Vietnam should redefine scope and scale of the digital economy
The current method of calculating the scale of the digital economy only reaches the core, while digital transformation is spreading strongly into many industries and fields.
That is the opinion raised by Dr. Can Van Luc, Chief Economist of the Bank for Investment and Development of Vietnam (BIDV), at a recent seminar.
Dr. Can Van Luc, Chief Economist of the Bank for Investment and Development of Vietnam (BIDV).
Luc said the criteria and measurement of the digital economy in Vietnam are still simple. He said the Ministry of Information and Communications has made a preliminary calculation of the digital economy, but it is not enough, because this result is only measured in terms of the core economy (ICT). Meanwhile, digital transformation has been taking place in all sectors of the economy.
According to Luc, the scale of Vietnam's digital economy is much larger. The proof is that with the banking industry, revenue from digital payments accounts for 20% of this segment. Meanwhile, the digital payments sector should clearly be counted as part of the digital economy.
In fact, each agency and organization has its own way of understanding and statistics about the scale of Vietnam's digital economy.
According to the ICT White Paper 2021 of the Ministry of Information and Communications, by the end of 2020, the total revenue of Vietnam's IT - electronics and telecommunications industry was 124.7 billion USD.
This revenue consisted of the hardware and electronics industry (111 billion USD), software industry (5.4 billion USD), digital content industry (888 million USD) and IT services (7. 3 billion USD).
Meanwhile, at a recent talk on digital economy, a representative of the Department of E-commerce and Digital Economy (Ministry of Industry and Trade) cited indicators on e-commerce development related to the growth of Vietnam's digital economy.
According to the Ministry of Industry and Trade, since 2016, the growth rate of e-commerce in Vietnam is 25-30%/year. B2C revenue of Vietnamese e-commerce rose from 5 billion USD in 2016 to 11.8 billion USD in 2020.
E-commerce is booming in Vietnam. Photo: Trong Dat
The representative said that by 2025, the scale of B2C revenue in Vietnam's e-commerce will be 35 billion USD, accounting for about 10% of the country’s retail sales.
From an international perspective, reports from Google, Temasek and Bain & Company only mention Vietnam's Internet economy. Accordingly, the total value of Vietnam's Internet economy in 2021 is expected to reach 21 billion USD, up 31%.
Forecasts by Google, Temasek and Bain & Company show that by 2025, the entire Internet economy in Vietnam will be worth 57 billion USD. The compound annual growth rate (CAGR) will be 29%.
With these various perspectives, it can be seen that there are many different interpretations when it comes to Vietnam's digital economy.
The narrow meaning of digital economy is the field of IT – Communication, including the production of IT equipment (hardware, software), semiconductor equipment, telecommunications and Internet services (digital content), data processing.
In a relatively narrow sense, the digital economy can be understood to include the ICT sector and industries and business models associated with digital technology (digital services, online platforms, a part of the sharing economy).
Meanwhile, the digital economy in its broad meaning consists of all industries and sectors of the economy formed and taking place on a digital platform (including traditional economic sectors).
Digital economy in a broad sense also includes industries and fields that use digital technology such as e-commerce, digital tourism, digital health, digital agriculture, digital education and e-government.
Dr. Can Van Luc said that Vietnam needs to measure the size of the entire digital economy. In particular, the first thing to do is to give a clear definition of the scope and scale of the digital economy.
Under the normal development scenario, the Vietnamese digital economy will only reach 10.5 per cent of GDP by 2025.
The Fourth Industrial Revolution is taking place around the world with a boom in digital technology, creating great opportunities for but also challenges to the development of each country, enterprise, and person.