Businesses Urged to Accelerate Digital Transformation

Digital transformation in Vietnam has obtained a lot of remarkable achievements in recent years but not made a dramatic leap yet. However, the unexpected outbreak of the COVID-19 pandemic has resulted in numerous changes in perception, commercial and business transactions. This is considered an opportunity, a rare push for businesses to realize advantages of digital economy and fill the more urgent need for digital transformation.

Manufacturing capacity shrank, with the biggest problem for businesses being restricted activity/work from home (WFH) requirements, said the Digital Transformation Report: Solutions for businesses to overcome COVID-19 pandemic released by the Enterprise Development Foundation under the Vietnam Chamber of Commerce and Industry (VCCI) in cooperation with the Japan External Trade Organization (JETRO). The report surveyed more than 400 enterprises in Vietnam. According to the report, larger businesses were more affected by short input supply. Meanwhile, small and medium-sized enterprises (SMEs) were affected more heavily by COVID-19 on production capacity which shrank due to restricted activity/WFH, difficulty in stockpile forecast, delayed technical maintenance/support on restricted mobility measures.

Sales of bigger companies were more affected by foreign market shrinkage than SMEs. In contrast, the latter faced difficulty in contacting and seeking new customers and keeping track of current customers and a shrinking domestic market because of COVID-19.

According to the report, on revenue, a very low rate of companies reported a positive revenue growth. More than three-quarters reported reduced revenue, with high ratios of companies suffering from 1-25% and 25-50% revenue decline. More than 18% saw revenue drop by more than 50% because of the epidemic. These figures just showed how seriously the COVID-19 epidemic has impacted businesses.

COVID-19 caused far-reaching influences on manufacturing and business activities, once again sounding alarm on the urgency for digital transformation to quickly overcome the pandemic. The report showed that the perception of digital transformation among Vietnamese enterprises increased as larger firms adopted it before the COVID-19 outbreak. However, the report also stated remarkable contents of concern when digital technology was mainly applied to management, logistics and marketing, while the most important stage - manufacturing - is not really focused.

Notably, most have certain capacities of digital transformation but they are just basic. The digitalization rate of products and services is still low. Digitized products and services account for a small share of total revenue. Major barriers to digital transformation are high cost of digital application, insufficient infrastructure, fears of data leakage and insufficient expertise. The cost is the biggest barrier.

Facing these difficulties, businesses put forth many proposals to the Government hoping for easier digital transformation, said the report.  Building of rules and regulations to promote paperless business, providing financial support for digital application and making clear rules and regulations on data management are three most-expected proposals by enterprises seeking to advance digital transformation in Vietnam in the coming time.

Source: Vietnam Business Forum