic robots have also been initially applied to some areas such as computerized automobiles and electronics.

Vietnamese businesses have also created the first “Created in Vietnam” artificial intelligence, for example “Social data hunting system” by Le Cong Thanh and colleagues at Topica AI Labs. The innovative startup network was formed with 3,000 startup companies. But, we need a lot more. We need tens of thousands of startups. We are in dire need of “Created in Vietnam” products, not just Made in Vietnam or Make in Vietnam.

Dr. Loc noted that starting a business is the requirement for all businesses, not only newly established ones. Starting a business is a regular affair of all companies even though they have existed for decades or centuries in the market. Starting a business is not only a job of micro, small and medium enterprises but also a daily work of giants in the economy. Starting a business is a non-stop job - the spirit of entrepreneurship is forever - “starting a business over and over again” is our mission.

Cutting-edge Technology 4.0 has positively impacted socioeconomic development in Vietnam. It is estimated that Industry 4.0 could help Vietnam increase its GDP by US$28.5-62.1 billion, or an addition of 7-16% of GDP by 2030, according to the Central Institute for Economic Management (CIEM). Indeed, this is a growing trend for a boom of growth potential and a boom of cooperation opportunities. We want to cooperate with the world business community to promote the digital economy in Vietnam.

The demand for manual jobs will be replaced by new jobs that require new skills and creativity. Vietnam’s labor market will shift strongly in Industry 4.0. These are new challenges and opportunities for employers, workers and schools in Vietnam. Vietnamese businesses will have to change to catch up with new technology trends, improve productivity, and enhance competitiveness to compete and participate in global value chains.

In other fields, even public services, public administration, healthcare and education, simple, repetitive jobs will be replaced by artificial intelligence (AI), robots and automatic lines. Only innovative workers will be employed. So, creativity is the highest quality requirement for human resources in the new era. Uncreative jobs can be all replaced. This is a huge challenge that requires the whole educational system to have transformational changes which will shape the future of the economy. Using only existing skills and knowledge, we will fail.

Preparing for human creativity has never been as important as now. Skills not only come from knowledge but also creativity to create new business models and technologies. Emotional capacity and humanity are also important contents in labor training. In the coming time, we not only pay attention to IQ (Intelligence quotient) or EQ (Emotion quotient) but also pay attention to LQ (love quotient in the broadest sense of love). Previous industrial revolutions tended to turn people into machines and Industry 4.0 may turn machines into humans. Humans must be interactable in such a context. That is the requirement of training and education in the future. And, in the previous education system we only talked about the STEM knowledge system (science, technology, engineering and math). And now, STEAM is being brought into education and training and this knowledge system will need to expand constantly.

VCCI President Loc said that, in the new revolution, businesses play a leading role and people are at the center. Therefore, the training system cannot be developed without businesses to play their roles. They must shape orientations for education, which must be linked to the needs of businesses and the economy. We orientate education for market needs. Enterprises are investors of education and training. Entrepreneurs and engineers must become lecturers. Theory must go with practice and learning at school must go with practicing at the workshop.

FDI companies must link with Vietnamese domestic enterprises and stick with Vietnam's training and research institutions to form a symbiotic ecosystem for mutual development. Currently, FDI sectors are largely closed to their value chains and cannot spread to domestic enterprises and that will not guarantee the sustainable development of FDI firms and the Vietnamese economy. Therefore, we hope that there will be a symbiosis, synergy and spillover between FDI companies with domestic enterprises, with scientific research institutions, with vocational training schools in Vietnam. Only by that synergy can FDI companies develop sustainably and root deeply into Vietnam's economy.

“Finally, I would like to say that, in the digital age, in a creative, humane economy, driven towards sustainable development, the market is no longer a battlefield but it is a space of cooperation for mutual benefit, not a win-lose but win-win-win (all wins) relations. The win-win-win value chain scales up and that is our sustainable development path. Many centuries and decades ago, we developed economies with finite natural resources, one person's success could lead to another's failure. Now, resources are creative and timeless brainpower. Therefore, sharing and cooperation for mutual benefit will be a new scenario of interaction between economies,” Dr. Vu Tien Loc affirmed.

Innovation is key to escape the middle-income trap

Mr. Bui The Duy, Deputy Minister of Science & Technology

It is time for Vietnam to have a strategic transformation to escape the middle-income trap. According to international experiences, to improve labor productivity, SMEs need to focus on technological improvement by absorbing technology and developing their own technology and they particularly need to focus on administration renovation because they cannot fully utilize new technologies to create new products or raise their labor productivity with old administration systems.

According to research, there are three levels of technological innovation, absorption and development for enterprises. Currently, most Vietnamese companies are still at the level of technological innovation: They only buy new machinery and equipment. And so, when a new technology appears, they will have to replace it with a new production line.

Failing to absorb new technologies and improve existing production lines, they cannot reach the next level of technological development. Therefore, they need to focus on the first two steps of technological innovation and absorption in the coming time. For those still at Industry 2.0 or Industry 3.0, how should they be motivated for technology innovation?

Besides, to promote technological application to production, to meet Industry 4.0 requirements, it is necessary to build a unified connectivity platform for the national innovation system to connect research institutions across Vietnam; identify and prioritize Vietnam's specialized industries and use digital technologies to build new business models, in-depth research centers, and technology and market testing platforms; provide support to build an innovative entrepreneurial ecosystem across Vietnam, and develop technology centers and hi-tech parks.

Utilizing Industry 4.0 opportunities and achievements for high-quality human resource development

Dr. Vu Van San, Director of Posts and Telecommunications Institute of Technology

In the era of Industry 4.0, the emergence of new converged and cross sectors such as IoT, multimedia technology, multimedia communications, e-commerce and financial technology will require workers with new skills. Therefore, it is very important for businesses to combine with vocational training institutions to teach skills and create jobs for workers, to increase labor productivity and ensure high quality of human resources for development requirements in the time of robots, computers and people working together.

The State can consider incentive mechanisms for businesses when they cooperate with universities and join student-led business startups. Businesses and schools can set up a specialized cooperation unit. The former reviews and gives advice on training programs to the latter based on their personnel needs. The latter school receives feedback, completes their programs and recommends business professional issues to the former.

To develop human resources, especially high-quality ones, to grasp Industry 4.0 opportunities and achievements, Vietnam needs to have a long-term inclusive strategy, with a system of consistent, practical, feasible solutions. Only by this way do schools and businesses themselves know what to do and what they will get from this cooperation and they will thus proactively offer the most positive solutions to improve training quality for practical needs.

Huong Ly