The digital economy has ushered in an era of new business models and methods which present huge opportunities for businesses to expand their markets, reduce business costs and promote after-sales services as well as facilitating global shopping habits.
Furthermore, the development of digital technologies will help to provide a low cost route for small and medium-sized enterprises to become involved in the global supply chain.
The latest technological breakthroughs enable supply chains to connect and distribute more effectively, reducing logistics and transaction costs.
According to reports from Google and Temasek, the digital economy in the ASEAN region has seen major breakthroughs in recent years, especially in 2017.
The growth rate of the digital economy in the ASEAN region exceeded expectations in 2017, ballooning by 27% to US$50 billion and accounting for 2% of the region’s GDP, it is expected to amount to 6% of GDP by 2025.
Major industries which have contributed to such vigorous growth include online tourism, e-commerce, online car bookings, and mass media and online entertainment.
With a population exceeding 90 million, which includes 58 million internet users and over 125 million mobile phone subscribers, more than 3,000 businesses have modernised their activities while others have found success in such fields as information technology, software, and digital applications.
Vietnam is seen as having great potential for the development of its digital economy. At present, the proportion of the retail market accounted for by e-commerce is just 3.6% - a modest level compared to the average throughout the Asia-Pacific region.
Ms Pham Thi Thu Hang, director of the Institute for Business Development under the Vietnam Chamber of Industry and Trade says, “although Vietnam’s private sector has seen improvements in 2017, there remains many problems due to the increasing number of small businesses suffering high losses.”
The State has encouraged individual business households to establish themselves as full businesses. Aside from this transformation, there should be support policies to strengthen business capacity and reduce costs for micro businesses, she said.
Hang warns that Vietnam should gear up to develop e-commerce business (Business to Business) to provide support services to the target group, which is especially important as Vietnam has not yet developed the service segment to the required level.
The establishment of B2B is a necessity at a time when the country has accelerated the process of modernization and industrialization process, applied advanced technologies, created added value, and participated in the global value chain.
Businesses will be eliminated from the market without enhancing their capacity to become involved in these processes, says Ms Hang.
Digital economy poses a number of challenges
The President of the Vietnam Chamber of Industry and Trade, Mr Vu Tien Loc, says if Vietnamese businesses can take advantage of new technologies, they can enhance the efficiency of their businesses, expand their market shares and penetrate new markets.
Particularly, hi-tech products will generate value, reducing the cost of production and of the workforce.
The benefits of the digital economy will not be restricted to technology companies but will also provide Vietnamese businesses with the tools to compete with other enterprises in the ASEAN region in the field of the digital integration.
However, Mr Loc says, “apart from the opportunities, the digital economy’s new business models and methods have also posed a number of challenges to Vietnamese businesses. If local businesses fail to seize opportunities presented by the modern trend, they could lose their place in the domestic market and face a lower ranking in the global supply chain.”
According to Mr Loc, the shortage of human resources in the field of information technology is one of the biggest challenges facing Vietnam’s digital economy.
There remain hindrances in terms of the legal environment, security, confidentiality, and implementation of e-commerce. Moreover, the adaptability of businesses, especially SMEs, to the digital economy remains limited.
VOV
