Huge potential

The digital economy is an economy based on digital computing technologies. Technological advances in recent years have driven many sectors to innovate their business models, whilst giving birth to many new industries and blurring the physical boundaries between countries. The digital economy is becoming increasingly important to the global economy, valued at approximately US$3 trillion, equivalent to 3.8% of the global economic output. In ASEAN countries, the digital economy is worth an estimated at US$150 billion, or 6% of the region’s GDP. It is projected that ASEAN’s digital economy will grow by 17% each year, while the overall economic growth rate is only 9%.

Vietnam is also among the ASEAN countries with considerable growth in its digital economy. Specifically, Vietnam’s online retail revenues reached an estimated US$5 billion in 2016, more than double the 2013 figure of US$2.2 billion and a great leap from less than US$1 billion in 2012. With revenues of US$5 billion, online retail accounted for more than 3% of Vietnam’s total retail and consumer services in 2016. In addition, the size of Vietnam’s online ads are growing rapidly, hitting US$390 million in 2016 and expected to triple by 2020.

Vietnam’s financial technology market has also seen positive growth in terms of the number of firms and the services they offer, ranging from payment portals, personal financial services such as electronic wallets and digital banking apps, to crowd-funding platforms and peer-to-peer lending.

Notably, the number of internet users in Vietnam has reached 50 million, indicating that Vietnamese citizens are tech-savvy and enthusiastic with regards to new technologies, which is regarded as an important factor to develop the digital economy.

Strong investment in infrastructure

Experts say the key to a digital economy is connecting and data sharing. Therefore, Vietnam’s major telecommunications firms have invested heavily in order to create a strong infrastructure system to boost the country’s digital economy.

For example, Vietnam Post and Telecommunications Group (VNPT) has made considerable investments in its broadband infrastructure, with optic cables now covering 97% of Vietnam’s communes.

The capacity of VNPT’s high-speed cables has reached almost six terabytes, while the capacity of international cables is about two terabytes. The company plans to put new cable lines into use in the future to improve the data transmission infrastructure for digital transformation.

VNPT is also the firm that has the most complete ICT infrastructure in Vietnam, ranging from satellites and cellular networks to internet, fixed lines and nearly 60,000 transceiver stations, most of which are for 3G and 4G services. The company plans to install another 21,000 4G stations this year to provide coverage to all provinces and cities across the country so that cellular broadband internet will become a basic service to all.

Furthermore, VNPT has built many IT solutions in various fields such as education, healthcare, transport, agriculture and tourism, many of which have been implemented widely throughout the country.

The firm has also continuously established new infrastructure systems, such as big data and cloud computing, and service platforms to provide tools for small enterprises and start-ups. Its smart connected platform is being used by many enterprises to develop healthcare, transport, agriculture and electrical power apps.

VPNT’s product offerings for the government and large enterprises always come with directions so that its customers will have a specific model and roadmap for digital transformation.

Recently VNPT signed a memorandum of understanding with IBM to promote smart city development, under which IBM will share its methods of building big data strategies in the telecommunications industry and smart city projects, as well as providing support for VNPT’s start-up programme.

The two sides will also form working groups and hold workshops to share updates on IBM’s latest products and technologies. This is an important foundation for long-term and sustainable cooperation between VNPT and IBM, helping to further stimulate the growth of the IT industry in Vietnam.