Digital economy: Vietnam cannot stay out 

Oct 27 2024 | Digital Economy

The digital economy (DE) has taken shape and is developing rapidly. The Asia-Pacific region is emerging as a central market and a new driver of growth. Global production and supply chains, for decades, have also focused on Asia, including China, India, Southeast Asia, and South Asia, which host the world’s main factories and workshops. Naturally, Vietnam is part of this global game.

Digital economy: Vietnam cannot stay out 

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From the Dream of a Digital Nation 

Digital technology—represented by smartphones connected to the internet and the widespread adoption of social media (SM)—has become increasingly suitable for Asia, a region characterized by a predominantly young, dynamic population that is quick to adapt to technology, exemplified by China, India, Indonesia, and the Philippines. 

Vietnam is also part of this trend, with one of the highest smartphone usage rates, extensive daily online time, and a vibrant digital environment for entertainment, shopping, and work. 

In this context, the vision of a “developed industrial nation” should be revised into “a nation developed in digital technology and services.” Frankly speaking, the concept of industrialization, which focuses on manufacturing and factories, is no longer suitable for Vietnam. 

A more realistic vision for a modern and developed Vietnam by 2045 lies in digital technology and services rather than manufacturing industries. 

This vision is supported by three realities. 

First, after 30 years of industrialization and modernization since the reform era, Vietnam has not successfully established the foundations for industrial development, including the science and technology capabilities supporting industry, a skilled and professional industrial workforce, and a domestic market for industrial products integrated into global value chains. 

Our industrial sector relies heavily on foreign direct investment (FDI), which primarily addresses employment challenges but fails to build internal technological capacity, improve labor productivity, or create high added value. 

These fundamental shortcomings may see some changes in the coming decades, but it is unlikely there will be any breakthroughs. 

Second, Vietnam’s young, dynamic population is quick to embrace new digital technologies, underpinned by relatively widespread access to secondary education. Additionally, the Vietnamese diaspora working in digital technology and services can collaborate and contribute to the development of Vietnam’s private sector, providing abundant resources for growth. 

Third, digital technology has demonstrated clear potential to enhance labor productivity across various sectors. In the private sector, this includes online commerce, financial services, transportation, and logistics, while in the public sector, it encompasses e-administration and the streamlining of administrative procedures, thereby improving management efficiency. Vietnam’s persistent challenge of low labor productivity can be alleviated through digital technology. 

Vietnam's population is young, dynamic, and highly responsive to new digital technologies.

Towards “Digital Citizens” 

Education and training remain the key for Vietnam to enter the digital era with dual goals: equipping the workforce with skills for the digital age and global collaboration, and preparing a new generation of “digital citizens.” 

There is broad consensus with the World Economic Forum’s proposal on the new skillsets required for workers in the digital era, emphasizing creative and critical thinking, and the ability for self-learning and continuous retraining at the individual level. Knowledge is no longer paramount; instead, skills—particularly soft skills for self-learning and adaptability—are essential. 

This suggests a breakthrough strategy for Vietnam’s education system. Could the current 12-year general education program be shortened to allow younger citizens to join the workforce earlier while acquiring skills on the job? 

The current curriculum, focused on imparting knowledge, should shift to equipping students with new skills. 

Furthermore, the traditional model of public schools and formal training should transition to public-private partnerships, with private enterprises deeply involved in providing educational services such as STEM, digital skills, and soft skills (critical thinking, creativity, and self-learning). 

In reality, the application of digital transformation has already been increasing Vietnam’s labor productivity. Digital technology is the key for Vietnam to escape the middle-income trap and become a mid-level power by 2045. Beyond sectors like finance, e-commerce, and tourism, digital technology can significantly boost productivity in education, healthcare, and agriculture. 

However, Vietnam currently faces two major challenges in developing its digital economy: (1) digital skills education and preparing the workforce and digital citizens for the digital era; and (2) institutional policies must remove barriers for businesses, enabling their participation in global value chains. Vietnam must adopt an open and flexible policy framework, moving away from protectionism. 

In other words, the aspiration for a prosperous and developed nation remains unchanged, but the goals and the pathway must evolve. The global context in 2020 has fundamentally shifted from the early 1990s when Vietnam embarked on its reform and set the goals of industrialization and modernization. Achieving national prosperity now hinges on developing the digital economy.

Nguyen Quang Dong - Institute for Policy Studies and Media Development 

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Nguyen Quang Dong

Nguyen Quang Dong