Instead of relying on the rest of the world, Vietnam is approaching its digital transformation by confidently developing homegrown solutions, photo Le Toan

At the eighth National Congress of the Vietnam Union of Science and Technology Associations (VUSTA) less than a fortnight ago, Prime Minister Nguyen Xuan Phuc emphasised VUSTA’s role in gathering the nation’s intellectuals and creative minds both at home and abroad to push innovation and modern solutions for governance, businesses, and citizens alike.

Along with complimenting the association’s work and congratulating its members for their engagement over the last decades, PM Phuc also pointed out current limitations of Vietnamese science and technology.

“Many manufacturers facing problems related to technology and equipment often seek the support of foreign producers and consultants, which is a sad reality that we need to overcome,” the PM said.

Moreover, PM Phuc criticised that, although research in many areas is heavily conducted, its results often “only fill up the shelves in the libraries and do not relate to the requirements of reality.”

Referring to Vietnam’s medical field as one of the prime examples for the close connection between science and application, the prime minister made clear that the approach in the coming year must be more focused on solving actual problems, rather than purely theorising without application.

Homegrown solutions

Two days prior to the PM’s speech at VUSTA’s congress, Minister of Information and Communications Nguyen Manh Hung also emphasised the crucial role of made-in-Vietnam tech solutions and local digital development.

During his speech, the minister announced that there are now more than 58,000 digital enterprises currently active in the country, with 13,000 new ones added just in 2020, more than twice the number of the 6,000 companies per year that the “Make in Vietnam” strategy targets.

The strategy, at its core, aims at the same goals that the PM referred to when talking about domestic manufacturers. Minister Hung clarified that, “Without Make in Vietnam, Vietnam cannot become a developed country. Without Make in Vietnam, we cannot go to the world. Without Make in Vietnam, our country cannot be resilient. Without Make in Vietnam, Vietnam cannot prosper.”

Part of Vietnam’s digital transformation is to develop and commercialise 5G technology, which is currently being implemented by the government and several local companies and overseas partners.

According to the Ministry of Information and Communications (MIC), Vietnam ranks fifth globally in terms of 5G infrastructure and equipment ownership, and the number of 5G subscriptions in the country is expected to reach more than six million by 2025.

Together with Singapore, it seems likely that Vietnam will be among the first Southeast Asian nations to roll out the new mobile network solution, despite its market penetration expected to be lower than in some regional countries in the first few months of the implementation.

With the launch of 5G services, Vietnamese mobile carriers like state-owned Viettel are forecast to see revenues increase by $300 million a year, starting from 2025. However, these stellar revenue forecasts rely on investments of about $1.5-2.5 billion in technology during the next five years.

Funding remains on the biggest hurdles in the race for technological advancement. Le Hong Minh, CEO of Vietnamese gaming and social media giant VNG, said in an interview with CNN that to cash in on its tech-savvy and young population, the country needs to create a favourable environment for local and foreign investors.

“Compared to five years ago, tech investment in Vietnam has become a lot more exciting and dynamic, but there is still a major gap between Vietnam and other regional countries like Singapore and Indonesia,” Minh said.

More than 15 years ago, he and four of his friends met in an internet café with the plan to start their gaming company. “Back in 2004, it was very hard to find money and people who know how to run a business, let alone someone who knows how to run an internet technology business,” Minh remembered.

Nowadays, Minh’s VNG has become the nation’s tech unicorn with a total of 560 apps, of which 171 were designed for iOS and 389 for Android. The company’s top-grossing app in November 2020 was Perfect World VNG, and its most downloaded app was the mobile game Dead Target: Zombie Offline.

However, one of VNG’s most popular creations remains the social network and free message and call application Zalo, whose publisher Zalo Group currently ranks as the biggest Vietnamese app publisher as of December 28, according to Swiss app intelligence provider 42matters AG.

Along with Zalo which launched in 2012, the publisher is also the developer behind other mobile apps like music platform Zing MP3, Laban Key Go Tieng Viet, Tu Dien Anh Viet Laban, and many more. Altogether, Zalo Group owns 17 apps that together have been downloaded more than 267 million times.

Zalo, Zing, and a few other mobile applications are outstanding examples of homegrown technology brands. However, Vietnam seems to not just aim for national digital sovereignty by fostering its own brands and applications, but also cash in on their vast economic potential.

Digital prospects

The final report on Vietnam’s Future Digital Economy, published in May 2019 by the Ministry of Science and Technology and the Australian Commonwealth Scientific and Industrial Research Organisation amid the Aus4Innovation programme, outlined four scenarios based on seven identified trends for Vietnam’s digital economy development by 2045.

Along with emerging digital technologies and infrastructure, internationalisation, and the need for cybersecurity and privacy measures, Vietnam’s driving development trends are a significant push towards smart city development, the rise of digital skillsets and entrepreneurship, and changing consumer behaviours driven by digital tribes and influencers, the report stated.

Based on these seven “megatrends”, the international group of scientists formed four likely scenarios for Vietnam’s digital economy by 2045. The direction of the country’s development is depending on whether it emerges “as a net buyer or seller of digital services and products”, as well as the “level of adaptation to new digital products and services across government, the community, and industry.” The four models – Heritage, Digitally Transformed, Digital Exporter, and Digital Consumer – all outline possible impacts on additional GDP, annual growth, and the job market.

With Heritage being the scenario with the lowest digital adaptation, in which the country acts primarily as a buyer of digital services and goods, forecasted accumulated additional GDP could amount to $60.9 billion over 27 years, with an annual impact on GDP growth of just 0.38 per cent. However, this scenario would also show the lowest risk of jobs being disrupted by modern technologies, estimated at 18.4 per cent.

On the contrary, if Vietnam mainly acts as a net seller of digital products and services, and population, industries, and government show a high level of digital adaptation, the accumulated GDP growth over the same period could amount to $168.6 billion, with an expected growth impact of 1.1 per cent. However, this Digitally Transformed scenario would also put more than 38 per cent of current jobs at risk of transformation or disruption.

Looking at the aforementioned speeches by PM Phuc and Minister Hung, it seems that more than one year after the publication of the report, Vietnam is strongly developing towards the latter scenario; that is, a high level of digital literacy with many digital goods and services made in Vietnam that can be exported to other markets and thus contribute to the socioeconomic development of the country. 

Etienne Mahler (VIR)

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