Vietnam is believed to be the fastest-growing digital economy in the Asia Pacific (APAC) as it is making efforts to push up the digital transformation as a key strategy to boost the national economy.
| Internet economy growth vs GDP penetration. Chart: Google, TEMASEK |
Over the past years, Vietnam has set ambitious goals for the digital economy such as contributing 30% to the country’s gross domestic product (GDP) by 2030.
Dean of the Diplomatic Academy of Vietnam's Faculty of International Economics Dang Hoang Linh said that if the sector keeps up with its current growth rate, the e-commerce market is likely to hit US$33 billion in value by 2025, Techwireasia reported.
In the report named “e-Conomy SEA 2019” by Google and TEMASEK, Vietnam’s Internet economy is booming as it reached some US$12 billion in 2019 on a 38% annualized growth rate since 2015. With the gross merchandise value (GMV) of its Internet economy set to account for over 5% of the country’s GDP in 2019, Vietnam is emerging as the most digital of all economies in the region.
| Vietnam's internet economy. Chart: Google, TEMASEK |
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E-commerce is a key driver behind the impressive numbers, where homegrown marketplaces like Sendo and Tiki compete with regional players like Lazada and Shopee, said the report.
According to Techwireasia, Vietnam will solidify its position as an e-commerce leader just behind Indonesia with US$100 billion and Thailand with US$43 billion.
Indeed, over the past year, Vietnam has built itself into an attractive destination for global investors and its efforts are paying off, tech giants like Nokia, Samsung, and Olympus have moved some operations into the country.
The high return on investment (ROI) in Vietnam’s digital-related economy is most apparent in the e-commerce sector, receiving approximately US$1 billion in funding, Techwireasia reported.
| Funding in Vietnam's Internet economy. Chart: Google, TEMASEK |
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The sector is growing robustly, producing successful e-commerce platforms such as Tiki, Thegiodidong, and Sendo.
Another reason supporting the market is Vietnam’s regulators played a large part in propelling the country’s e-commerce industry forward.
A solid regulatory framework is set in place to ensure that safeguards are enacted, preventing the exploitation of the e-commerce industry.
Specific regulation was recently passed in order to create favorable conditions that can support the high growth rate of the retail e-commerce market, and at the same time, ensure a fair business environment.
In a world where virtually every industry is disrupted by technology, Vietnam’s priority to boost digitization is a wise move. It also serves as a good exhibit of the integral role regulators play in digital-related fields such as e-commerce, AI, or fintech.
Ultimately, governments and businesses alike must recognize that digital transformation is inevitable. The only way forward is to embrace it, and develop strategies that can best help them thrive against such a backdrop, Techwireasia concluded.
