“A decisive click” to measure Vietnam's digital economy: Survive or not

The global economy is strongly moving in the context of the “Industrial Revolution 4.0”. Digital economy associated with automation will create a transparent investment environment for enterprises to develop.

In Vietnam, technology has become an important part of people’s lives as well as significantly supported the economic development. Everything has become easier than ever with just a “click”. However, digital economy poses many challenges to Vietnam, especially the unemployment and the struggle of SMEs to survive.

Than Trong Phuc, Managing Director of DFJ VinaCapital Group Limited, said that Vietnam’s digital economy is in danger of lagging behind other countries in the world.

The digital economy is currently a global trend; however, the digital economy of Vietnam is developing slowlier than other countries. What should Vietnam do to catch up with other economies?

Than Trong Phuc: “It is the first step that costs.” Vietnam can move slowly as “it is better late than never”. If Vietnam wants to develop then the digital economy is a prerequisite.

The government of Vietnam must create policies to boost the digital economy. Currently, enterprises paying taxes to both government and locality has become an obstacle for their development. Therefore, a policy to automize all the processes in order to minimize the business conditions for enterprises is very necessary.

The automation will make everything transparent; therefore, enterprises will be willing to pay taxes and the government can eliminate tax evasion.

How has digital economy impacted on manual areas like agriculture?

Than Trong Phuc: The agricultural productivity in Thailand far surpasses Vietnam as agricultural activities in Vietnam are still traditional and manual. Therefore, Vietnam needs to promote the application of technology in agricultural activities to improve productivity, catching up with such countries as Thailand.

Besides, Vietnam mainly imports components to assemble mobile phones and automobiles. Therefore, the government needs to support enterprises to create a domestic supporting industry. Lately, VinGroup investing in the manufacture of the first Viet branded car VINFAST is expected to be a kick to the formation of the components manufacturing industry in Vietnam.

Currently, the localization rate in Vietnam is around 15 per cent, compared to 30 to 60 per cent in other countries. The application of technology will help Vietnam to narrow that gap and create more jobs for people.

Is it a part of the digital economy?

Than Trong Phuc: This is absolutely a part of the digital economy. Digital economy relates to online transactions; therefore, if the products do not have good quality, transactions will make no sense. Hense the application of technology to improve the quality of products in order to promote transactions is very important.

Does the digital economy lead to any consequences, unemployment for example?

Than Trong Phuc: In the digital economy, there will be factories to manufacture components, which can help to create thousands of jobs. For the next five years, Vietnam will not have been impacted yet, but it should prepare carefully.

Do you think that Vietnam’s current human resources can meet the requirement of the digital economy in terms of both quantity and quality?

Than Trong Phuc: They must be trained and retrained from the first stage to understand thoroughly what automation is.

China started its digital economy with the manufacture of outsourcing equipment for foreign firms. When components are available, domestic firms can think of manufacturing mobile phones and automobiles on their own.

This process will take Vietnam dozens of years. Every economy, China, for instance, must experience this period when transforming into the digital economy.

Currently, software outsourcing is one of the strengths of Vietnam while the demand for programmers and software engineers is increasing dramatically, especially for startups, foreign outsourcing companies in Vietnam and domestic enterprises like FPT and Viettel. Vietnam should take advantage of its strength to develop and solve the problem of unemployment.

Do you think that Vietnam will be able to manufacture software products instead of outsourcing only?

Than Trong Phuc: Vietnam has gained significant achievement in the field of software. It currently ranks the top country in ASEAN and the third country in the world, following China and India, in the field of software.

However, lacking personnel is the biggest obstacle that Vietnamese software firms are facing. Vietnam needs up to tens of thousand programmers and software engineers while there are only under 10 universities can train programmers and software engineers in Vietnam. I think that Vietnam should create favorable conditions for private schools to support the labor market. Currently, software outsourcing companies in Vietnam are seriously lacking staff.

At the conference themed on “Digital Economy – the World does not wait for us” prior to the Vietnam Digital Economy Forum (VDEF) 2018, you said that within the next four years, the number of people using the internet in Vietnam increases by 10 per cent, the figure for social media, smartphones, and internet on smartphones will be 25 per cent, five per cent and 21 per cent respectively. Do you think that this will be an advantage of Vietnam in the digital economy?

Than Trong Phuc: The increase in the number of people using smartphones and internet will significantly support the digital economy of Vietnam. However, the country needs to create an automation economy as these are only the indicators for the readiness of Vietnam in applying information and communication technology.

In reality, the effectiveness of transactions will depend on the automation of society, which means that enterprises can transact with each other online. Currently, the automation in Vietnam is still implemented at a low level.

What could the government do to support the development of the digital economy in Vietnam?

Than Trong Phuc: Many foreign governments have applied automation in working with people.

I think that in the future, Vietnam should have a common digital signature for all levels of government in order to help enterprises minimize the time waiting for investment licenses as well as enter the digital economy.

Besides, the government should make policies in order to support Vietnamese firms to dominate the domestic market before reaching out to the world.

Thank you so much!