How enabling technologies have a great impact on Vietnam’s economic development

Enabling technologies play a pivotal role in Vietnam's economic development. These technologies, which include advancements in areas such as information technology, telecommunications, and infrastructure, provide a solid foundation for growth and innovation. As Vietnam continues to leverage enabling technologies, it can unlock new opportunities, accelerate economic growth, and pave the way toward a more prosperous future. 

How technology is transforming Vietnam’s economy

According to the Ministry of Science and Technology's statistics, the significant contributions of science, technology, and innovation to socio-economic development are evident. This impact is not limited to a single sector, as technology is reshaping various industries such as healthcare, finance, and retail.

For example, in the healthcare sector, telemedicine has emerged as a transformative solution, sizing down crowds at clinics and hospitals by offering online consultation services. This enables doctors to make diagnoses and create treatment plans remotely, improving professionalism and reducing waiting times for patients.

Similarly, the retail industry has harnessed the power of e-commerce platforms, connecting businesses with customers, increasing convenience, and boosting revenue. By embracing digital storefronts, retail businesses can cater to customer needs more effectively.

Education is also experiencing a technological revolution, with online learning platforms and mobile learning apps providing students with flexible learning opportunities. Additionally, technology empowers lecturers to analyze student data and adjust teaching methods accordingly, enhancing the learning experience.

A significant driver of Vietnam's economic growth is the digitalization of the country. The digital economy is projected to play a pivotal role in achieving the goal of becoming a high-income economy by 2045. By 2025, the digital economy is expected to contribute around 20% to the GDP, with an estimated 30% contribution by 2030.

The digital economy is indeed on an upward trajectory, as evidenced by Vietnam's digital marketplace. The E-Conomy SEA 2022 report indicates a substantial 28% increase in gross merchandise value, reaching $23 billion in 2022. Projections suggest further growth, with the digital economy expected to reach $49 billion by 2025, reflecting a remarkable 31% expansion.

Tran Minh Tuan, Director of the Department of Digital Economy and Digital Society under the Ministry of Information and Communications, believed that digital market, digital space, and digital data are necessary for developing a digital economy, and to do that, the first thing is to ensure digital infrastructure. Recognizing the inherent potential of technology, leveraging its power becomes a pivotal undertaking not only for the digital economy but for the nation's economy as a whole.

Future Outlook and Recommendations for Investors

Vietnam's relentless pursuit of technological integration to propel economic development is evident as it prioritizes the infusion of technology across various sectors. There are four key trends that hold immense promise in shaping the country's economic growth, which include: AI and machine learning (ML), 5G, blockchain, and VR/AR. 

AI and machine learning (ML)

In Vietnam, AI and ML has made significant strides in recent years and this trend is expected to continue in 2023. According to Mr. Hoang Viet Tien - Deputy Secretary General of the Vietnam Digital Communication Association, in 2023, these technologies are becoming increasingly transcendent, with a particular focus on natural language processing and computer vision, thereby supporting businesses in enhancing operational efficiency.

Recognizing the immense potential, the Vietnamese government has outlined its commitment to AI and ML integration in the National Strategy on Artificial Intelligence, with the goal of becoming one of the leading AI brands in ASEAN by 2030.

As a result, the demand for skilled professionals in AI and ML has surged, particularly in sectors like electronics (E-commerce), digital marketing, fintech, education, healthtech, and emerging fields such as entertainment and human resource management. Roles such as AI Engineers, Big Data Scientists, and Business Intelligence Analysts are in high demand, reflecting the growing importance of AI and ML in Vietnam's commercial industries.

5G 

Anticipated for 2023, Vietnam is poised to embrace the widespread adoption of 5G networks, revolutionizing connectivity with faster and more reliable connections for an increasing number of devices. The advent of 5G technology promises immense benefits, particularly in high-tech manufacturing, logistics, and agriculture industries.

In the manufacturing sector, 5G is expected to enhance factory capabilities and operational efficiency by reducing reliance on wired connections. As highlighted in a KPMG report, a factory equipped with a wireless 5G network has the potential to generate an additional value equivalent to $1/m2. To put this into perspective, even the smallest factory area of 10,000m2, when leveraging 5G, could potentially yield nearly $4 million USD in added value per year. 

In the field of logistics, 5G networks will propel businesses currently utilizing IoT devices to new heights, resolving common issues such as shipping delays and improving the information flow to customers.

For the agriculture sector, the deployment of 5G infrastructure is a pivotal step toward achieving high-tech agriculture. Given Vietnam's emphasis on agricultural investment, the application of 5G in agricultural production is crucial and highly advantageous.

Beyond these key sectors, 5G holds immense potential for advancing various domains, including smart traffic management, energy management, construction and mining, digital education, telehealth, retail smart solutions, and the development of smart cities.

Blockchain 

In Vietnam, blockchain technology has emerged as a cornerstone of technological innovation, presenting a myriad of compelling applications across various sectors. It serves as a secure platform for storing diplomas in the education sector and facilitates processes such as letters of credit, contract guarantees, and payments within the banking industry.

However, according to Dr. Nguyen Quoc Hung, the General Secretary of VNBA, the current implementation of blockchain in Vietnam primarily revolves around the financial domain, particularly digital assets and currencies. Other promising applications, such as traceability in agriculture, logistics, healthcare, and education, have not yet been widely adopted.

Looking ahead, Vietnam anticipates the emergence of new blockchain-based applications and a surge in the utilization of smart contracts. These self-executing agreements, encoded within lines of code, hold the potential to revolutionize traditional contract frameworks, enabling seamless transactions between buyers and sellers.

VR and AR

In the upcoming year of 2023, widespread adoption of VR and AR in Vietnam is anticipated in key sectors such as gaming, retail, and education. This technological integration will empower businesses to deliver innovative products and services, elevate customer experiences, and foster higher levels of engagement.

While the benefits of AR-VR are undeniable, the challenges of its widespread application in Vietnam persist. Experts often attribute this barrier to the complexity of the technology itself, as its advanced nature poses difficulties for universal adoption. However, globally recognized brands like IKEA, Houzz, and Wayfair have successfully harnessed AR-VR applications in sales, proving the potential of these technologies.

The key to unlocking the true potential of AR-VR in Vietnam lies in simplicity and addressing the daily needs of users. Modern users prioritize practicality over extravagant graphics or overly complex experiences. They seek usefulness above all else.

An effective combination that has emerged in the retail industry is "E-commerce & AR-VR." Recognizing this trend, AR-VR businesses in Vietnam, such as ADT Creative, Holomia, and CO-WELL Asia, have collaborated with e-commerce giants Lazada, Shopee, Tiki, and others to provide enhanced buying experiences for customers. By offering the best deals and increasing competition in the market, these collaborations tap into the immense potential of AR-VR technology.

Investors must be keenly aware of the tremendous opportunities presented by the application of AR-VR technology in Vietnam. The market holds significant potential for growth, and it is crucial not to overlook the investment prospects that arise from this emerging field.

Bottom-up

The significance of enabling technologies in Vietnam's economic development cannot be overstated. These technologies provide a solid foundation for growth, innovation, and competitiveness across industries. By leveraging advancements in information technology, telecommunications, and infrastructure, businesses in Vietnam can thrive in the digital age, with enhanced efficiency, productivity, and market expansion.

To seize the immense potential, we would like to invite investors to explore the high-tech sector in Vietnam and join our upcoming webinar, "Unlocking Business Opportunities in Vietnam". Reserve your spot today by visiting our LinkedIn or contacting our team directly. Together, we can unlock the vast potential and contribute to the continued success of Vietnam's economic transformation!