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Vietnam's growth potential lies in the digital economy

The digital economy in Vietnam accounts for about 8.2% of GDP. The development potential of the Internet and digital economy components is still quite large. 

Unleashing this resource will contribute to socio-economic growth and improve national competitiveness.

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Three components of the digital economy

There is no unified definition of the digital economy in the world, but most understand the digital economy as an economy based on digital technology and digital platforms, with economic activities on and by digital technology and digital platforms, created from the application of digital technology and digital data, using the Internet as an operating space.

The digital economy consists of 3 components:

- ICT digital economy: This is the field of information technology industry and telecommunications services, including activities such as manufacturing electronic products and hardware, developing software and digital content, providing IT and telecommunications services;

- Internet digital economy: economic activities based entirely on the Internet such as digital services, digital business, platform economy, data economy, algorithmic economy, sharing economy, gig economy, and other forms of Internet-based business;

- Digital economy of industries: An economic segment created from digital transformation, applying digital technology and digital platforms in traditional industries including activities such as: e-governance, e-commerce, digital finance, digital banking, smart agriculture, smart manufacturing, smart tourism.

The key to reach the global economy

The digital economy opens up a new growth space, helps improve the competitiveness of the economy, and is the core driving force for national economic growth, and contributes to solving socio-economic problems.

In the world, the digital economy is growing very fast, becoming the key for many economies to reach out to the world. This can be seen through data analysis in international reports, such as the United Nations Forum on Trade and Development (UNCTAD)'s Digital Economy Report [1].

For example, in 2008 China’s digital economy accounted for about 15% of GDP, but in 2019 the digital economy accounted for 37% of this country's GDP. Many Chinese digital economy enterprises have become technology giants that worry the US and many developed countries in the west because of their development capacity and strong global competitiveness.

In the Asia-Pacific region, in 2017 the digital economy accounted for about 6% of GDP, but in 2019 it made up 25% of GDP, and with the current complicated Covid-19 pandemic, it is predicted that by 2021 the digital economy may account for more than 60% of the GDP of this region. Vietnam currently has no official data about this, but based on many sources, the digital economy currently accounts for about 8.2% of GDP, with about $163 billion.

Internet digital economy and digital economy for industries has great potential for development.

The ICT digital economy accounts for about 4.5% of global GDP, about 6.9% of America’s GDP and 7% of China's GDP. For Vietnam, the ICT digital economy is estimated to account for about 5.5 percent of the country's GDP, with a revenue of about $123 billion.

This number does not reflect the real potential of Vietnam's Internet digital economy, because many cross-border digital platforms collect billions of dollars in Vietnam but do not make declarations. The supervision and management of online business forms has many loopholes, and measuring the digital economy is still difficult, but this figure shows that Vietnam's Internet digital economy still has great potential for development. According to the e-Conomy SEA Report [2], although Vietnam's internet economy is behind Indonesia and Thailand in total revenue, Vietnam has the highest growth rate with 16% per year, compared to 11%/year for Indonesia or 7%/year for Thailand.

To promote the digital economy, it is necessary to quickly implement a number of key tasks.

Ministries, sectors and localities can immediately implement tasks to promote the digital economy, such as: Promoting small and medium-sized enterprises in their fields to participate in the SMEdx.vn digital transformation program; guide, support individual business households and farmers to join on e-commerce platforms to sell their products as well as buy supplies and raw materials for production;

Implement training programs, universalize digital skills for people and businesses, and at the same time build a network of consultants for digital transformation and digital economy in their industries and localities; promote digital transformation for industries and priority areas, with the motto of digital transformation based on digital platforms, all on cloud services.

A very important thing that ministries, sectors and localities need to pay attention to is to add specific goals and tasks on developing the digital economy and digital society to their economic development plans and strategies.

Nguyen Trong Duong

Deputy Director of the Department of Enterprise Management, Ministry of Information and Communications

[1] https://unctad.org/system/files/official-document/der2019_en.pdf

[2] https://storage.googleapis.com/gweb-economy-sea.appspot.com/assets/pdf/e-Conomy_SEA_2020_Report.pdf

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