Vietnam likely to become second largest growing digital economy in ASEAN by 2030
VOV.VN - Vietnam was the fastest-growing digital economy in ASEAN in 2023, and with its potential it is on the road to becoming the second-largest by 2030, said the Hong Kong and Shanghai Banking Corporation (HSBC) in its recent report “Vietnam at a glance.”
Becoming ‘digitally fit’
A flurry of digital-related investments has been taking place in Southeast Asia, with Microsoft recently announcing a number of investments in Indonesia, Malaysia and Thailand, and Alibaba planning to build a data centre in Vietnam to accommodate rising digital demand.
HSBC pointed out that with a population of over 100 million and a working age share of close to 70%, there is huge potential for Vietnam’s digital consumption.
According to the e-Conomy SEA 2023 report, Vietnam was the fastest-growing digital economy in ASEAN with impressive growth of 20%. Measured by gross merchandise value (GMV), the country has the potential to become the second-largest digital market in the region by 2030, just after Indonesia.
Think tanks expect the expansion to be led by a rapidly developing e-commerce ecosystem, supported by a rising consumer base.
Apart from the demographic tailwinds, Vietnam’s rapid rise in internet users also helps expand its digital market. Almost 80% of the country’s population now use the Internet, thanks to smartphone ownership more than doubling from a decade ago.
But more can be done
However, despite the considerable growth in Internet users, the application of digital technologies in certain areas has lagged behind. According to the World Bank’s 2021/22 data, Vietnam stood behind Singapore, Thailand and Malaysia in terms of using non-cash payment methods, although efforts to transition to digital payments have accelerated since then.
Encouragingly, the National Digital Transformation Program is an example where the public sector seeks to play an active role to facilitate the digital transformation of the economy. Meanwhile, how to secure the additional energy necessary to fuel the momentum is another challenge, evidently shown in the case of data centres.
Vietnam on track to recover from trade downturn
Heading towards the end of the first half of the year, Vietnam remains on track for an external-led recovery. It is still not broad-based, with the electronics sector taking the lead.
In addition to electronics, expanding market access is also helping Vietnam to buoy certain agricultural shipments. Its durian exports to China almost doubled in the first four months of the year, largely eating Thailand’s market share in China.
Notably, long-term business interest also showed little sign of slowing. FDI remained well on track to sustain the momentum seen in 2023. Newly registered FDI grew double digits since the beginning of the eyear with incremental flows centring on the manufacturing and real estate sectors.
As testament to Vietnam’s attractive investment for a range of manufacturers, Pandora, a jewellery brand, has started construction of a US$150 million factory in Binh Duong.
Meanwhile, the domestic recovery continues to lag behind, with muted monthly retail sales performance. Outside of growth, inflation continued to hover close to the 4.5% ceiling in May. The performance was rather a mixed picture in the food and energy segments, warranting a close watch in the near term.
