Thriving in an increasingly digital ecosystem

The Hanoitimes – Many banks are on the brink of losing their market shares in case they lag behind in the digitalization process.

While Covid-19 is causing severe impacts on the economy as a whole, the pandemic has also served as a driving factor for banks and fintech companies in Vietnam to digitalize their services and take on online payment.

Banks are at the brink of losing their market shares in case they lag behind in the digitalization process.

Pham Tien Dung, director of the Payment Department under the State Bank of Vietnam (SBV), said recently, there has been a major shift of customers from one bank to another, leaving many on the brink of losing their market shares in case they lag behind in the digitalization process.

According to Mr. Dung, in order to promote digital economy, banks should find the quickest way to attract customers to use their online services. And secondly, they have to be satisfied with the service quality offered.

In Vietnam, the growth rate of mobile banking is estimated at 200% in recent months, while around 30 million people are using banks’ payment system daily. However, customer behavior remains the largest restriction to promote greater usage of online banking services. In this regard, around 81% of credit institutions are working with fintech companies to develop new services.

Nguyen Chien Thang, director of BDIV Digital Bank, said before 2010, as customers look to move from cash-based to e-payment with the introduction of debit cards and ATMs, BIDV took advantage of this trend to become Vietnam’s top three banks with the largest number of transaction points. During the Covid-19 pandemic, BIDV recorded 15.5 million transactions per month with an amount of VND11 trillion (US$475.43 million).

Technological bottleneck

Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said priorities for the economy in the post-Covid-19 period is digitalization, corporate operation, and the development of e-commerce.

Digital transformation is fast becoming an urgent task to help support the development of enterprises at the moment, Mr. Loc noted.

Among Southeast Asian economies, Vietnam holds a number of advantages in developing digital economy. Statistics revealed the country is home to 70 credit institutions, not to mention intermediary payment services providers.

In the first six months of 2020, the amount of transaction value via the internet is estimated at VND7,000 trillion (US$302.49 billion) and nearly VND300 trillion (US$12.96 billion) via mobile phones, which remain disproportionate to the potential of the economy, stated Mr. Loc.

To address the technological bottlenecks, Mr. Thang from BIDV said in the bank’s development strategy until 2025 with vision to 2030, it identifies technology and digital banking among the top three pillars for development.

Mr. Dung from the SBV expected the government to continue investing in the digital infrastructure, including technology for the banking sector. Moreover, there should be greater connectivity between banking infrastructure and those of other sectors to expand the digital ecosystem.

In addition to the development of digital banking, Mr. Dung said financial inclusion should be among priorities, and banks should continue to provide services in remote and rural areas as part of the national strategy for financial inclusion.

The Hanoitimes – The Ministry of Planning and Investment (MPI) and USAID/Vietnam are collaborating to support the Vietnamese enterprises in the process of digital transformation.

About 100,000 small-medium enterprises (SMEs) will be supported to use a digital transformation readiness evaluation tool and other digital solutions, according to the latest program launched by the Ministry of Planning and Investment (MPI) and USAID Vietnam.

An overview of the launching ceremony being held on December 3. Photo: Nhat Minh

Revolutionary technology development is changing people’s lives. Traditional business models are gradually being transformed by new technologies that bring higher efficiency. Enterprises’ competitive advantage is shifting based on new technology and innovation.

Speaking at the launching ceremony for the “Supporting enterprises’ digital transformation from 2021 to 2025” program on December 3, Minister of Planning and Investment Nguyen Chi Dung said that digital transformation becomes an indispensable trend for enterprises to quickly recover from the Covid-19 pandemic, improve their competitiveness and make breakthroughs in the fourth Industrial Revolution.

The MPI will continue collaborating with the USAID LinkSME project to implement the program by 2025, in which, 100% of enterprises will be aware of digital transformation, at least 100 manufacturing and processing enterprises will successfully adopt digital transformation and then their experiences will be replicated on a larger scale.

Besides, a network of at least 100 experts and agencies will also be established to provide digital consultancy and services for the enterprises.

Ms. Ann Marie Yastishock, USAID/Vietnam Mission Director said that the program will help address digital transformation gap in three phases including pre-digital transformation, determining how digital tools to be used, and creating systems to fully upgrade productivity. “I hope this program would help SMEs understand the importance of digital transformation towards sustainability,” she added.

Ms. Ann Marie Yastishock, USAID/Vietnam Mission Director, told Hanoitimes about the importance of digital transformation, as well as solutions to support Vietnamese small and medium-sized businesses to recover from Covid-19 and better position themselves to meet customer demand and expectations. Ms. Ann Marie Yastishock, USAID/Vietnam Mission Director. Photo: Nhat Minh What do you think about the importance of digital transformation for Vietnamese small-medium enterprises (SMEs), particularly in the context of Covid-19 prevention? The Covid-19 pandemic has changed everything in the globe and has really changed the way business is done now making everything virtual like electronic. It is important for Vietnam to be competitive to make sure the SMEs are quick with the digital platform as well as digital opportunity to response to the customer. How has the USAID/Vietnam assisted Vietnamese SMEs in effective digital transformation? We are working very closely with Vietnamese government, particularly the Ministry of Planning and Investment as the outstanding partner for us in Vietnam. We are moving into the process of the implementation of the Prime Minister’s decision about digital transformation [Decision No. 749 on the National Digital Transformation Program by 2025 with Orientations toward 2030]. We have worked out SMEs program to help the ministry put together plan and now looking at implementation of that plan. So for the pilot program jointly held by the Ministry of Planning and Investment and USAID LinkSME, we will have 100 SMEs that will be helped with increasing digital transformation. They will have more capacity to meet the demand of customers and really participate in the global economy. Thank you for answering to Hanoitimes .

Illustrative image (Photo: VNA)

Singapore (VNA) – With the pandemic showing little signs of slowing and as countries around the world shift away from the traditional economy, Asia has an opportunity to consider building a more integrated digital economy and to promote digital trade and a common digital currency .

According to the International Monetary Fund’s outlook report on the Asia-Pacific region released in October 2018, the level of digitalisation in various Asian economies is higher than that of countries in other regions, said an article recently published on ThinkChina e-magazine.

Even the relatively poorer Asian economies are going digital at an ever-increasing pace. Over the past 20 years, digital innovation has contributed about a third of Asia’s per capita economic growth. Asia will lead global digitalisation, and will benefit greatly from the growth of its digital economies. For instance, e-commerce seems to be boosting companies’ productivity, and going digital may help improve targeted expenditure and streamline taxation processes.

The United Nations Conference on Trade and Development (UNCTAD) noted that global trade in 2020 is expected to shrink by about 7-9 percent as compared to 2019, and closer cooperative ties in digital trade within Asia would help Asian countries to withstand the impact of shrinking global trade, or to buffer the blow.

According to the 2020 China Internet Development Report, China’s digital economy in 2019 was worth 35.8 trillion RMB, or 36.2 percent of its GDP, putting it among the top in the world in terms of scale and growth rate. The fifth plenary session of the 19th Central Committee of the Chinese Communist Party (CCP) in December 2020 unambiguously proposed stepping up the development of digitalisation, promoting the formation and growth of the digital industrial sector, and strengthening international cooperation in areas such as internet infrastructure, big data, cloud computing and e-commerce, to build a digital Silk Road.

The recent signing of the Regional Comprehensive Economic Partnership (RCEP) and the successful conclusion of negotiations on the China-EU investment agreement are expected to provide positive impetus for global economic recovery. These two agreements include significant content on cooperation in the digital economy, such as in the areas of trade digitalisation, cross-border e-commerce, and fintech among the signatory countries. This will certainly help China, Asia, and ASEAN unleash their enormous growth potential in the digital economy in the post-pandemic era.

ASEAN is a region of many young people, with over half of its population aged below 30. Smartphones are prevalent among the young and the internet economy is growing at an astonishing rate which is set to hit 300 billion USD by 2025.

In Asia, building the digital economy has been a key part of the strategic development of Singapore and China in recent years, and results have been remarkable.

With the rise of new information technologies and the digital economy, Singapore has in recent years taken an active lead in establishing digital economic partnerships with countries such as China, New Zealand, Australia and Chile, as well as ASEAN. New bilateral Digital Economy Partnership Agreements are signed to boost digital connectivity, and this includes cooperation in digital trade, interoperability between digital systems, enhanced cross-border data flow, data innovation, and fintech.

For example, the vision behind setting up the ASEAN Smart Cities Network and building an open data network for ASEAN is to promote digital integration in regional economy and trade.

The article said with the pandemic hampering the growth of the traditional economy, and under the shadow of unilateralism, there is great potential for the growth of the contactless digital economy. Coupled with the favourable trends and conditions for the development of the digital economy outlined above, it is timely and will be significant in seizing the opportunity to build a more integrated Asian digital economy./.

High technology and innovation are the keys for Vietnam to escape the status of doing outsourcing for foreigners, which has occurred for several decades.

“Make in Vietnam” key to Vietnam’s target of high income by 2045

Nguyen Quang Dong, Director of the Institute for Policy Studies and Media Development, talks about Vietnam’s efforts to master science and technology production to help it achieve the goal of becoming a high-income country in 2045.

Make in Vietnam, by Vietnam for a fresh digital orientation

Vietnam has made impressive steps in its digital transformation journey in 2020, with strong aspirations and ambitious targets set through the launch of the Make in Vietnam programme.

The Hanoitimes – It is the right time for Vietnam to promote the growth of digital government, digital economy and digital society.

T he Internet Day 2020 entitled ” “Digital Transformation in Vietnam: from Aspiration to Reality” is held on December 16 in Hanoi. Photo: Nhat Minh

Speaking at a conference with the theme “Digital Transformation in Vietnam: from Aspiration to Reality” held on December 16 in Hanoi, Mr. Dung underlined major directions for relevant agencies, businesses and internet users when embarking on the process.

Among the tasks, he stressed on the continual expansion of the number of new internet users. Under the goal of the National Digital Transformation Program, each citizen would have a smartphone and each household, a high-speed fiber-optic internet line.

“Another important direction is the development of a national digital infrastructure to meet the new requirements amid the explosion of internet of things (IoT) for smart devices and machine to machine communication; complete transformation of Vietnam’s internet into IPv6 address space and make Vietnam a regional internet hub,” Mr. Dung said.

He said the ministry will also develop an ecosystem of digital platforms, expand the national cyberspace and the scope of operations of Make in Vietnam digital platforms. In addition, ensuring information security, mastering digital infrastructure, cyberspace and protecting national digital sovereignty are also prioritized and focused tasks.

Deputy Minister of Information and Communications Nguyen Huy Dung addresses the conference on December 16. Photo: Nhat Minh

At the conference, a representative from VNG, an internet and technology company of Vietnam, raised three majors issues challenging the Government in boosting the development progress of the digital economy (including data) in next three years.

VNG Founder/CEO Le Hong Minh said the three issues, including the law on personal data protection, infrastructure (digital identity data – ID) and system for data exchange.

He said to develop the digital economy, creating trust among Vietnamese internet users on a secure cyber environment is the first and foremost task. Over recent years, personal data (especially phone number) has been leaked on the internet and the users are over-disturbed by spam calls.

“The ministry has put great efforts in preventing the issue but not it has not been wiped out all through,” Mr. Minh said.

He suggested the government to focus on building the law on personal data protection for Vietnamese internet users, of which the users have rights to know where and how the personal data is used, or to agree and not for the usage.

He expected the law to be launched in the next 1-2 years. Besides, the CEO also expected to have a digital ID system in the next 3-5 years as part of infrastructure for the development of digital economy. Lastly, for the effective use of data, the government should encourage local enterprises and organizations in Vietnam can exchange data among them.

On Mr. Minh’s suggestions, Mr. Vu Hoang Lien, Chairman of the Vietnam Internet Association said that the proposals are right and appropriate because building the legal framework for the digital transformation is necessary. However, it takes much time to realize the proposals.

“It requires the technology application, human resources and the organization,” he told Hanoitimes .

Nguyen Manh Hung, Minister of Information and Communications

The movement from the physical into the digital world is the greatest transformation in humankind’s history, and with this transformation, huge opportunities always come together with huge challenges.

Digital technology, digital transformation, and also the media play important roles in this move, and this is a rare chance for the sector to reassert itself. Understanding the challenges and defining correctly the new development space plays a decisive role in all developments.

For example there is the postal service: if it focuses only on mail and parcel delivery, the service will remain static. However, if the post is to ensure physical flow besides data flow, and is the platform to support all individuals and households in facilitating their business activities and access to global markets, it becomes a platform that helps people escape poverty, thus making the development space and new mission of the postal service much greater.

And in telecommunications – if this is the infrastructure of the digital economy, the infrastructure of data storage and processing, and the infrastructure providing technology as a service to everyone and all businesses, telecommunications becomes the driver of the digital economy.

In terms of IT application, if it continues to automate old operations only, nothing changes. However, if it is to use digital technology and change operational models, it can be a revolution helping humankind move from the analogue world into the digital one.

Digital transformation is the next development of IT application, and is the breakthrough development as it places all activities into the digital environment in a comprehensive manner. The breakthrough here is that instead of doing it gradually, part by part, it can be carried out immediately and comprehensively, setting higher goals. It changes the way we do our jobs and live our lives, and the more we use it, the cheaper it is and the higher skills we get – and the more technology develops.

The other breakthrough is that it can be more important to dare to change and apply a new model rather than simply develop technologically; those that follow can create applications in a stronger and faster manner with the potential to become frontrunners.

Digital transformation also creates opportunity for each individual, household, and small business to approach national and global markets, thus prompting more people to run businesses to make money. It does not force us to experience the stages of catching up with and then jumping over the competition – but instead leapfrog them and lead the charge.

Meanwhile, we need information security to focus on more than protection of IT systems. Information security needs to protect Vietnam’s prosperity in cyberspace, build safe industry and network security, own the product ecosystem, and become a powerhouse to protect the country in cyberspace.

If ICT simply focuses on assembling and outsourcing, this will not do. However, if ICT becomes Vietnamese-made and develops domestic digital technology businesses – mastering technology with design and innovation and production in Vietnam, focusing on dealing with the problems facing the country – it can develop Vietnam into a tech-led nation with a huge rise in GDP. It then becomes a driving force to develop Vietnam into a prosperous and developed country with high incomes by 2045.

This year marks the first of a 5-year period for Vietnam to realise its goal of becoming a developing country towards modernisation surpassing the low average income; by 2030 becoming a developing country with modern industries and high average income; and by 2045 becoming a developed country with high incomes. With that in mind, the Ministry of Information and Communications issued Directive No.01/CT-BTTTT in January on specific works to develop the sector in 2021 with the spirit and aspiration of strength and prosperity – with high goals, new approaches, and breakthrough solutions to realise the five-year job in just one year, thus enabling the country to develop fast and sustainably.