As Vietnam continues to position itself as a digital transformation hub in Southeast Asia, the country is making significant strides in attracting foreign investment and driving the growth of its digital economy. The government has taken a proactive approach towards promoting digitalisation, with the establishment of the Vietnam National Committee on Digital Transformation and various programmes aimed at encouraging businesses to adopt digital technologies.
Despite the challenges posed by the traditional reliance on cash transactions and the need for wider adoption of digitalisation among SMEs, Vietnam’s push towards digital transformation has been successful. The report by Google, Bain and Temasek indicates that the country is one of the fastest-growing digital economies in the region.
To continue this growth trajectory, the government is investing in infrastructure upgrades and providing support to private industries. These efforts are aimed at ensuring that Vietnam remains an attractive destination for foreign investment in the data center industry and other sectors.
Gary McKinnon, the Director at VNG, is optimistic about the country’s prospects for continued growth in the digital space. As Vietnam continues to embrace digitalisation, it is likely that the country will continue to attract investment and drive the growth of its digital economy.
Digital penetration in the financial sector
Despite the progress made in driving digital transformation in Vietnam, many SMEs still lack the necessary connectivity to fully embrace digital technologies. To address this issue, the government has taken steps to push for wider adoption of digitalisation, especially among SMEs.
Gary highlights some of the measures being taken by the government to increase adoption rates among SMEs. These include requirements for national data to be online and connected, with all government inspections to be undertaken online instead of in person. Additionally, the government is aiming for 50% of all transactions from banks to be done online, while SME loans can also be completed digitally. Credit institutions are also encouraged to store 70% of their workers’ information digitally and locally.
“Infrastructure improvements are also a priority, with plans to connect 80% of the country. By implementing these measures, the government hopes to encourage more SMEs to adopt digital technologies and fully embrace digital transformation, thus driving further growth in the digital economy,” said Gary.
Changing Mindset
Despite the progress being made in digital transformation in Vietnam, there are still challenges to overcome, particularly with regards to changing the mindset of people who are used to the traditional concept of “cash is king”. However, with the ongoing digitalisation efforts in the country, this mindset is slowly being shifted.
Gary notes that changing the local mindset towards digitalisation is a challenge in Vietnam. However, with the support of the government, infrastructure upgrades, and the growing number of tech-savvy young people, the country is moving forward positively towards digital transformation.
“While the shift to digital payments and online services may take time, the benefits of increased efficiency and convenience are likely to encourage more people to embrace digital technologies. As a result, the country’s digital economy is expected to continue growing, attracting foreign investment and contributing to overall economic development,” he added.
Government and Private Industry Efforts
Vietnam’s aggressive push towards digital transformation is relatively recent, with the very first meeting on the topic being held in late 2021. While the country may be behind some of its ASEAN counterparts in terms of digitalisation, Gary remains optimistic about the country’s future prospects.
According to Gary, Vietnam’s stable government over the past few decades, coupled with the growing momentum among the younger generation, provides a solid foundation for digital transformation. The government is actively upgrading infrastructure and improving service levels to facilitate this transformation.
“Realising that they cannot achieve this alone, the government is seeking private industry to provide applications and platforms to support the country’s digitalisation efforts. The major players in the IT industry began to evolve in 2019, and while the country may be relatively new to the digitalisation game, there is a lot to look forward to in terms of growth and development in the years to come,” he said.
Discover in our part 2 segment on digital transformation in Vietnam, the ways in which data centers in the country will be affected by the ongoing digital transformation, and which government policy has had the most significant impact on this sector.