Vietnam today is in the middle of a digital transformation that makes it an exciting platform for developing ideas. This change is not a trend, but an entire approach to developing socio-economic conditions in the state. The Vietnamese government has identified digital technologies as a key enabler of growth and has laid out massive initiatives for applying technologies in numerous fields. This blog will explore the state of digital transformation in Vietnam today, its enablers, innovative technologies, opportunities for organizations, and Vietnam’s role in shaping the future in this area.
Overview of Digital Transformation Strategy in Vietnam
Digital transformation in Vietnam has become a matter of innovation and development, particularly since the early 2000s. This is mainly facilitated by government and international trends in shaping technologies. The upgraded digitization strategy began with creating of the Digital Transformation Center in 2019 and culminated in the National Digital Transformation Program launch in 2020. This grand strategy for a high-tech future by 2030 covers improving the quality of public services, developing a digital economy, and making Vietnam a competitive market player in the digital age.
The Rise of Digital Transformation in Vietnam
Vietnam's momentum for digital transformation is driven by strategic government policies aimed at modernizing the economy and governance. The National Digital Transformation Program outlines goals such as digitally processing 90% of government work documents and achieving 40% adult usage of online public services by 2024. These efforts aim to transform Vietnam into a digitized nation with efficient and open service delivery.
According to the E-Conomy Southeast Asia 2019 Report, which was jointly released Thursday by Temasek, Google, and Bain & Company, the digital economy in Vietnam is expected to reach US$43 billion by 2025. This growth is fueled by over 70 million internet users and a tech-savvy young population keen on leveraging technology for efficiency. The COVID-19 pandemic accelerated this shift, boosting e-commerce and new mobility solutions as consumer habits changed.
Vietnam's Vision
Vietnam's National Digital Transformation Agenda focuses on three pillars: digital government, digital economy, and digital society. The goal is to enhance efficiency while fostering inclusivity, ensuring no one is left behind. Celebrated annually on October 10, National Digital Transformation Day underscores the government’s commitment. Prime Minister Pham Minh Chinh envisions Vietnam as a digital nation, promoting innovative applications and business models, with technology driving economic growth and societal progress.
Current State of Digital Transformation in Vietnam
Vietnam's digital transformation is evident across several key sectors, each contributing significantly to the country's economic growth and societal advancement. Here’s a detailed exploration of these sectors, supported by specific data and evidence.
Digital Government
Digital government integrates digital technologies and ICT to enhance service delivery, streamline public administration, and improve transparency and efficiency. It encompasses e-services, e-participation, and e-administration, aiming to modernize governance through digital transformation.
Progress in E-Government Development
Vietnam has made significant strides in its e-government capabilities:
- National Public Service Portal: Launched to provide online access to government services, this portal has digitized over 80% of administrative procedures by December 2024, allowing citizens to complete transactions without visiting offices.
- E-Government Ranking: According to the United Nations' E-Government Survey in September 2024, Vietnam ranked 71st out of 193 countries, improving by 15 places from the previous ranking.
- Digital Identification System (VNeID): This system has enabled over 20 million citizens to securely access online public services, streamlining processes and reducing bureaucratic delays.
Digital Economy
The digital economy refers to an economic framework where digital technologies, such as the internet and advanced computing, significantly influence economic activities, driving growth and innovation. This encompasses various components that transform economic processes, including e-commerce, digital payments, digital services, data analytics, artificial intelligence (AI), the Internet of Things (IoT), blockchain technology, the sharing economy, and digital government.
Growth of Vietnam's Digital Economy
Vietnam's digital economy has been experiencing rapid growth, fueled by a tech-savvy population. As of 2023, the country boasts over 77.93 million internet users, translating to an internet penetration rate of 79.1%. The rise of e-commerce, online payments, and ride-hailing services has significantly contributed to this growth. In 2022, the digital economy's revenue was estimated at $166.4 billion, accounting for approximately 14.26% of Vietnam's GDP, with the ICT sector contributing nearly half of this figure and employing over 1.5 million workers.
The gross merchandise value (GMV) of Vietnam’s digital economy reached $23 billion in 2022 and is projected to grow to $50 billion by 2025, making it one of the fastest-growing markets in Southeast Asia due to the booming e-commerce sector.
Government Initiatives and Targets
The Vietnamese government has set ambitious targets for its digital economy, aiming for it to account for 30% of GDP by 2030. Key focus areas include:
- E-Commerce and Digital Payments
- Emerging Technologies including AI, blockchain, and IoT technologies.
- Support for Startups with National Technology Innovation Program and the National AI Strategy aim to position Vietnam as a leading AI hub in Southeast Asia.
Digital Infrastructure Development
A crucial aspect of Vietnam's digital economy is its digital infrastructure. The government is investing heavily in enhancing connectivity through Broadband Expansion, 5G network coverage, and data center development.
Read more: Trends in applying Artificial Intelligence in business
Digital Society
A digital society refers to a population in which digital media intersects with daily activity to the extent that paperless and electronic processes form the norm. The adoption process of digital society in Vietnam is still continuing, and some appropriate issues need to be addressed, especially issues related to digital literacy in society.
The State of Digital Literacy
Despite a high internet penetration rate of approximately 79.1%, many individuals, especially in rural areas and marginalized communities, lack the necessary skills to navigate digital platforms effectively. This skills gap can limit access to essential services and participation in the digital economy, particularly among women and older adults.
Government Initiatives
To address these challenges, the Vietnamese government has prioritized digital literacy in its digital transformation agenda through initiatives such as:
- National Digital Transformation Program: Aiming to train one million people in essential digital skills by 2025.
- Community Training Programs: Local governments and NGOs are providing workshops to improve digital skills among underserved populations.
- Educational Partnerships: Collaborations between tech companies and universities are integrating digital literacy into educational curricula.
Key Drivers of Digital Transformation in Vietnam
Vietnam is undergoing a significant digital transformation, driven by several key factors that are reshaping its economy and society. This transformation is essential for enhancing productivity, fostering innovation, and improving its citizens' overall quality of life. Below, we explore the primary drivers of this digital shift.
Rapid Growth of Internet and Mobile Penetration
One of the most critical drivers of digital transformation in Vietnam is the rapid growth of internet access and mobile penetration. As of 2023, Vietnam boasts over 77.93 million internet users, resulting in an impressive internet penetration rate of 79.1%. This connectivity has facilitated the widespread adoption of digital services across various sectors, including e-commerce, online banking, and telehealth.
The increasing availability of affordable smartphones has also played a significant role in this growth. With mobile devices becoming more accessible, more people can engage with digital platforms and services, further driving the digital economy.
Expanding IT Infrastructure and Cloud Computing Adoption
The expansion of IT infrastructure is another crucial factor propelling Vietnam's digital transformation. The government has prioritized investments in high-speed internet and cloud computing services to support businesses and citizens alike. By targeting universal broadband access by 2025 and nationwide 5G coverage by 2030, Vietnam aims to enhance connectivity throughout the country.
Cloud computing adoption is growing rapidly as businesses recognize its potential to improve efficiency and reduce operational costs. According to industry reports, the cloud services market in Vietnam is expected to reach $1 billion by 2025, driven by increased demand from both public and private sectors for scalable IT solutions.
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Strong Government Support and Favorable Policies
The Vietnamese government plays a pivotal role in driving digital transformation through robust support and favorable policies. Initiatives such as the National Digital Transformation Program aim to propel Vietnam into the ranks of digitally advanced nations by 2024. This comprehensive plan includes over 60 specific tasks across various areas like policy direction, economic development, infrastructure enhancement, and cybersecurity.
Key government initiatives include:
- E-Government Development: The government aims to digitize all administrative procedures by 2025, making services more accessible to citizens.
- Support for Startups: Programs like the National Technology Innovation Program and the National AI Strategy foster a vibrant startup ecosystem by providing funding, mentorship, and access to digital tools.
These efforts are designed to create an open environment that encourages innovation and attracts both domestic and foreign investment.
Pioneering Technologies Driving Vietnam's Digital Transformation Journey
Vietnam is at the forefront of a digital transformation, propelled by several pioneering technologies that are reshaping its economic landscape. As the country embraces innovation, technologies such as cloud computing, artificial intelligence (AI), the Internet of Things (IoT), and big data analytics are becoming integral to its growth strategy. Here’s a closer look at these key technologies and their impact on Vietnam’s digital journey.
Cloud Computing
Cloud computing serves as a foundational technology that supports the development of other modern technologies, including AI, data analytics, and IoT. In Vietnam, the cloud services market is rapidly expanding, with projections indicating significant growth in the coming years. Although the country ranked 53rd out of 76 in the Cloud Ecosystem Index in 2022, initiatives are underway to improve this ranking.
The rise of edge cloud computing is particularly noteworthy, as it offers advantages such as reduced bandwidth usage, improved data download speeds, and enhanced security. These features make it an attractive option for businesses looking to leverage cloud technology for operational efficiency.
Internet of Things (IoT)
The Internet of Things (IoT) is a rapidly growing sector in Vietnam, with the market expected to reach $7.3 billion by 2025, growing at a compound annual growth rate (CAGR) of 24.03% from 2019 to 2025. The increasing demand for smart home devices is a significant driver of this growth; over 179.3 million homes in Vietnam already utilize smart home technology, reflecting a 15.4% increase since 2021.
The arrival of 5G technology is set to further accelerate IoT adoption by providing high-speed, low-latency connectivity that enhances the capabilities of IoT devices. This synergy is anticipated to create smart, interconnected ecosystems that will drive digital transformation across various sectors such as healthcare, automotive, and smart energy.
Artificial Intelligence (AI)
Artificial Intelligence (AI) is another critical technology shaping Vietnam's digital landscape. The market size is expected to show an annual growth rate (CAGR 2025-2030) of 27.85%, resulting in a market volume of US$3,412.00m by 2030 (Statista). The increasing demand for automation and efficiency across industries is driving AI adoption.
In sectors like banking and healthcare, AI applications are being utilized to enhance fraud detection, improve disease diagnosis, and streamline customer service processes. As businesses recognize the potential of AI to optimize operations and enhance decision-making, investment in AI technologies is expected to rise.
Big Data Analytics
Big data analytics plays a pivotal role in enabling organizations to make data-driven decisions and gain insights into consumer behavior. In Vietnam, big data has been identified as a priority area for investment, with plans to allocate significant resources from the state budget towards its development.
The application of big data analytics spans various sectors including retail, agriculture, and e-commerce. By harnessing large datasets, businesses can improve operational efficiency and tailor their offerings to meet customer demands more effectively.
Blockchain Technology
Vietnam has emerged as a leader in cryptocurrency adoption within Southeast Asia, ranking first globally in terms of crypto holders. The potential applications of blockchain technology extend beyond cryptocurrencies; it is increasingly being explored for use in logistics, education, healthcare, and banking sectors.
As businesses seek to enhance transparency and security in transactions, blockchain technology offers innovative solutions that can streamline operations and reduce fraud.
Opportunities for Businesses in Vietnam’s Digital Transformation
Vietnam's digital transformation landscape presents a wealth of opportunities for businesses to innovate, grow, and enhance their competitive edge. As the country embraces digital technologies, various sectors are experiencing significant shifts that create new avenues for investment and development. Below are key opportunities that businesses can leverage in this evolving digital environment.
Developing AI-Driven Platforms for Various Industries
The increasing demand for artificial intelligence (AI) solutions across multiple sectors presents a significant opportunity for businesses. Companies can focus on developing AI-driven platforms tailored to specific industries such as healthcare, finance, manufacturing, and retail.
For example, AI applications can enhance customer service through chatbots, improve operational efficiency through predictive analytics, and streamline supply chain management with automated decision-making processes. As businesses seek to harness the power of AI to gain insights from data and improve their operations, there is ample room for innovation and growth in this area.
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Expanding Cloud Computing Services and Infrastructure
With the rapid adoption of cloud computing technologies, there is a substantial opportunity for businesses to expand their cloud services and infrastructure offerings. As more organizations migrate to cloud-based solutions to improve flexibility and scalability, providers can meet this demand by developing robust cloud platforms.
Vietnam's cloud computing market is projected to grow at an annual rate exceeding 30%, driven by increased demand from both public and private sectors. Companies that invest in building data centers and offering cloud services will be well-positioned to capture market share as businesses increasingly rely on cloud solutions for data storage, software applications, and IT management.
Contact EDUTO, your trusted partner in Vietnam’s digital transformation, to explore tailored technology solutions for your business. From AI-driven platforms to cloud-based management systems, EDUTO empowers businesses to optimize operations and stay ahead in a competitive market.
Vietnam’s Potential as a Leader in Digital Transformation
Vietnam’s strategic approach toward digital transformation positions it as a potential leader within the ASEAN region. With a young population that is increasingly tech-savvy—over, over 50% under age 35—and an expanding startup ecosystem supported by government initiatives like "Startup Nation," Vietnam is well-equipped to leverage its strengths in technology adoption.
Moreover, international collaborations are enhancing Vietnam's capabilities; partnerships with countries like Japan have led to knowledge sharing in areas such as smart city development. By fostering innovation through collaboration between public institutions and private enterprises, Vietnam can enhance its global competitiveness while addressing socio-economic challenges.
Vietnam's journey toward digital transformation is marked by significant advancements driven by rapid internet growth, expanding IT infrastructure, strong government support, and pioneering technologies like AI and IoT. As businesses adapt to this new reality, they must seize opportunities presented by emerging technologies while contributing to building a more inclusive digital society. Through collective efforts from all stakeholders—government bodies, private enterprises, educational institutions, and citizens, Vietnam can achieve its ambitious goals for sustainable economic growth driven by technology.
