Business leaders and economic experts discussed how an open economy like Vietnam should deal with risks and impacts in the wake of international economic and technological upheavals at a business forum themed “Navigating the digital age” held by Forbes Vietnam in HCM City on August 15.

Speakers at the business forum themed “Navigating the digital age”
held by Forbes Vietnam in HCM City on August 15. (Photo: VNA)

For years, Vietnam’s economic growth has been driven by exports and investment. The Asian Development Bank (ADB) estimates the economy will grow 6.8 percent in 2019, the highest growth rate in the region. The first half of the year has seen a good business environment with stable interest and exchange rates, inflation under control while industry and service sectors are steadily growing.

Meanwhile, US-China trade tensions are causing uncertainties for the global economy. The confrontation between the world’s two largest economies, which are also Vietnam’s major economic partners, has great impacted the country’s trade, investment and monetary policies.

It is inevitable for an open economy like Vietnam to suffer from the impacts of current global economic uncertainties, said Dr. Chua Hak Bin, Senior Economist at Maybank Kim Eng. Vietnam’s exports to the US have increased 30 percent over the past several years, bringing the country more opportunities to boost exports and climb the global supply chain, he noted.

Vietnam ranked second among Southeast Asian countries in foreign direct investment (FDI) attraction, after Singapore, and FDI flows into the country were quite diverse, stable and barely dependent on any economy, the economist added.

He advised Vietnam to adopt preferential policies to lure FDI from more countries and in manufacturing and that the country should be prepared to make the most use of FDI shifts from other countries to Vietnam that are making changes in labour costs, taxation and land.

Tran Dinh Thien, member of the National Financial and Monetary Policy Advisory Council, said Vietnam has signed new-generation free trade agreements with major partners, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU – Vietnam Free Trade Agreement (EVFTA); which ensure the country’s reform commitments, and thus making the country a more attractive destination in the global market.

Thien said Vietnam's economy has grown well throughout the last three years, not just the first half of 2019.

He underlined the need for Vietnam to promote a digital economy, saying if the country fails to enter the digital economy, it may be excluded from the global market. Digital transformation is key to lifting Vietnam’s position in the world’s free trade market, he noted.

Vietnam’s per capita income and labour productivity remains relatively low, founder, Chairman and CEO of TBS Group Nguyen Duc Thuan said. To sustainably develop the economy with improved competitiveness, the country should deploy digital-based management, enhance productivity and help firms develop digital databases and apply digital technology, Thuan said.

A recent study by the Institute for Global Leadership under the US-based Tufts University showed Vietnam ranks 48th out of 60 countries globally in terms of rapidly switching to the digital economy. The readiness of the Vietnamese market is fairly high so not only businesses but also consumers will face few barriers to participating in digital transformation. In other words, Vietnam has been accelerating digital transformation not only by increasing awareness but also by adopting new business models.

Most banks in Vietnam now have a mobile banking system that gives customers no choice but giving up their old banking habits and catch up with the digitalisation, Joan Ziegler, CEO of Sequent, Inc said.

The digitalisation has changed the way a business interact with its customers and partners and at the same time, shifted values from producers and suppliers to customers, said Partner of McKinsey & Company Bruce Delteil, adding that to solve challenges to the digital transformation, a business leader need to sit down with his human resources team to create a culture of innovation in his company, and with that culture, the company will select a proper strategy for digital transformation based on existing personnel or outsourcing partners.