Vietnam pushes digital economy to boost competitiveness amid urgent SME challenges

THE HANOI TIMES — A multilayered support model in policy, technology, finance and training will help local companies thrive and advance the digital economy, said Mac Quoc Anh, Vice Chairman and Secretary-General of the Hanoi Association of Small and Medium Enterprises (HANOISME).

Anh was speaking at the forum “Developing the Digital Economy: Opportunities and Challenges in a New Era,” organized by the Kinh te & Do thi (Economic & Urban) newspaper on November 21 in Hanoi.

According to Anh, Hanoi aims for the digital economy to contribute 25%–30% of GRDP in 2025 and 40% by 2030. These targets reflect global trends and the city’s determination to make digitalization a new growth pillar.

However, he said SMEs, as the most numerous and economically decisive group in Vietnam, still face major structural obstacles, beginning with limited technological capacity.

Anh cited a 2024 survey that found 54% of Hanoi SMEs do not have a dedicated IT department. Meanwhile, 62% of surveyed companies said they “do not have sufficient budget” for comprehensive digital transformation.

“This creates a significant gap between market demands and business capabilities,” he said.

The HANOISME vice chairman noted other pressing challenges such as a lack of standardized data and rising compliance costs amid new national requirements for e-invoicing, electronic customs records, cybersecurity standards, ESG rules, the Carbon Border Adjustment Mechanism (CBAM) and currency risk management.

He said weak linkages among SMEs and the lack of inter-provincial and cross-sector value chains also hinder progress.

“These barriers show that SMEs need a multilayered support model, including policy, technology, finance and training, to overcome challenges, keep pace with global trends and take part in digital value chains,” Anh said.

To Hoai Nam, Executive Vice President and Secretary-General of the Vietnam Association of Small and Medium Enterprises (VINASME), said more than 80% of SMEs have no digital transformation strategy.

He said the business community faces shortages of digital human resources, incomplete regulations on data, electronic transactions and cross-border taxation and difficulty accessing capital for innovation.

Nguyen Duc Kien, former Head of the Prime Minister’s Economic Advisory Group, said research by the Institute for Digital Economic Development, based on data from the World Bank and the State Bank of Vietnam over 10 years, shows uneven access to financial services nationwide.

He said low income, long distances, poor transportation and a lack of information limit people’s ability to access financial products and services. Vulnerable groups, including low-income workers, the elderly and women, face added obstacles such as missing identification papers and difficulties proving income.

Although small businesses and household enterprises make up a large share of the economy, their rate of using bank accounts and cashless payments remains low.

The gap in financial access between income groups and enterprise sizes continues to widen, creating disadvantages for low-income individuals and smaller firms, he added.

Experts at the forum said digital transformation is helping Vietnam strengthen its global competitiveness, attract higher-quality investment, promote the circular economy and increase value in global supply chains.

They noted that the digital economy enables businesses to innovate in products, business models and customer engagement. Early adopters of technology, especially in the private sector, tend to outperform competitors, scale faster and achieve stronger market positions.

Institutional reforms needed

To turn the digital economy into a true growth driver, Quoc Anh from HANOISME said improving institutions and removing barriers for SMEs must remain central.

He said strong institutional frameworks ensure efficient resource allocation, protect innovation and support economic activity. Experiences from Singapore, South Korea and Estonia show that when institutions move ahead, businesses can grow even faster.

He said Hanoi needs to strengthen the legal framework for digital transactions, digital data and digital assets. Many SMEs struggle due to the lack of a unified electronic identification system, unclear rules on data storage and sharing, and limited protection of intellectual property for digital products.

“The city should allow businesses to use public-sector open data in planning, transport, health and education, following models in Seoul and London, while setting mandatory standards for cybersecurity and data safety to build trust in digital interactions,” the secretary-general said.

Anh said administrative procedures should also be simplified and fully digitized. High compliance costs remain a burden: in 2024 surveys, SMEs reported spending 18–25 days completing investment procedures and up to 30% of their time processing paperwork.

A one-stop digital system with synchronized databases would allow companies to submit information once, saving billions of dongs in social costs each year, he added.

He also recommended regulatory sandboxes for emerging sectors such as AI, fintech, blockchain, IoT, digital healthcare and digital education. He said Singapore’s model has helped small firms test products and reach millions of users within months.

Agreeing with this view, Nguyen Van Tuan, CEO of NetSpace, said sandboxes give companies flexible space to test products, reduce legal risks and still maintain regulatory oversight.

“This is how many advanced countries create the launchpad for tech enterprises,” he said.

The government should increase financial support for SMEs undergoing digital transformation, including establishing a Digital Transformation Support Fund and offering maximum 3% preferential loans for ERP, CRM, big data and cybersecurity projects, Quoc Anh said.

He noted that South Korea once spent 1% of its GDP annually to help small firms digitalize, boosting productivity by more than 25%.

According to the HANOISME vice chairman, tax and fee incentives for innovative businesses should expand. Firms investing in digital platforms or training digital talent should qualify for corporate income tax deductions, while sustainable e-commerce companies should receive incentives similar to high-tech enterprises.

Offering a national perspective, VINASME Executive Vice President Nam said Vietnam must strengthen its capital and financial market mechanisms to address two major hurdles: limited long-term funding for innovation and high technology, and a shortage of green finance tools to support sustainable development.

Nguyen Phu Tien, Deputy Director of the Department of Digital Economy and Digital Society under the Ministry of Science and Technology, said Vietnam must build domestic digital platforms capable of solving cross-sector and interregional challenges while supporting digital governance across the public sector.

He said data has become a strategic production factor. The State must build national and sectoral data sets, develop the data market, establish policies on data assets, ownership and value distribution, pilot data exchanges and expand open data initiatives.

He said cybersecurity and digital safety are essential for public trust in the digital and social economy. This includes widespread protection tools for citizens and businesses and promoting digital signatures and trusted digital services.

Tien also highlighted the importance of developing digital human resources, from tech specialists to everyday platform users, through deep training programs blended with hands-on learning.

He said digital citizenship and digital culture will underpin an inclusive and secure digital society, supported by a national digital skills framework and programs such as “Digital Literacy for All” and mass online training.