The most important policy that the Vietnamese Government could turn to a speedy socio-economic recovery is to take a pioneering role in digital transformation and encourage such a process in other sectors.

Bruno Sivanandan, board member of the Digital Economy Group under the Vietnam Business Forum (VBF), gave the remarks during a technical consultation session jointly held on February 18 by the VBF, World Bank, Vietnam’s Ministry of Planning and Investment, and the IFC.

According to Sivanandan, Vietnam and countries around the world could not afford to see further inefficiency and waste in the state governance process, therefore, Governments must speed up the application of technologies in simplifying administrative procedures to reduce compliance costs for the benefit of the people and businesses.

This is particularly important as the pandemic has made significant changes to social behavior and devastated the global economy, but on the other hand, create opportunities for certain economic sectors to thrive.

While brick-and-mortar businesses continue to struggle with the pandemic impacts, new models based on the digital platform, including online meetings, e-commerce, live stream, and delivery, have witnessed unprecedented growth.

The VBF pointed out the trend as a result of information digitalization, the application of IoT and mobile technologies that helped promote the development of cloud services, and the explosive growth of data.

In this regard, Sivanandan noted Vietnam is among countries in Southeast Asia with the fastest growth rate of the digital economy, estimated to be at US$19 billion in 2019.

Foreign investment in Vietnam’s IT sector has also been on the upward trend, as more and more global IT tech giants see the country as their next investment destination, he said.

In 2021, foreign direct investment (FDI) into the IT sector in Vietnam stood at $4 billion with 2,355 projects, standing 10th among economic fields.

As the trend continues, Vietnam has an opportunity to further develop the digital economy and software industry.

Digital transformation as a long-term process

The fact that the country is providing 1,000 public services through the national public services portal has been a welcoming effort, for which the Government should take the next step by recognizing e-signature for each individual, he added.

With digital solutions as an alternative for physical signature and identification, considered the foundation of a digital world, the revision of Vietnam’s regulations to comply with the electronic identification and trust services (eIDAS) is essential for Vietnam to work out its requirements on e-signature.

The VBF’s representative expected startups, small and medium enterprises (SMEs) would hold a key role in Vietnam’s sustainable development.

For the past years, Sivanandan said Vietnam’s SMEs have been the beneficiaries of modern IT infrastructure with the support from the VBF so that they could work on new solutions in fields of healthcare, digital government, smart city, hi-tech farming, or space technologies.

He suggested the Vietnamese Government could take the leading role in applying new technologies via the formulation of a clear legal framework focusing on protecting intellectual property rights, a vital move to encourage both local and foreign firms to invest in modern technologies.

Another step is to draft new tax policies for the IT sector so that Vietnam can further attract investment capital into this field, or give permission for venture capitals to set up representatives in Vietnam.

Sivanandan stressed the fact that in Vietnam currently, 50 venture capitals are operating, but the majority are investing in major firms rather than startups.

Meanwhile, the sharing of infrastructure on a wide scale could foster competitiveness among businesses, subsequently leading to higher services quality and lower costs for customers.

He cited an example of the broadband networks in rural areas that would require high costs for installation, due to the lack of services providers.

In a digital economy, protection of privacy data is a key move, as such, the Government must find a balance between the benefits of the society and the security of the public.

There is no doubt that the digitalization of the economy is a long journey that requires the involvement of all parties, and Vietnamese businesses have many works to do to complete the digitalization process.

International cooperation has, thus, is a matter of great urgency for Vietnam to become a digital economy, for which the country should further participate in international agreements for innovation and find consensus from all parties throughout this process.