According to an estimate by the National Innovation Centre under the Ministry of Planning and Investment, digital technology may bring Vietnam more than $74 billion by 2030, which is comparable to 27 per cent of Vietnam’s GDP in 2020. In Vietnam, the passage of this development might paradoxically result in the loss of a substantial number of current jobs.

Conundrum ahead with robotics rise, source: shutterstock

Hoang Nam Tien, chairman of FPT Telecom, predicted that approximately 70 per cent of the total 5.4 million Vietnamese workers will lose their jobs within the next decade. This includes 2.7 million textile workers, 1.7 million leather and footwear labourers, and nearly one million electronic assembly staff.

Tien said, “Humans cannot compete with robots in terms of labour output and work hours. A series of robots have been imported into Vietnam in recent times. Before 2020, many manufacturers were still unsure about deploying them.”

The recent pandemic has expedited the digital revolution in Vietnam. In the Southeast Asia Digital Economy Report published in October 2022 by Google, Temasek, and Bain & Company, it stated that Vietnam’s digital economy has the fastest growth rate in Southeast Asia, with the gross merchandise volume expected to increase by 28 per cent, from $18 billion in 2021 to $23 billion last year, driven by a 26 per cent increase in e-commerce compared to the same period in 2022.

Vietnam was one of the nations that swiftly resumed regular operations last year. Around 90 per cent of digital customers aim to retain or expand their usage of e-commerce platforms during 2023, with consumers mostly interested in food delivery (60 per cent) and online grocery shopping (54 per cent).

Vietnam’s urban internet consumers had the greatest adoption of digital services, with e-commerce, food, and groceries leading the way at 96, 85, and 85 per cent, respectively. Nearly a quarter of survey respondents claimed they watch streaming video at least once per week, followed by 19 per cent for online gaming and 16 per cent for on-demand music. However, this consumption rate is lower than the regional average.

The report concurred that digital financial services in Vietnam continue to expand rapidly. The industry of digital lending saw the highest compound annual growth rate (CAGR) at 114 per cent, while the investment channel is anticipated to see the biggest increase in 2025, at over 106 per cent CAGR. Moreover, Vietnam dominates Southeast Asia in terms of long-term venture capital (VC) growth, with 83 per cent of VC funds anticipating long-term development in transactions in Vietnam.

According to Stephanie Davis, Google’s vice president for Southeast Asia, technology funding is robust, and the region appears to be a hotbed for technology investments, despite investors’ growing scepticism in light of the present macroeconomic climate.

“The high-quality domestic labour in the technology industry and the rising penetration of digital services in urban and rural areas provide a solid platform for the future digital development of Vietnam,” Davis said. “The country and the Southeast Asia region will be able to build a sustainable development strategy for the digital era if environmental, social, and governance concerns get more attention.”

In private markets, VCs continue to set aside $15 billion to support transactions in the region. However, early-stage and late-stage investments are moving in opposite directions; early-stage investments are prospering while late-stage investments tend to decline owing to poor initial public offering prospects.

In spite of this, Singapore and Indonesia continued to be the most popular investment locations in 2022, while Vietnam and the Philippines are attracting a growing number of investors over the longer term. In the first half of 2022, digital financial services surpassed e-commerce as the leading investment channel and attracted a record $4 billion in capital.

If digitalisation is feasible, Vietnam’s economic environment might shift. According to research on unlocking Vietnam’s digital potential by AlphaBeta, if completely leveraged, digital transformation might deliver Vietnam up to $74 billion in annual economic value by 2030. Under the analysis, strengthening the local tech ecosystem and educating employees and students in digital skills are the main pillars that will enable the potential.

Vietnam has the chance to generate more employment, improve the working environment, increase productivity, and enhance labour skills in the value chain, according to Davis of Google.

“Our aim in Vietnam is to enable digital access to all Vietnamese. We are dedicated to driving the nation’s digital transformation and supporting the government’s efforts to establish a strong digital talent pool, all while fostering the growth of local businesses,” Davis said.