Tech firms forecast to continue benefiting from digital economy growth

Technology and telecoms businesses are expected to continue benefiting from the growth of the digital economy in Vietnam, which is showing a strong performance in the commercialisation of the 5G network.

Chu Duc Toan, an analyst from the VNDIRECT Securities Corporation, predicted that revenue from digital transformation in 2023 will increase 18% from this year to double the earnings made from traditional IT services.

Like the rest of the world, the Vietnamese economy is undergoing a digital transformation. The national digital transformation programme for 2025, with a vision to 2030, targets that the digital economy will contribute 20% of GDP by 2025.

The Government is promoting the development of the digital economy with a series of policies and mechanisms with the latest being the Prime Minister's Directive 16/CT-TTg

Meanwhile, the e-Conomy SEA 2021 report by Google, Temasek and Bain & Company predicted the value of Vietnam’s digital economy at US$52 billion by 2025 with a growth rate of 24%, ranking third in Southeast Asia.

The 5G revolution is heralding a new era for a number of technologies, and Vietnam is one of the countries with the fastest internet development in the world. According to Internet World Stats, the number of internet subscriptions in the country surged by 343-fold between 2000 and 2021.

Vietnam was one of the first countries to successfully operate 5G-based phone calls. Network device producer Cisco forecast 5G subscriptions in Vietnam will reach 6.3 million by 2025.

The early deployment of 5G services could help Vietnam’s telecom service providers raise revenue by US$300 million each year, starting from 2025. The country could soon become one of the first in Southeast Asia to launch a 5G network with companies such as Viettel, Vinaphone and Mobifone racing to develop the first nationwide 5G network.

Thanks to the application of 5G technology, there will be numerous opportunities for developing modern apps to diversify products and services.

Besides, with the technology sector’s attractiveness, mergers and acquisitions (M&As) are also being promoted, especially by firms possessing or investing in advanced technology with big customer databases. Noteworthy deals in the recent past include FPT’s purchase of Base.vn, and an investment worth US$300 million in VNPay by Softbank Vision Fund and GIC Fund.

Despite uncertainties in the global economy, M&As in technology are still taking place, driven by particularly strong flows of private capital. In addition, in spite of tightened conditions in the capital market, many enterprises still have large sums of cash ready to be disbursed, according to insiders.