TOPIC ANALYSIS OF THE CURRENT SITUATION OF THE DIGITAL ECONOMY IN VIETNAM

According to researchers, the digital economy is "an economy that operates mainly based on digital technology", especially electronic transactions conducted through the Internet.Over the

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS

-*** -MID-TERM INTERNATIONAL ECONOMICS REPORT

TOPIC: ANALYSIS OF THE CURRENT SITUATION OF

THE DIGITAL ECONOMY IN VIETNAM

MEMBER: Dang Thai Son – 2013150046

Vu Tien Dat – 2012150020Pham Le Huy - 2012150040

14 Vu Tien Dat 2012150020 Prepare Chapter 2

26 Pham Le Huy 2012150040 Prepare Chapter 1

DISCUSSION OF FINDINGS 5

CHAPTER 1: VIETNAM TODAY AND THE DIGITAL ECONOMY 5

1 Digital economy – a new development trend 5

1.1 What is the digital economy? 5

1.2 Digital economy of the world 5

2 Advantages of developing the digital economy in Vietnam 6

2.1 Vietnam in relation to the global economy 7

2.2 Policies to support the digital economy in Vietnam 8

2.3 A promising start for the digital economy in Vietnam 8

3 Challenges of developing the digital economy in Vietnam 10

CHAPTER 2: THE CURRENT SITUATION OF THE DIGITAL ECONOMY IN VIETNAM 11

1 Digital transformation trend in Vietnam 11

1.1 Foundation of digital transformation 11

1.2 ICT – the foundation for the booming digital economy in Vietnam 12

1.3 Ecommerce 14

1.4 Smart logistics 15

1.5 Smart tourism 16

1.6 Smart health 17

1.7 Sharing economy 18

1.8 Financial Technologies 19

2 The digital economy in Vietnam during the Covid-19 Pandemic 20

CHAPTER 3: SOLUTIONS TO THE DIGITAL ECONOMY IN VIETNAM 22

CONCLUSION 25

REFERENCES 26

ABSTRACT

Currently, the world economy is changing profoundly under the impact of the fourth

is now based on a digital platform, which is the digital economy (also known as the web economy, internet economy or new economy) According to researchers, the digital economy is "an economy that operates mainly based on digital technology", especially electronic transactions conducted through the Internet.

Over the past 10 years, Vietnam's digital economy has rapidly developed both in terms of infrastructure and business market With a population of nearly 100 million people, Vietnam is considered as one of the countries with a good digital economy

development rate in the ASEAN region Vietnam has recorded the emergence of

digitization trends in many fields and economic sectors, from commerce and payment to transportation, education, health According to the "Digital Economy of Southeast Asia

in 2019" report announced by Google, Temasek and Bain on October 3, 2019, Vietnam's digital economy in 2019 is worth 12 billion USD (contributing 5% of GDP in 2019), 4 times higher than the price value in 2015 and is expected to reach 43 billion USD by 2025

However, the level of active participation in the development of the digital economy

in our country is still limited and somewhat spontaneous Currently, the system of

institutions, policies, as well as enforcement, dispute settlement and enforcement

agencies related to digital economy development is still weak, inconsistent and effective.Our team has decided to conduct the study report “Analysis of the current situation of the digital economy in Vietnam” to further research the advantages, challenges Vietnam has and the current situation of the digital economy in Vietnam

DISCUSSION OF FINDINGS CHAPTER 1: VIETNAM TODAY AND THE DIGITAL ECONOMY

1 Digital economy – a new development trend

During the past four decades, Vietnam has undergone industrialization, modernizationand international integration For this country, science, technology and innovation play animportant role in development: improving production capacity and competitiveness in

product value chains, revolutionizing business models and attract more investment

sources in the field of information and communication technology (ICT)

1.1 What is the digital economy?

According to the Oxford Digital Economy Collaboration, the digital economy is understood as an economy that operates mainly on digital technology, especially

electronic transactions conducted through the Internet Digital economy includes all sectors and economies (industry, agriculture, services; production, distribution,

circulation of goods, transportation, logistics, finance and banking, ) that in which digital technology is applied

In essence, we can see that these are organizational models and operating methods of the economy based on the application of digital technology We can easily see every day the manifestations of digital technology appearing anywhere in life such as e-commerce sites, online advertising or applications for food, transportation, and delivery also integrates digital technology to meet the convenience needs of customers But if

considered at a more macro level, the digital economy also has significant contributions

to the integration of Vietnamese enterprises into the global technology chain and creates great economic values to develop the country

1.2 Digital economy of the world

In fact, we can see that the digital economy has brought many advantages to largeglobal companies and corporations Specifically, large global enterprises are more or less related to digital platforms and the digital economy (Google, Apple, Amazon, Microsoft

or Alibaba) The most prominent advantages of the strengths that the digital economy brings can be mentioned: e-commerce growth; promote users to use the internet and develop a system of digital economic goods and services In addition to these advantages, economic development in the direction of the digital economy also ensures transparency

It should be understood that transparency is one of the strengths of the digital economy

the amount of money corruption through transparent online activities, giving

governments a better control of the economy

2 Advantages of developing the digital economy in Vietnam

For Vietnam, the digital economy has made significant contributions to the integration

of businesses into the global technology chain In the digital economy, businesses are forced to innovate their traditional production and business processes into an ecosystem model, linking from production, trade to use, and this will increase productivity as well

as labor efficiency The information and communication technology (ICT) platform is considered as the core of digital transformation and is considered the most important part

of the Core Digital Economy A healthy development of this platform will contribute to helping Vietnam overcome the middle-income trap and move forward to rapid and sustainable development

Vietnam is considered a country with a good digital economy development rate in the ASEAN region thanks to good telecommunications and information technology

infrastructure, wide coverage, and high user density By the end of 2020, all three major domestic mobile phone carriers, Viettel, VNPT and Mobifone have simultaneously announced coverage areas and officially tested 5G service business, bringing Vietnam into the group of countries being the first in the world to access this technology,

contributing to strongly promoting the digital economy More importantly, unlike

previous technologies, which were mostly imported, Vietnam has gradually mastered and manufactured 5G devices, a step of strategic significance in the development of

telecommunications technology

2.1 Vietnam in relation to the global economy

Over the past 10 years, Vietnam's digital economy has rapidly developed both in terms of infrastructure and business market With a population of nearly 100 millionpeople, Vietnam is considered as one of the countries with a good digital economy development rate in the ASEAN region Vietnam has recorded the emergence of

digitalization trends in many fields and economic sectors, from commerce and payment

to transportation, education, health According to the report "Digital Economy of

Southeast Asia" Asia in 2019" announced by Google, Temasek and Bain on October 3,

2019, Vietnam's digital economy in 2019 is worth 12 billion USD (contributing 5% of GDP in 2019), 4 times higher than the price value in 2015 and is expected to reach 43 billion USD by 2025

In terms of a number of criteria related to the digital economy, Vietnam is leading in anumber of areas:

• 5G network –Vietnam is one of the first countries in the world to test a 5G network, which is expected to start rolling out in 2021

• High-achieving high school students – On international rankings for science, reading and math subjects, Vietnamese students are on par or even higher than high-income countries

• Moderate Internet service charges – Fixed broadband internet service charges in Vietnam are among the lowest in the Asia Pacific region (converted according to purchasing power parity)

This represents a comparison of capabilities in business and innovation, human

resource development, digital infrastructure and digital economy between Vietnam and regional countries such as Indonesia sia, Thailand and the Philippines Accordingly, Vietnam's areas of strength include the urgent export of high-tech products and the results

of the Global Innovation Index

2.2 Policies to support the digital economy in Vietnam

The Government of Vietnam recognizes that the economy-wide digital transformation

is crucial to growth and prosperity At this time, there are many agencies that

simultaneously support and regulate different parts of the digital economy in Vietnam The current legal framework is a compilation of trade regulations and decrees issued by various ministries For telecommunications and ICT matters, the Ministry of Information and Communications is the main focal point

In order to strongly promote the digital economy, besides the political will and

determination of the government, there should be a unified body or ministry that can promote, regulate and carry out all activities related to digital economic development This body can officially recognize the existence of the digital economy in the overall economy and create consistency, synchronization and feasibility in the revision,

formulation and implementation of policies, programs and plans for the digital economy Policies need to be updated as new Free Trade Agreements are signed and implemented This will facilitate regional cooperation in digitization, innovation, development of new global value chains and attracting quality FDI capital At the same time, creativity, openness and liberalization should be considered as guiding principles for the

implementation of the digitalization process, starting from the government and spreading

to the whole society

Over the years, the Vietnamese government has implemented a number of laws toregulate the digital economy The detailed implementation of these new laws is guidedthrough decrees and decisions

2.3 A promising start for the digital economy in Vietnam

Vietnam's digital economy is growing rapidly Digital development has radicallychanged many economic sectors, from manufacturing and agriculture to commerce,payments, transportation, finance and education

Since 2003, the inplemetnation rate of high-speed Internet services, smart devices and mobile phones in Vietnam has been relatively high, far exceeding that of countries such as Pakistan, India and Indonesia -nesia In 2017, more than half of the country's population had access to the Internet, much higher than 15% a decade earlier Rural areas still lag behind urban areas, although usage rates have also increased sharply thanks to satellite and wireless services now offered in remote provinces as well The use of

broadband Internet services is also increasing in the business sector The percentage of manufacturing and service companies using the Internet in their business activities

increased from 71% in 2007 to 86% in 2011 As of 2016, about 500,000 Vietnamese business accounts were newly created on the site Alibaba.com, every year about 100,000 new Vietnamese business accounts are created Vietnam is also the country with the highest number of domain name registrations in the ASEAN region In 2017, there were about 422,000 '.vn' domains operating out of a total of nearly 1 million domain names registered in ASEAN countries About 16 million IPv4 addresses have been issued in Vietnam.

The digital economy is booming in Vietnam In 2016, PC magazine described

Vietnam as the Silicon Valley of Southeast Asia New economic sectors, emerging and fast-growing industries in Vietnam include financial technology, telecommunications, computer and electronics manufacturing, and ICT services As of mid-2018, Vietnam had about 30,000 enterprises operating in the fields of hardware, software, digital content and ICT services There is a large community of startups and software developers who are designing digital products and services for domestic use as well as undertaking software development for advanced economies In the world There are also specialized training centers and technology parks for IT programmers and engineers in many localities, including major cities such as Hanoi, Ho Chi Minh City and Da Nang ICT is one of the fastest growing industries in Vietnam In 2018, total revenue from the ICT industry was US$98.9 billion, 13 times higher than 2010 revenue (7.6 billion US dollars) The

hardware industry is the largest branch of the ICT industry in Vietnam, contributing 89%

of total revenue in 2018 Exports of ICT equipment accounted for about 25% of Vietnam'stotal exports in 2016 (this figure) in 2011 only reached 10%) This is also the industry with the largest export turnover in the country, in which broadcasting equipment and mobile phones are particularly important product groups This is explained by the fact thatleading manufacturers based in Vietnam such as Samsung, Intel, Dell and LG are

expanding their business and increasing investment in Vietnam Vietnam assembles electrical and electronic equipment, increasing exports of modern computer equipment Half of all Samsung S8, S8 Plus phones and more than 80% of the central processing

units in Intel's personal computers are made in Vietnam Thanks to foreign investment inICT manufacturing, turnover Vietnam's high-tech exports have surpassed most of its neighbors in the region Domestic ICT businesses are also experiencing remarkable growth with their share prices tripling since 2012,85 typically large companies such as

VC Corp, Viettel and FPT

Vietnam's software industry is also growing steadily and is starting to become an attractive destination in the region Domestic enterprises hold a large market share,

providing software products at low cost As of mid-2018, a total of 9,500 enterprises in Vietnam are developing digital software for the fields of finance, telecommunications, smart agriculture and government In 2016, IT outsourcing services brought in about 3 billion USD in profit Vietnam has overtaken India to become Japan's second largest software outsourcing destination, just behind China

3 Challenges of developing the digital economy in Vietnam

However, the level of active participation in the development of the digital economy inour country is still limited and somewhat spontaneous Currently, the system of

institutions, policies, as well as enforcement, dispute settlement and enforcement agenciesrelated to digital economy development is still weak, inconsistent and effective, so it has not been exploited the full potential to develop the digital economy yet The habit of transaction, payment using cash and payment on receipt of goods of most consumers is a big obstacle, increasing costs for the whole society, businesses and people People's awareness about the digital economy is still limited, skills to use the internet safely are low, and it hasn't kept up with the speed of technology development The structure and quality of human resources have not met the requirements Science - technology and innovation are not really driving forces for socio-economic development; The newly formed national innovation system has not been synchronized and effective The process

of national digital transformation is still slow and lacks initiative due to limited

infrastructure for digital transformation; many enterprises are still passive, the capacity to access, apply and develop modern technology is still low The digital

economy is small in scale Fighting crime and ensuring network security still face many challenges.

CHAPTER 2: THE CURRENT SITUATION OF THE DIGITAL

ECONOMY IN VIETNAM

1 Digital transformation trend in Vietnam 1.1 Foundation of digital transformation

Rising demand for digital technologies in Vietnam

Since 2003, high-speed Internet and smart devices as well as mobile phones have beenused at a relatively high rate in Vietnam; surpassing countries like Pakistan, India,Indonesia Within the year of 2017, over half of the nation’s population had access to theInternet, which is 15% higher compared to that of the last decade Rural areas are farbehind urban areas for the most parts, however Internet usage has also strongly increasedthanks to more and more communication and wireless services offered there BroadbandInternet services have also seen more use in businesses 71% of manufacturers and serviceproviders had already incorporated Internet into their business practices And that numberrose to 86% in 2011

As of 2016, about 500000 Vietnamese business accounts were created on Alibaba.com,with about 100000 new ones were created each year Vietnam also ranked the highestdomain-registering country in ASEAN Among almost 1 million domain names registered

in 2017, run by ASEAN members, around 422000 of them are named ‘.vn’ About 16millon Ipv4 addresses have been allocated in Vietnam

Wireless network is preferred over fixed broadband

Users in Vietnam access the Internet mainly by mobile phones From 2006 to 2017,the number of registered mobile subscribers increased sixfold As of 2017, Vietnam has

120 million mobile subscribers, equivalent to 126% of the total population of the country.This figure shows that many Vietnamese own more than one mobile subscription More

than half of mobile phones used in Vietnam are smartphones that can connect to theInternet.

Percentage of population using the The situation of broadband usage in Internet by country period 2000-2017 Vietnam is calculated on the number

of connections for the period

2006-2017

1.2 ICT – the foundation for the booming digital economy in Vietnam

Digital economy is booming in Vietnam In 2016, PC magazine had describedVietnam as the Silicon Valley of South East Asia New economy areas, industries risingand growing in Vietnam include financial technology, telecoms, computer and electronicsmanufacturing and ICT services

As of mid-2018, Vietnam had about 30,000 enterprises operating in the fields ofhardware, software, digital content and ICT services There is a large community ofstartups and software developers who design digital products and services for domesticuse as well as undertake software development for advanced economies in the world.There are also specialized training centers and technology offices for programmers and ITengineers in many localities, including big cities such as Hanoi and Ho Chi Minh City.and Da Nang ICT is one of the fastest growing industries in Vietnam In 2018, the total

revenue from the ICT industry was US$98.9 billion, 13 times higher than the revenue in

2010 ($7.6 billion) The hardware industry is the largest branch of the ICT industry inVietnam, contributing 89% of total revenue in 2018

ICT equipment exports accounted for about 25% of Vietnam's total exports in 2016(this figure was only 10% in 2011) It is also the industry with the largest export turnover

in the country, in which broadcasting equipment and mobile phones are particularlyimportant product groups This can be explained because leading manufacturers based inVietnam such as Samsung, Intel, Dell and LG are expanding their business and increasinginvestment in Vietnam Vietnam assembles electrical and electronic equipment, increasingexports of modern computer equipment Half of all Samsung S8, S8 Plus phones and morethan 80% of the central processing units in Intel's personal computers are made inVietnam Thanks to foreign investment in ICT manufacturing, turnover Vietnam's high-tech exports have surpassed most of its neighbors in the region Domestic ICT companiesare also experiencing remarkable growth with their share prices tripling since 2012, 85typically large companies such as VC Corp, Viettel and FPT Vietnam's software industry

is also growing steadily and is beginning to become an attractive destination in the region.Domestic enterprises hold a large share of the market, providing low-cost softwareproducts As of mid-2018, a total of 9,500 enterprises in Vietnam are developing digitalsoftware for the fields of finance, telecommunications, smart agriculture and government

In 2016, IT outsourcing services brought in about US$3 billion in profit.86 Vietnamovertook India to become Japan's second largest outsourcing destination, second only toChina

Revenue from ICT by sectors (unit: billion US dollars)