New growth approach needed for Vietnam to reach high-income target by 2045

After nearly 40 years of renovation, the Vietnamese economy has experienced a period of continuous growth. Growing from an underdeveloped country, the country has now surpassed the lower middle-income level and is aiming to become an upper middle-income country by 2030 and a high-income nation by 2045.

The digital economy has therefore been identified as the new driving force for growth as it is capable of creating momentum to pave the way for a new, fast, and sustainable growth trajectory.

The Resolution adopted at the 13th National Party Congress includes digital economic development as one of the key tasks and orientations for national development in the 2021 to 2030 period.

The Government's "National Strategy for Digital Economy and Digital Society Development to 2025, with a Vision to 2030" affirms that the task of developing the digital economy has been given high priority in national development strategies. In addition, the goal has also been set to develop the Vietnamese digital economy to account for 20% of GDP by 2025 and 30% of GDP by 2030.

However, according to the General Statistics Office (GSO), the digital economy currently makes up for nearly 13% of GDP. To achieve the set goal, experts calculate that the country needs a breakthrough growth scenario whilst maintaining an average annual digital economic growth rate of about 20%. This therefore represents a challenge for the development of the country’s digital economy.

Forming a mechanism to promote and link digital economy in key areas

Professor Tran Tho Dat, chairman of the Science and Training Council of the National Economics University, stated that the Government and localities have shown high determination and great responsibility in terms of developing the digital economy.

This is therefore reflected in the Government's National Strategy for Digital Economic Development and National Digital Transformation, whilst most localities have Resolutions and Projects on digital transformation and digital economic development.

However, Prof. Dat pointed out the fact that most of the projects are not clear about the quantitative structure of digital economic development (core digital economy, internet economy and industry economy), the impact of digital economy in the general economic restructuring of localities, and different digital economic development scenarios.

“The Government needs to soon have a mechanism to boost digital economic development in key economic regions to link digital transformation projects and digital economic development of localities in key regions, while promoting regional advantages not only as places with high economic growth rates, but also with favorable conditions and potential for digital economic development,” Prof. Dat recommended.

To improve the overall productivity of the digital economic transformation and development process, Prof. Dat said that it is necessary to devise an effective public investment strategy, focusing on widespread high-speed ICT infrastructure and cybersecurity to ensure safety and expanded digital skills. In addition, it is essential to implement legal reforms and regulations in a bid to modernize state services and to allocate resources effectively, whilst also strengthening the innovation network.

In the context of the digital economy bringing both challenges and opportunities, Prof. Dat said, “The Government and the state economic sector need to have a new role related to efficiency, ensuring fairness and equality as well as monitoring the market power of large platforms and encouraging more innovation, building an effective institutional and legal framework for the distribution of data assets, designing a tax system and promoting digital economic efficiency in building an independent, self-reliant economy with deep and extensive international integration.”

Promoting the role of the national economy in developing the digital economy

“Amid the 4.0 industrial revolution, state-owned enterprises play an important role in implementing the government's economic development policies, especially when carrying out strategies to update technology and improve competitiveness to be able to adapt and develop in an increasingly competitive business environment,” Prof. Dat expressed.

He emphasized the responsibility and pioneering role of state-owned enterprises in digital transformation, developing national digital platforms, industry digital platforms, transforming into digital technology enterprises, and forming an ecosystem of digital products and services around core business areas.

State-owned enterprises also need to change and improve production processes and efficiency, whilst also enhancing product quality and competitiveness to meet the requirements of making products in the direction of "Made in Vietnam" (created in Vietnam, designed in Vietnam, and manufactured in Vietnam).

"Made in Vietnam" is an important highlight in the Government's "National Strategy for Digital Economy and Digital Society Development to 2025, with a Vision to 2030". This can help the nation become a hub for manufacturing and supplying high-quality industrial products in the international market.

To successfully produce “Made in Vietnam” products, state-owned enterprises not only need to focus on improving research, investment, technology development, and product quality, but also need to reform institutions, strengthen management capacity, and train high-quality human resources as a way of adapting to market and international standards.

Prof. Dat suggested, some areas in which state-owned enterprises should produce “Made in Vietnam” products, including information and communication technology: production of hardware, software, applications, services, solutions, and information systems; the production and processing of agricultural and aquatic products; the production of agricultural and aquatic products, processed foods, beverages, spices, functional foods, and nutrition; the supporting industry: and the production of equipment, machinery, components, spare parts, and support services for key industries such as automobiles, electronics, refrigeration, ships, aerospace and renewable energy.