Vietnam is one of the very few countries that dealt with COVID-19 relatively well. With only 438 (as of July 28) cases reported and no deaths linked to the outbreak, Vietnam has stunned the world for beating the novel coronavirus. And despite gloomy projections for the global economy, Vietnam is confident it will achieve a GDP growth rate of 5 per cent for 2020.
The pandemic has also been expediting a digital transformation throughout the world, and particularly in Southeast Asia. But while Singapore has been the ‘poster child’ leading the region’s digital wave, Vietnam’s digital push has been much under the radar. This dispatch explores the Vietnamese government’s latest digital-related initiatives – particularly the National Digital Transformation Roadmap – highlighting the opportunities and challenges Vietnam’s digitalization will create.
Three pillars for transformation
Vietnam was already committed to a significant digital transformation, even before the COVID-19 pandemic. It launched in December 2019 the National Public Services Portal, an electronic platform connecting the government, citizens, and businesses and providing information on public services and administrative procedures. At the time, it vowed to become the leading digital economy in ASEAN by 2030, with digital economic activities set to account for 30 per cent of its GDP. The pandemic only accelerated the trend. On June 3, 2020, Prime Minister Nguyen Xuan Phuc approved the National Digital Transformation Roadmap 2025 (with a vision toward 2030), which sets additional targets and guidelines to help Vietnam reaching its digital transformation goals with a focus on three pillars: E-government, e-economy and e-society.
The first pillar, e-government, aims to overhaul the entire government infrastructure, from digitalizing all public services and administrative procedures to developing an integrated system of databases. This government digitization will require all government-related documents to be sent via the national e-document exchange platform and approved using e-signatures. Comprehensive national databases on population, land, enterprise registration, finance, and social insurance will be created, connected to a national data centre, and will be publicly accessible online. This platform builds on the National Public Service Portal, which will keep expanding to pull other services into its digital fold.
Under the second pillar, e-economy, the government plans to build a digital economy that will represent up to 30 per cent of Vietnam’s GDP by 2030, a substantial increase from the five per cent that digital activities accounted for in 2019. E-commerce has been identified as an indispensable segment of this new economy. The National Digital Transformation Roadmap, building on the recently-approved National E-Commerce Development Strategy for 2021-2025, outlines specific measures to encourage more consumers to switch from offline to online shopping, increase the participation of small and medium enterprises on e-commerce platforms, and strengthen the supporting digital infrastructure. Vietnam has also set the goal of reaching 100,000 tech firms domestically as the main driver for the design and production of innovative tech products and services with its ‘Make in Vietnam’ brand.
The third pillar, e-society, intends to address Vietnam’s ‘digital gap,’ or the unequal access to the internet and the use of online services. Having an internet penetration rate of only slightly more than 60 per cent, Vietnam plans to boost access to its fibre-optic broadband network to 80 per cent by 2025 and to 100 per cent by 2030. Other major objectives include the deployment of 5G services nationwide and the increase to 80 per cent by 2030 of e-payment usage. The proposed reforms under this third pillar also highlight the urgent need for post-secondary educational reforms to foster the learning of new technologies such as artificial intelligence, blockchain, cloud computing, Big Data, and the Internet of Things.
‘Make in Vietnam’ – taking on international tech giants
The government has also leveraged the Roadmap to galvanize support from the private sector in reviving Vietnam’s post-COVID economy. The Prime Minister has repeatedly highlighted the vital role of technology and tech enterprises in Vietnam’s ongoing development. The ‘Make in Vietnam’ campaign, launched before the pandemic, has been reintroduced in the Roadmap as a way to re-energize the private sector and reaffirm the government’s push to turn Vietnam into an innovation hub, not only a manufacturing hub. The goal is to foster 100,000 tech firms and 10 unicorns (startups valued at over US$1 billion) by 2030. Through the ‘Make in Vietnam’ campaign, officially launched in May 2019, the government has actively supported local tech champions, such as homegrown e-commerce platforms Tiki and Sendo. This support allowed them to successfully compete with foreign platforms, such as Lazada and Shopee, two of Southeast Asian leading e-commerce platforms. The campaign has also encouraged domestic IT firms to create homegrown social media networks like Lotus, launched in 2019 by VCCorp, a leading Vietnamese internet firm, to challenge the dominance of Facebook in Vietnam.
The COVID pandemic has become a catalyst for the government’s innovation ambitions vis-à-vis its Make in Vietnam’ plan. For example, Vietnam has already rolled out three homegrown tech products to combat the spread of COVID-19 and accommodate changing consumer needs in a time of pandemic. In April 2020, Vietnam launched its contact tracing app, Bluezone, and a virtual health checkup platform. The checkup platform allows medical examinations to be carried out remotely and has further incentivized the government to digitalize Vietnam’s health sector, as highlighted in the Roadmap. Riding on this current momentum, the Ministry of Information and Communications launched Zavi, Vietnam's first homegrown video-conferencing platform, in May 2020. Through its support and rollout of Zavi, the government has demonstrated its commitment to developing a local champion to challenge the widespread use of China-based Zoom, and to stay at the forefront of the fast-changing post-COVID innovation landscape in Vietnam.
Given Vietnam’s ambitious post-COVID digital transformation plans, there will be a massive increase in domestic demand for cloud storage. The government is looking to established domestic tech enterprises to drive Vietnam’s tech rebound post-COVID-19 by expanding the country’s cloud industry. On May 22, the Ministry of Information and Communications launched a campaign supporting digital transformation via cloud computing and calling on the country’s leading tech enterprises to master cloud-computing infrastructure and technology. On May 28, FPT Telecom, a leading Vietnamese IT enterprise, began construction of Vietnam’s largest data centre in Ho Chi Minh City to compete with the data centres of cloud computing giants Amazon, Google, and Microsoft.
Long-standing challenges to new ambitions
While the COVID-19 pandemic has accelerated Vietnam’s digitalization and the government’s myriad efforts to support it, two major issues remain: increasing censorship on social media platforms and an unfavourable legal environment for innovative startups.
Vietnam’s increasing censorship on foreign social media platforms is concerning. In February 2020, the government increased pressure on Facebook to restrict access to “anti-state” posts by taking down its local servers for seven weeks. The tech giant eventually conceded to government pressure and removed the “anti-state” posts to preserve its access to the vast Vietnamese market. That incident followed the introduction of the 2018 Cybersecurity Law, which allows authorities to force foreign tech companies to store data within the country, hand over data (including personal information) to the government when requested, and to censor users’ posts. Further, Hanoi’s push for homegrown social media networks has been met with the suspicion that the government is seeking broader control of “anti-state” content. Indeed, the government’s ambitious digital agenda is also seen to be accompanied by efforts to limit freedom of speech. In the post-COVID recovery phase, it is important to watch how Hanoi balances economic liberalization and media censorship with its new-found digital capacity.
Despite the government’s efforts to create a more favourable legal environment for tech startups, legal hurdles remain substantial – notably, the red tape that must be navigated to set up tech startups and a lack of effective regulations to support different models of funding, such as crowdfunding and angel investing. The process of improving the legal framework for startups has not been speedy enough to accommodate the growth of Vietnamese tech startups.
For the government to achieve its target of 100,000 tech firms and 10 unicorns by 2030, additional policies to support innovative startups will be needed, and the country’s legal hurdles will have to be addressed. Over the past two years, the Vietnamese government has accelerated the country’s transition toward a ‘digital country’ with the introduction of new digital-related initiatives and strategies. But as the National Digital Transformation Roadmap adds further momentum to Vietnam’s digitalization efforts, these long-standing challenges will need to be resolved if the country hopes to reach its ambitious goals.
