Are Vietnamese businesses ready for a green and digital transformation, and what are the issues that hinder their plans?

Bui Thu Thuy, deputy director general of the Agency for Enterprise Development under the Ministry of Planning and Investment

Initially, most businesses, especially small- and medium-sized enterprises (SMEs), were not ready for digital transformation. But when the pandemic hit, businesses had to respond immediately without any time to build a methodical strategy, but had to find immediate solutions to maintain operations, especially in the context of a broken supply chain.

After the pandemic, businesses looked back and realised that previous transformation efforts were spontaneous and lacked a clear roadmap. Since then, with the Vietnamese government’s commitment to the net-zero goal and the challenges in green transformation, businesses have been preparing for this process.

Green and digital transformation have a close relationship, in that the latter accelerates the former. In addition, a green transformation creates pressure and requirements for businesses to choose the right digital tools. These two processes are really stressful for businesses because they have to carry out both of them.

Exporters, especially in textiles and footwear, currently have to comply with sustainability standards that international markets, such as Europe and the US, require regarding the origin of raw materials, environmental protection, and factors throughout the production process. This requires enterprises to comprehensively change their production, warehouse management, and digital transformation is a tool for them to do.

Although many enterprises have aware of the importance of digital and green transformation, implementation is still difficult. Enterprises are applying various software in management and production, but the synchronisation and integration are not good.

Most of them, especially SMEs, are only at the early stages of the digitalisation process. Only 3 per cent of enterprises can master technologies and management software. The remaining are gradually digitising, training employees, and building a roadmap. This is a great pressure for them because, in 2025, numerous new standards set by Europe will take effect, while Vietnamese businesses are still struggling with digitalisation and integration.

Businesses need a lot of support from the government to adapt to global trends. Are the current support policies of Vietnam’s government enough to promote and support long-term development?

The Vietnamese government has already issued many policies to support businesses in digital and green transformation, such as the national digital transformation programmes, the law on supporting SMEs and its decrees and circulars, including many support policies such as consulting for businesses, training for businesses, and more.

However, the actual implementation process is still quite slow. For example, Bangladesh is a developing country in the textile sector, similar to Vietnam, but this government has already provided policies to support textile enterprises to transform to green, develop raw material areas, and very practical incentive policies. Currently in Vietnam, there is still no clear policy for green transformation.

SMEs are facing numerous challenges, like high investment costs and a lack of finance. Green credit support policies have been considered, but criteria for green projects are still under discussion. Agencies, ministries, and sectors are urgently building criteria for green projects, so that banks or other organisations have a measure to determine green projects and apply support policies.

Another problem is the workforce. In some enterprises, the management board is eager and committed to transformation. But some employees may be hesitant to change, so they need pioneers and coaches for this movement.

Therefore, in addition to training and consulting solutions, the Ministry of Planning and Investment has already deployed portals and a group of consultants to help enterprises build a digital transformation roadmap. They will review management software and the current status of enterprises to determine what can be used and what new investments can be made.

We also connect with banks through the SME Support Fund to deliver some financial support. The ministry is drafting amendments to the law on supporting SMEs to adjust the beneficiaries of this fund to include enterprises that are implementing this dual transformation.

What are the roadblocks that pioneering businesses in this transformation process typically face?

In large businesses, these transformations have been implemented for a time very well. However, it is quite hard for SMEs to adapt to the greening trends. However, some SMEs and startups, even in remote areas, have already applied sustainable strategies very early.

Pioneers will face some challenges, but if they succeed they will make a great impact, spreading sustainable values throughout the business community.

The sustainability factor also comes from consumer behaviour and the supply chain. If the top enterprises in the chain follow sustainable development, all suppliers will also have to comply with this requirement. Thus, the entire business community will work together to do better in this dual transformation process to increase their competitiveness and performance in all business activities.