The whole world spent several years fighting the pandemic, of which apparent, long-term effects are still shadowing over our lives. Vietnam was one of the earliest reopening economies, which should have offered a spectacular bounce back after stagnant years.

Lam Thuy Nga, head of Large Corporates and Wholesale Banking at HSBC Vietnam

However, the Ukraine conflict pushed the world into an energy crisis. Global geopolitical issues and polarisation have caused serious inflation. Last year was a rather gloomy picture with energy inflation, tightening policies, rising consumer prices, and the murky real estate market. Despite advantages in manufacturing, especially when China was still stuck with its strict pandemic policy, tight spending of Western countries, especially the US, completely affected Vietnam’s exports.

That impact still lasts today, with Vietnam recording a 12 per cent drop on-year in exports over the first three months. Energy inflation remains high, although the headline inflation in February was only 4.3 per cent, lower than the State Bank of Vietnam’s target for 2023. Inflation momentum is still strong.

More than ever, technological advancements, sustainability goals, and strategies to cope with risks and challenges are clear priorities.

Since late last year, the emergence of AI chatbots with the capability of processing language in a fairly natural way has attracted great attention globally, and raised a series of questions about how AI might replace humans in the future. In Vietnam, AI has been applied to perform a number of tasks in healthcare, image recognition, shopping payments, and more.

Today, the remarkable advances in technology seem to happen daily. Never has the world changed and redefined the way we study, work, and live.

In terms of sustainability, many countries are trying to accelerate the realisation of climate goals and green growth, especially when environmental issues are increasingly and rapidly affecting people’s lives as well as all economies. Foreign investors have specific investment requirements of sustainability. Modern consumers, especially young people, tend to prioritise products and services from businesses that are committed to sustainability.

Being ready to adapt

Operating in a volatile and uncertain business environment, business leaders also prioritise investing in strategies that enable a response to external risks to support businesses’ sustainable development.

In the global new circumstance, the arisen question is whether Vietnamese businesses can promptly adapt themselves. The answer is that they have to be able to.

According to the Global Innovation Index Report 2022 published by the World Intellectual Property Organization in September 2022, Vietnam was ranked 48th out of 132 economies in terms of innovative capacity, and ranked third in Southeast Asia, after Singapore and Thailand. Vietnam is also one of the three middle-income economies with the fastest innovation catch-up to-date.

Over the past decade, Vietnam has risen by more than 20 ranks. Thus, it is organically a country with a high innovation spirit. This is also a driving force for businesses to continue improving their production and business activities in order to upgrade their economic capacity.

Take the sales methods during the pandemic as an example. With travel restrictions imposed, people’s demand for online shopping increased dramatically. The percentage of Vietnamese people using online shopping increased from 77 per cent in 2019 to 88 per cent in 2020. The number just decreased slightly post-pandemic.

According to the Vietnam E-commerce White Paper 2022, three-quarters of Vietnamese internet users shopped online in 2021 and Vietnamese people are gradually getting used to multichannel shopping. It is expected that the number of Vietnamese online shoppers may reach 60 million. With such a rapid increase in demand, the e-commerce system in Vietnam can adapt very well.

After the government’s specific guidelines and incentives, especially the approval of the National Strategy on Green Growth for this decade, the number of businesses that set sustainability goals in their development agenda has increased. Green growth and the circular economy are the keywords all around us. When meeting with local corporate clients, we feel very optimistic, seeing many businesses have quickly developed and implemented strategies that help them to be more sustainable.

Vietnam cannot stand still

In the past, corporates only cared about productivity and how to sell goods or export to foreign countries. Nowadays, a business that wants to develop and grow sustainably needs to focus on more factors.

These factors include how to produce good products without harming the environment; how to timely apply advanced tech to optimise efficiency and increase returns; how do businesses withstand unpredictable global changes; and how can more investors be attracted. Several actions can be considered:

- The government provides specific guidelines and directions to help businesses, especially smaller ones, perceive the importance of repositioning their businesses by innovation;

- Organisations and associations must work together to support the government in providing daily innovation knowledge to the Vietnamese business community;

- Businesses should proactively learn from within the business community about global investment trends, consumers’ new requirements, and advanced technologies to flexibly apply to their activities to improve productivity, quality, and more;

- Investing in research and development activities has been proven as a catalyst for successful innovation. Therefore, businesses should pay more attention to this kind of activity and the government should have more commensurate investment.

- Innovation needs a core workforce with appropriate knowledge and expertise. Therefore, businesses need to select, facilitate, and train potential employees so that they can develop to their full capacity.

When the world changes, as one of the fastest growing and most dynamic economies with great openness and extensive participation in global value chain, Vietnam cannot stand still. And we have the capability. I think that if businesses can take on these advantages with faster speed, they can create greater values in innovation.

Many local business leaders here are visionary, proactive, and innovative, and they know how to utilise available resources to generate specific results. This proactive thinking in innovation is one of the factors that will help us write Vietnam’s successful foreign investment story.