The history of the world over the past 200 years has revealed an unchanging law: Every technological breakthrough or industrial revolution marks a turning point, opening tremendous opportunities for nations, peoples, and businesses, especially for those capable of innovation and pioneering in applying new technologies, such as technology firms.

Through research, creativity, and the development of high-productivity, user-friendly, and convenient technological products and services, many countries have experienced substantial economic growth for decades, allowing them to rise to become wealthy and prosperous nations.

In the 20th century, we witnessed the miraculous growth of Japan, South Korea, Taiwan (China), and China - transforming from poor agricultural economies into developed economies.

Japan succeeded by focusing on heavy industries (shipbuilding, electricity, coal, steel), automobiles, and electronics as the main drivers of growth. South Korea achieved success through automobiles, electronics, and mobile phones. Taiwan (China) thrived by concentrating on computers and semiconductors. China is currently advancing by emphasizing electric vehicles, self-driving cars, telecommunications technology, mobile phones, and the digital economy (e-commerce, social media, artificial intelligence) as its main growth drivers.

Over the past 30 years (1994-2024), Vietnam has belonged to the group of economies with the highest growth rates in the world. However, the peak growth cycle for Vietnam has only reached 7-9% per year, still lower than the peak growth rates exceeding 10% per year seen in Japan, South Korea, Taiwan (China), and China.

Consequently, for many years, the Vietnamese have been pondering the question: “When and how can Vietnam create an even higher economic growth cycle, join the ranks of the 'Asian Dragons,' and become a developed, wealthy, and prosperous nation?”

Humanity is entering the 4.0 industrial revolution, characterized by the explosion of artificial intelligence (AI), the widespread adoption of high-speed internet, smartphones, social media, e-commerce, online tourism, and online media—resulting in the digital economy growing at a much faster rate than traditional economies. In many countries, the digital economy is becoming a new driving force for economic growth and development.

With its human qualities, national stature, position, and potential, along with the initial achievements in developing the digital economy over the past few years - especially in software exports, mobile gaming, e-commerce, digital finance, ride-hailing, and online food ordering - Vietnam should, for at least the next 30 years (2025-2054), select the digital economy as the primary driver of growth and economic development.

Why is the digital economy a growth driver?

We choose the digital economy as the main engine for economic growth over the next 30 years for several reasons:

- It has a growth rate 2.5-4 times higher than traditional economic growth.

- It provides higher added value and productivity, ranging from 1.5-8 times that of traditional sectors.

- It serves as a foundation for the growth of other traditional economic sectors.

- It transcends borders, facilitating globalization.

- It requires less investment capital.

- It maximizes the qualities and potential of the Vietnamese people.

According to the “e-Conomy SEA 2023” report by Google, Temasek, and Bain & Company, from 2021 to 2025, Vietnam’s digital economy will have the highest growth rate in ASEAN, averaging 24.5% per year—over four times higher than GDP growth (while the Philippines grows at 19.8%, Singapore at 17.9%, Indonesia at 14.7%, Thailand at 13.1%, and Malaysia at 12.1%). Vietnam also boasts the highest growth rates in ASEAN across e-commerce, ride-hailing, online food delivery, online tourism, and digital payments.

The report predicts that from 2025 to 2030, Vietnam’s digital economy will continue to grow at the highest rate, while also having the highest proportion of the digital economy to total GDP in ASEAN (digital economy share of national GDP in 2030: Vietnam 26.79%, Thailand 22%, Philippines 19.46%, Indonesia 15.19%, Malaysia 10.95%, Singapore 9.5%).

FPT Software's 2024 data shows: $1.25 billion in revenue, a total workforce of 28,000, and an average revenue per employee of $45,000. For software exports, the cost of imported machinery and tools accounts for about 10% of revenue. Thus, the added value per person, after deducting 10%, is $40,500 (other software companies report lower average revenue per employee, tentatively estimated at a minimum of $35,000).

In 2023, the textile and garment industry reported exports of $40.3 billion and imports of $21 billion, resulting in a trade surplus of $19.3 billion, employing 2.5 million workers, with an average revenue per employee of $7,720. Assuming machinery and tool import costs are around 10%, the added value per employee is $6,948.

Another statistic, not included in the “e-Conomy SEA 2023” report, indicates that software exports are growing at 25% annually (note that the e-Conomy SEA report does not account for software services, telecommunications services, mobile gaming, AI, or semiconductors in the digital economy).

Sectors within the digital economy exhibit much higher added value and productivity than traditional economic sectors. Statistics show that the software export sector has per capita added value ranging from $31,500 to $40,500, while the textile and footwear sectors average around $6,948. Therefore, the added value of software exports is 4.5 to 5.8 times that of textiles and leather.

Moreover, the added value in sectors like “Make by Vietnam,” AI, chip design, and mobile game development surpasses that of software exports.

Additionally, the textile and footwear sectors primarily consist of FDI enterprises, meaning profits largely benefit the FDI sector, whereas the digital economy is predominantly comprised of Vietnamese enterprises.

Importantly, the Vietnamese people have immense potential in the digital economy. Evidence includes: Viettel being a leading telecommunications company in ASEAN for several years, valued as the 15th most valuable telecommunications brand globally, surpassing many companies from developed economies; FPT Software being the first ASEAN software company to achieve over $1 billion in software export revenue; and the establishment of the Vietnam-Japan Digital Transformation Association involving numerous Vietnamese software companies in Japan. Vietnam ranks in the top 7 globally for mobile game production.

Regarding semiconductors, Vietnam is situated in East Asia, which accounts for 80% of global semiconductor production. While we are still in the early stages, a noteworthy observation is: “Nations that use chopsticks possess the qualities suitable for semiconductor design and manufacturing,” supported by the successes of Japan, South Korea, Taiwan (China), and China in this field, with major names like TSMC, Samsung, SK Hynix, UUMC, and MediaTek.

To bolster confidence in Vietnam's potential in the digital economy, let’s listen to billionaire Narayana Murthy, one of the greatest entrepreneurs of our time, as stated on VTV4 during his visit to Vietnam in May 2024: “Vietnamese people are known for their great ambition, hard work, sacrifice, and ability to achieve anything they desire. This is an energetic, passionate, and confident country. Aside from India, Vietnam is the only country in Asia (not counting Singapore, Japan, China, or Malaysia) that can achieve significant success in software exports (reaching billions like FPT).”

What should Vietnam do?

First, it is crucial to focus on telecommunications infrastructure. The digital economy relies on internet connectivity; thus, high-speed internet with extensive coverage, reaching every corner of the country, including rural and remote areas, is essential.

The implementation of 5G must be expedited. Currently, Vietnam's 5G coverage does not match that of Singapore, Japan, South Korea, Taiwan (China), or other regional countries like Malaysia, Thailand, Indonesia, the Philippines, and even India and Sri Lanka. If we consider the digital economy to be the main driver of growth and economic development, we must strengthen 5G networks.

Additionally, there should be greater focus on logistics, which is the backbone of e-commerce. Efficient delivery systems facilitate the movement of goods, shorten cash cycles, and reduce logistics costs, enhancing capital efficiency. Developing transportation infrastructure, including air travel, expressways, and high-speed rail, is vital. The lesson from China is noteworthy: with a high-speed rail system, they achieved a nationwide e-commerce delivery standard of just 24 hours, compared to the 72-hour standard in the US.

Furthermore, Vietnam's digital banking, online payment, and lending services have experienced the fastest growth in ASEAN (in just a few years post-COVID-19, online money transfer quickly became mainstream; some banks have begun offering online payment services and QR codes in some ASEAN countries). However, the proportion of online payments is still relatively low. Continued support is needed to enhance the convenience and speed of transactions on international e-commerce platforms.

Finally, the government must invest heavily in building an effective digital government system, while also creating a clear and transparent legal framework for the digital economy. A national strategy for the digital economy should be developed, particularly focusing on semiconductors and AI - two sectors with tremendous potential.

Do Cao Bao

Member of the Board of Directors, FPT Corporation