Vietnam needed to invest in the digital economy and seize the opportunities it provided to improve labour productivity.

Many firms would have been forced to close down if there were no electronic
transaction floors or online distribution channels amid COVID-19
(Photo: thuongtruong.com.vn)

The information was released at the annual Vietnam economic evaluation report released by the National Economics University recently. The annual report aims to provide an overall evaluation of the economy and prospects for upcoming years.

The report showed that the digital economy could contribute 7 to 16.5% a year to labour productivity growth from 2020-30. This means the digital economy could play an important role in the productivity and effectiveness of the economy.

Researchers from the university said the digital economy would influence the productivity of sectors relating to science and technology, finance, banking, insurance, real estate and information.

It was forecast that the industrial and construction sector would contribute 56% to the country’s labour productivity growth in the next decade. Of which, the manufacturing and processing industry would take the lead for labour productivity growth in the country.

Prof Tran Tho Dat, chairman of the university’s council and a member of the Prime Minister's Economic Advisory Group, said this was the first research in Vietnam to quantify the impact of the digital economy on labour productivity, whilst looking towards 2030.

The report includes research from both official and unofficial economic sectors as well as household businesses. In addition, it also looked at the impact of COVID-19 on the economy and policy suggestions in response to the pandemic.

To Trung Thanh, head of the university’s Science Management Department and co-editor of the report, said the main message of the publication was that in the context of the economy being hit by big shocks like COVID-19, it was time to review the foundations of the economy. It would be an opportunity to restructure, he added.

Labour productivity in Vietnam was at a very low level and increasingly lagging behind other countries in the region and around the world. Incentives for productivity growth had also been exhausted and ineffective.

It was the reason that digital economy would be an opportunity for improving labour productivity, thus achieving sustainable development and at the same time withstand shocks from the outside.

Nguyen Kim Hung, deputy head of the Science Institute on Small-and-medium Enterprises Management (SISME), said COVID-19 had hit production and business activities, especially the tourism, transport and restaurant sectors. Of which, many companies had seen a sharp decline in turnover and zero profit. In the first quarter of the year, 35,000 more businesses halted operations than new operations were established.

However, Hung said it was time to screen more qualified businesses and help them change management and business methods using a digital transformation platform.

Do Hoai Nam, chairman of UPGen Vietnam, said Vietnam was hard to compare with other countries in terms of science and technology, but it had a pretty big market.

Digital platforms have contributed an important part to creating a favourable business environment, especially in technology services such as map apps and website design, he said.

Online sales revenue of some supermarkets in Hanoi had increased by 20% amid the COVID-19 outbreak. Specialists in the e-commerce sector said many firms would have been forced to close without electronic transaction floors such as Tiki, Lazada and online distribution channels.

Vu Tu Thanh, deputy regional managing director of the US-ASEAN Business Council in Vietnam, said the Government should manage companies doing business on digital platforms based on the number of transactions, then calculate the benefit sharing ratio of said parties. This would form the basis to calculate taxes, fees and the responsibilities of related parties.