“Powering Digital in Vietnam”
On June 9th at the Vietnam Chamber of Commerce and Industry (VCCI) offices in Hanoi, TRPC kick-started the first of a series of forums in Asia to discuss how different sectors of the economy can leverage off the Internet to transition towards a Digital Economy. TRPC was commissioned in early 2015 to undertake a research study of pathways to a digital economy in five selected Asia economies: India, Indonesia, Japan, South Korea and Vietnam.
The workshop held in Hanoi was the first of the five planned for each country, to share the research and the lessons arising from the case studies, as well as to spur discussions between policymakers and entrepreneurs on the challenges and opportunities of driving a digital agenda. Upwards of 70 people attended the seminar jointly organized by TRPC and local partner, the Institute of Information Technology for Business of VCCI. The workshop was well attended by an audience that was noticeably young, knowledgeable, engaged and already experienced in working for companies using ICTs. As a result, questions – of which there were many – were well-informed and searching, ranging from the constraints on human resource and capacity building, to concerns about Internet outages and certain unnecessary restrictions hindering business. The former point on HR was particularly interesting for the point made that few young IT-savvy graduates are able to find employment in government agencies and make an impact. In an era where the successful transition to a digital economy is inherently reliant on cross-sectoral understanding of ICT, this appeared to be a point well-made and, we assume, well-received.
The workshop divided into two sessions. During the first, two speakers were from featured case studies, PeaceSoft and the GiapSchool. PeaseSoft has pioneered Vietnam’s most expansive e-payments system in support of the digital ecosystem it has created around its e-commerce business and is now expanding regionally. GiapSchool, founded by Dr Giap as a non-commercial social venture, offers ‘massive open online courses’ (MOOCs) to thousands of school and college students, as well as for companies wanting to retrain their staff. The third speaker, from the Vietnam Internet Association (VIA), stressed the need to raise awareness of the benefits of going digital.
The second session focused on policy issues, featuring government representatives from the Ministry of Information and Communications (MIC), the Vietnam E-Commerce and IT Agency (VECITA) under the Ministry of Industry and Trade, the Ministry of Finance’s Department of Taxation, and the Department of Customs, with the private sector represented by the Vietnam E-Commerce Association (VECOM).
All speakers referring to the report agreed with the key findings, in particular that Vietnam has advanced a long way in terms of mobile access to the Internet, and that this is already paying dividends in terms of the growth of e-commerce, particularly via smartphones. However, the ecosystem of companies directly making their business from the provision of Internet services, content and applications is still in the very early stages. Nevertheless, e-commerce is already driving a nascent digital economy in Vietnam, with PeaceSoft’s ecosystem of supporting auxiliary commercial activities, including logistics and payments, providing a good illustration of this development. But there is an overwhelming need for a digital vision in Vietnam. A vision that government can provide a lead on through simplifying and making more transparent the laws and regulations governing online commercial activities, and which organization such as VCCI, the VIA, VECOM and others can promote. Progress will continue to come from young entrepreneurs who have the digital skills and knowledge and the vision themselves.
It was stressed that creating and promoting this vision depended upon non-Internet companies seeing and understanding the opportunities of the digital economy, using examples from overseas to show what can and is being achieved – as the TRPC report illustrates through a variety of case studies. Such approaches need also to offer ways to measure and illustrate the advantages of adopting digital technologies and how to integrate them into the business of the enterprise. While seminars and workshops can help, the real drivers will come from the market.
On the one hand, start-up companies will begin offering online and digital services to the traditional sectors of manufacturing, agriculture, banking and financial services, travel and transport services, retail, and so on. On the other hand, where markets are genuinely competitive, companies will begin adopting digital technologies and going online to reduce costs, increase efficiencies and introduce new products and services, such as Internet-connected devices.
But before Vietnam can reach the take-off point into a full digital economy, there are challenges and obstacles to be overcome. Human resource is perhaps the outstanding challenge in the short-run. Either people with digital skills and know-how are in short supply within companies and government agencies, or students with these skills cannot find employment using them to the full. Some will strike out on their own as start-ups, but those that cannot represent a wasted resource in Vietnam unless they can be brought into the employment process in productive ways. This implies that business processes and investment and the initiatives taken by state agencies, need to be aware of the opportunities they have to accelerate the digitalization of Vietnam.
Recommendations from the TRPC Report for Vietnam include the following:
- Vision – awareness is key
- Transparency – certainty of policies and regulations is critical for investment
- Harmonization – Vietnam should allow and encourage the adoption of international standards to open world markets to Vietnamese products and services online
- Ecosystems – every effort should be made to enable and encourage their growth
- Capacity building – both raising the level of IT literacy and business processes that can take advantage of a more ICT-skilled workforce
- Impacts – regulations should be ‘smart’ to ensure that they giving the right signals to people so as to promote productive endeavours
- Business climate – new entrants from home and abroad should be encouraged to create a competitive and innovative market economy as a stepping stone to making Vietnamese companies more competitive in the global marketplace
- Industry engagement – consultation with industry and all stakeholders will harvest their collective wisdom and best practices to guide government policies
Vietnam is a nascent digital economy with a growing middle-class with annual incomes of around USD3,000 or more. Through this forum, TRPC sought to invigorate momentum towards achieving a digital Vietnam which will offer opportunities for growth and for companies of all scale and size to enter regional and global markets.
 Japan and South Korea were selected because they are already digital economies, but even they are going through renewal and restructuring which can be instructive in terms of illustrating ways digital technologies can be married with very traditional sectors, such as small scale farming in Japan, and family-run food shops in South Korea. By contrast, India, Indonesia and Vietnam are still at the very early stages, but in all three cases are examples of companies and organizations making the transition which in some cases is also allowing them to go global.