The development of Vietnam’s digital economy in recent years has been guided by a relatively comprehensive and consistent policy framework, serving as a roadmap for the country’s transition toward a new growth model. The key political foundation was established through Politburo Resolution No. 52-NQ/TW in 2019, which identified digital transformation as an inexorable trend and set targets for the digital economy to account for approximately 20 per cent of GDP by 2025 and more than 30 per cent by 2030, with a long-term vision of positioning Vietnam as a regional innovation hub by 2045.
To implement these goals, the government introduced a range of major programs and strategies, including the National Digital Transformation Program under Decision No. 749/QD-TTg in 2020, the Strategy for Digital Economy and Digital Society Development under Decision No. 411/QD-TTg in 2022, and new policy directions under Politburo Resolution No. 57-NQ/TW in 2024.
Current situation
Vietnam’s digital economy expanded significantly between 2020 and 2025, with its share of GDP increasing from 12.66 per cent to approximately 14.02 per cent, equivalent to a market size of more than $70 billion. Value-added growth in the digital economy remained strong, averaging around 9.8 per cent annually in constant prices.
By 2025, core digital economy industries contributed 8.42 per cent of GDP, equivalent to $43.3 billion, accounting for more than 60 per cent of total digital economy value, while digitally-enabled sectors contributed 5.6 per cent of GDP (equivalent to $28.8 billion), representing nearly 40 per cent.
Geographically, Vietnam’s digital economy remains highly concentrated. Industrial provinces such as Bac Giang, Bac Ninh, and Thai Nguyen in the northern region lead in the digital economy’s share of gross regional domestic product (GRDP), largely driven by electronics manufacturing and high-tech industries linked to FDI. Meanwhile, major urban centers such as Hanoi, Ho Chi Minh City, and Da Nang contribute more in absolute scale and play a central role in driving digital transformation, particularly in services, e-commerce, platform-based businesses, and smart urban management. This reflects an emerging two-pillar structure: one centered on high-tech manufacturing and the other on services and innovation.
At the sectoral level, core digital economy industries, particularly high-tech manufacturing and information and communications, continue to dominate with high levels of digital value creation. Service sectors such as wholesale and retail trade, finance, banking, and insurance have also seen rapid digitalization, fueled by the growth of e-commerce, fintech, and big data. In contrast, agriculture and construction continue to lag behind, reflecting barriers related to production models, scale, and technological capacity.
Overall, Vietnam’s digital economy is progressing positively but unevenly, with clear disparities across sectors and regions. While early achievements are notable, the digital economy has yet to drive a breakthrough in the quality of economic growth, particularly in productivity and domestic spillover effects. This highlights the need to further strengthen institutions, build domestic technological capabilities, and accelerate digital transformation across the broader economy.
Vietnam’s core digital economy, comprising ICT manufacturing and ICT services, has consistently remained the backbone of the country’s digital sector, accounting for more than 60 per cent of total digital economy value throughout the study period. This reflects a growth model driven primarily by industries that directly produce digital goods and services, while digitalization across traditional sectors has progressed more slowly and unevenly.
Impact on the broader economy
Between 2012 and 2025, the core digital economy expanded rapidly in scale, with its share of GDP rising steadily. However, improvements in growth quality were far more modest. Expansion was driven mainly by higher output rather than stronger value creation, while gains in domestic income and productivity remained limited. In other words, the core digital economy has grown larger but has yet to become a structural engine of growth. Despite its dominant share of digital economy value, its spillover effects have remained moderate and insufficient to fundamentally reshape Vietnam’s growth model.
This is reflected in the sector’s relatively low value-added performance. During 2012-2025, the ratio of value-added to gross output in the core digital economy consistently remained below the national average. Though modest improvements emerged after 2019, they were not strong enough to alter the sector’s underlying dependence on scale-driven growth rather than efficiency or domestic value creation.
The challenge is most visible in information and communications technology (ICT) manufacturing, which remains highly-dependent on imported intermediate inputs. Vietnam’s role in global value chains is still concentrated in lower-value activities such as assembly and contract manufacturing, while higher-value functions, including R&D, core technology design, and intellectual property ownership, largely remain outside the domestic economy.
By contrast, ICT services show stronger growth quality, with higher value-added and greater domestic income generation. However, because the sector remains relatively small compared with ICT manufacturing, its positive impact has not been sufficient to offset broader structural weaknesses in the core digital economy.
Input-output analysis for 2012-2025 shows that the core digital economy can stimulate upstream industries, with output multipliers exceeding 1 in most years. This suggests that rising demand for digital goods and services generates some spillover effects across supplier sectors. However, these backward links have shown little improvement over time and remain weaker than those in major sectors such as manufacturing and construction, limiting the digital economy’s role as a leading growth engine.
Forward links are even weaker. Throughout 2012-2025, indicators remained below 1 and declined in relative terms, suggesting that digital products and services have not yet become widely used as foundational inputs across the broader economy. This highlights the still-limited pace of digitalization in production and services and underscores the fact that the core digital economy has yet to function as shared technological infrastructure.
A more fundamental structural issue is that spillovers to imports consistently exceed spillovers to domestic value-added and income, reflecting Vietnam’s relatively low position in global value chains. In practice, the current model resembles a form of “high-end outsourcing”: rising demand for ICT products and services tends to boost imports more than domestic production.
This pattern is particularly evident in ICT manufacturing, while ICT services display more positive spillover dynamics. Yet because of their smaller scale, these benefits remain insufficient to shift the overall trajectory of the digital economy.
The research also highlights important implications for household welfare. First, although the digital economy creates jobs, income gains have not translated proportionally into domestic consumption. High intermediate costs and low value-added reduce the share of income ultimately reaching households. Second, consumption is increasingly sustained by non-productive income sources, such as remittances and transfers, rather than productivity gains within the digital economy itself, raising concerns about long-term sustainability. Third, weak domestic feedback loops reduce the effectiveness of government stimulus, as spending quickly leaks into imports and remains heavily dependent on FDI instead of circulating back into domestic production.
Overall, Vietnam’s core digital economy made an important contribution to growth during 2012-2025 but has yet to become a structural driver of sustainable and inclusive development. Weaknesses in growth quality, intersectoral links, and domestic spillover effects have persisted for more than a decade. The central challenge for Vietnam is therefore not the pace of digital economy growth but its ability to convert that growth into stronger domestic value-added, higher incomes, and productivity gains.
Policy recommendations
Vietnam’s digital economy strategy through 2030 should be viewed not merely as the digitalization of existing activities, but as a structural transformation in which digital technology becomes a core production factor, shaping productivity, growth quality, and national competitiveness. To achieve the target of a digital economy contributing around 30 per cent of GDP by 2030, development efforts should focus on three interconnected pillars.
First, the core digital economy must move from outsourcing to technological ownership. Rather than focusing solely on scale, policy should prioritize higher value-added through the “Make in Vietnam” strategy, with an emphasis on semiconductors, 5G/6G technologies, and national digital platforms. Shared digital infrastructure, including cloud computing, AI, and digital identity systems, will be essential to strengthening domestic competitiveness and reducing external dependence.
Second, digitalization must deepen across industries. Key sectors such as finance, retail, logistics, and agriculture should shift from basic technology adoption to data- and AI-driven operating models. Digital finance and fintech can improve capital allocation, while smarter retail and logistics systems can strengthen supply chains. High-tech agriculture, meanwhile, can raise productivity and export value.
Third, digital governance must become the institutional foundation of the digital economy. Transitioning from e-government to data-driven digital government can reduce compliance costs, improve transparency, and strengthen public resource allocation. Data should be treated as a strategic asset, supported by interoperable systems connecting ministries, agencies, and local governments.
These pillars will only succeed if supported by wider technological and spatial development. Investment in digital infrastructure, data centers, and digital growth hubs in major cities should be paired with stronger spillover effects to surrounding regions. In this way, the digital economy can serve not only as a growth engine but also as a means of narrowing regional disparities.
Regarding institutional and regulatory reform, a smarter, leaner, and more effective public administration system is essential. This includes streamlining procedures, improving governance efficiency, and expanding online dispute resolution mechanisms. Vietnam should also introduce a dedicated Digital Economy Development Program through 2030 to translate broad goals into concrete targets for infrastructure, talent development, and innovation policy.
At the same time, legal frameworks must become more adaptive. Stronger implementation of laws on electronic transactions, consumer protection, and personal data protection will help address emerging digital risks. Support policies for “Make in Vietnam” products, including R&D tax incentives and preferential public procurement, should also be expanded to strengthen domestic firms.
In regard to supporting strategic technology industries, priority technology sectors require more targeted support. Software and digital content industries, for example, should benefit from tax incentives and technical safeguards to compete more effectively in cross-border markets. Policy support should shift from broad-based incentives to performance-based mechanisms that reward R&D and the development of Vietnamese technology brands. Stronger intellectual property protection will also be essential to encourage long-term investment. Meanwhile, public procurement policies should prioritize domestic digital solutions through transparent technical standards and clear evaluation criteria.
In restructuring the core digital economy, Vietnam should adopt differentiated strategies for ICT manufacturing and ICT services. ICT manufacturing should focus on raising localization rates and moving into higher-value activities such as design and product development, supported by stronger industrial links and technology transfer requirements in FDI policy. High-tech FDI should be selectively attracted and tied to commitments that strengthen domestic suppliers and factory digitalization. ICT services, by contrast, should become a key source of domestic income growth, with AI, big data, and cybersecurity positioned as strategic priorities for modernizing the wider economy.
Regarding accelerating digitalization across sectors and regions, technology diffusion should be strengthened to spread innovation from major urban hubs to less-developed localities. Greater digitalization in manufacturing and logistics, supported by real-time data systems and preferential financing for shared infrastructure, can improve productivity and supply chain resilience. Sector-specific priorities should include open banking in finance, digital heritage databases in tourism, and precision agriculture to raise efficiency and competitiveness. Expanding nationwide e-commerce, supported by digital payments and export facilitation, will also be important. At the same time, policies should ensure balanced regional development and inclusive growth, creating higher-value jobs and stronger domestic spillovers.
In regard to supporting business digital transformation, a stronger startup ecosystem is needed to increase the number of firms capable of developing and owning advanced technologies. Support policies should be tailored by business size, with smaller firms receiving easier access to financing and training, while larger firms lead investment in digital infrastructure. Commercial banks should also improve access to capital by recognizing intangible assets and trademarks as collateral. At the local level, wider 5G coverage and stronger digital infrastructure should be accompanied by more transparent online public services to reduce costs and administrative burdens for businesses.
Regarding human capital and changes in mindset, digital transformation will require a fundamental shift in leadership and workforce capabilities. Policymakers and business leaders should receive stronger support through training, exhibitions, and international engagement programs to modernize management approaches. Leading cities such as Hanoi, Ho Chi Minh City, and Da Nang can play a pioneering role in regional coordination and cross-sector collaboration. Education reform is equally important. Digital skills should be introduced early in schools, university curricula updated to reflect AI and advanced technologies, and open labor market databases developed to better connect workforce supply with demand.
In cybersecurity and managing risks, stronger cybersecurity measures will be critical to sustainable digital development. Information security should be treated as a national priority, with cybersecurity embedded into products and systems from the design stage. Vietnam should also expand international cooperation to share experience and best practices in the context of Industry 4.0. Finally, stronger legal safeguards are needed to address privacy violations and cyber risks. Social protection policies should support workers displaced by technological change, while better e-waste management will be essential to ensuring long-term sustainability.
(*)Professor To Trung Thanh, National Economics University, and Dr. Bui Trinh & Dr. Nguyen Viet Phong, National Statistics Office, Ministry of Finance.
