Digital Transformation Impacts in Urban Development: Opportunities and Challenges for Vietnam (Part 2) – Successful Digital Transformation in the World and Suggestions for Vietnam
8 October, 2021
National and Regional Transformation Strategy – Sustainable Cities Development
To implement, measure and develop the digital transformation process, many organizations around the world, listing as: Organization for Economic Co-operation and Development (OECD), European Commission, Economist Intelligence Unit (EIU), GSMAssociation have established common policies and programs for diverse countries like: Digital transformation policy integration framework, Digital transformation strategy implementation framework for European cities and regions, European Digital Transformation Program, Asian Digital Transformation Index, Digital society assessment program in some Asian countries in addition to individual programs of each country.
At the beginning stage, most of European digital transformation policies and programs focused heavily on economic aspects like: enhancing competitiveness, modernizing industry to ensure sustainability in manufacturing, etc. In Asia, digitization programs in countries (for example, Japan and Malaysia) are also associated with the economic sector and econometric vision (Anchordoguy, 2015; Athique, 2019).
After this process implementation, Europe also had a positive change in measuring digital transformation efficiency, which is to use Digital Society index in addition to Digital Economy Index (DESI) (Russo, 2020). In Asia – Pacific, social factors are also gradually being taken into account in digital transformation when GSMAssociation (2020) conducted research in 11 Asia-Pacific countries (Australia, Bangladesh, India, Indonesia, Japan, Malaysia, Pakistan, Singapore, South Korea, Thailand and Vietnam) that have shown remarkable progress in terms of society, directing countries towards the future of digital society development.
Studies that estimate environmental benefits or abatement potential have shown that digital transformation can indirectly reduce greenhouse gas emissions by 20%, creating a low-carbon circular economy (low-carbon circular economy) (DigitalEurope, 2019). Recognizing that the interaction between digital transformation and the environment has not received due attention in previous years, Council of Europe has emphasized the need to consider and adequately address the opportunities and challenges of digital transformation, making digital changes to the environment, climate and protecting nature through policy tools, contributing to a sustainable digital transformation approach in Europe (Liu et al., 2019). The introduction of European Green Deal program at the end of 2019 is a testament to European Commission’s vision of environmental protection in the process of digital transformation, towards sustainable development (Claeys et al., 2019; Haines & Scheelbeek, 2020). In some Asian and African countries (China, Thailand, Philippines, Kenya, Rwanda, South Africa, Nigeria), policies related to digital transformation have been somewhat aware of digital transformation impacts on environment (Kunkel et al., 2020).
Successful digital transformation of some cities in the world
All cities that are judged to be successful in digital transformation in the world have a smart development strategy focused to (1) solve the problems that exist in their cities or (2) further satisfy the local residents’ needs towards sustainable city development and population life quality betterment. Digital transformation strategies have only one or two goals that are very clearly defined and specific with ways to follow the digital transformation development frameworks of organizations or countries. When focusing on implementing one or two of these goals, other areas are also developed to contribute to completing and accelerating the process of digital transformation comprehensively and in all fields. Another reason for the success of digital transformation strategies is that the construction, the development and the implementation are always the cooperation of various stakeholders, listing as: representatives of State government, companies/enterprises and universities/research institutes.
Sofia City (Bulgaria)
The government has chosen a problem, that is, “local software companies are positioned very low” to address in digital transformation strategy. The objective of the strategy is to improve the quality of IT products through the development of digital products and electronic services to meet the needs of local companies and organizations. 2 main reasons for this development decision are as follows: (1) human resources working in IT industry in Sofia are mainly outsourcing software for foreign companies although Sofia is at the top of European as an outsourcing city and ranked third in Europe in terms of number of startups in 2014; (2) domestic IT products and services in Sofia are underdeveloped behind other sectors in digital service application.
Supercomputer system installed in Sofia technology park – the largest in Eastern Europe
To solve the problem and realize the set goal, Sofia government decided to build an extremely smart strategy that focuses on developing local IT industry and urban ecosystem to solve the gap between the export-oriented digital market and the local digital market. The strategy is implemented in accordance with the framework proposed by European Commission in collaboration with stakeholders from the private and public sectors in Sofia. To successfully implement this digital transformation strategy, Sofia has built an integrated platform of stakeholders (for example, representatives of local government, universities/research institutes, budget department/ financial, companies and public utilities) together to exchange and build and implement digital maturity index and develop digital services in three main areas: government, public services utility and traffic. In terms of education, training is focused on digital skills like: software programming and digital data analysis. Besides, the creation of open data sources is also gradually implemented.
Granada City (Spanish)
In Granada (Spain), the government chose to satisfy the need of people’s health enhancement as a key factor to concentrate in the digital transformation strategy implementation. With its advantages in the field of education and healthcare on a regional and international level and its digital infrastructure, Granada City has determined that education will be a powerful contributor to the advancement and development of all areas of the city in terms of digital transformation process. In addition, the city identified a few internal problems, listing as: little open and shared data sets, leading to very limited practical use by businesses and citizens as well as poor-quality cooperation among units.
Digital transformation strategy at Granada is developed and implemented in accordance with European Commission’s guiding framework. To strengthen its strengths, the government supports Health Technology Park with their focus on health sector research by expanding research institutes that transform knowledge, with a particular focus on the pharmaceutical industry, health sciences, healthcare and food care, aiming Health Technology Park to be the first to specialize in healthcare in Spain. Research institutes integrate teaching, research, patient care and business development for health and biomedicine; concurrently, advanced systems, platforms and services for IT application are developed by companies. The city also encourages the development of open data sources to benefit residents and research activities. In order to increase cooperation between companies, the city promotes companies to jointly implement digital transformation whereas non-digitized companies are supported by related units. Mission, vision and operational goals and steps to implement digital transformation strategy at Granada City are all constructed on an integrated platform of stakeholders who are representatives of the city government, industry/ companies and universities/research institutes.
In addition to European cities, Asia also witnessed the success of digital transformation. Singapore is considered as the clearest example. In Asia, Singapore is one of the cities that intelligently harness the ongoing technological revolution to accelerate development and transform the entire economy (Chua, 2012). Singapore chooses to focus on solving public service problems for people and businesses. Public service digitalization has been carried out since 1960 with the aim of providing convenient and cost-effective public services (Hanna and Knight, 2011); by 2000, 90% of public services will be provided online; 10 years later Singapore provides integrated public services; in 2014, Singaporean government launched the initiative to build a smart nation with three main pillars: digital economy, digital government and digital society (P.M Hung, 2021). It can be stated that digital transformation at Singapore took place quite early compared to that of many other cities in the world and has been very successful. With the policy of taking the people as the center, Singaporean government has built 11 one-stop service itineraries with essential utilities for residents from making birth certificates for young children to medical declarations for the elderly. These services save time, costs and change people’s perception. In particular, people participate in most of the stages of making digital products and services with a strict 5-step process: Surveying and collecting people’s opinions; Being tested from the use of people; Defecting assessment; Redesigning and Improving service digitization (Nhan, 2020). When it comes to smart city development, Singaporean government also focused all its resources on creating a start-up ecosystem by implementing a series of programs to support policies, costs and raise awareness for the startup community: “Chief Technology Officer (CTO) -as-a-Service” program, “Digital Leaders Program”, “Open Innovative Platform” (Ngoc, 2020).
Singapore – one of the cities smartly harnessing the ongoing technological revolution to accelerate development and transform its entire economy.
Analyzing Vietnamese context: opportunities and challenges
In the previous three Industrial Revolutions, Vietnam did not have the opportunity to actively develop; rather, inherited these experiences and results to build and develop the country. 4.0 Industrial Revolution and digital transformation are appropriate opportunities for Vietnam to proactively reach out for outstanding development. Vietnam is ranked as one of the leading countries in promulgating national digital transformation programs and strategies. Starting from 2019, Central Executive Committee has issued a number of guidelines and policies to actively participate in 4.0 Industrial Revolution with the urgent requirement to accelerate digital transformation process (Politburo, 2019). In June 2020, National digital transformation program to 2025 with orientation to 2030 was issued, including three main pillars: digital government, digital economy and digital society (Prime Minister, 2020). This results from researches and learning from programs of many countries around the world like: Singapore, Thailand, UK, Australia, Denmark, Estonia, Israel, Uruguay and so on (Ministry of Information and Communications, 2020). After that, the referenced digital transformation evaluation index set was also issued to monitor and evaluate the annual digital transformation results of the provinces and centrally-run cities with references from many sets of indicators in the world, listing as: Asia Transformation Index, European Digital Economy and Society Index (DESI), OECD’s unified policy framework for digital transformation and so on (Ministry of Information and Communications, 2020). It can be confirmed that the trend of digital transformation program at Vietnam follows the development trend in the world analyzed above, which is to focus more on economic aspects and social aspects, not including environmental aspects. is a group of elements that need to be emphasized and developed in strategies and programs. It is also worth-noting that Vietnam introduced a set of digital transformation assessment indicators to monitor and evaluate annual digital transformation results of provinces and centrally-run cities (Ministry of Information and Communications, 2020). In a word, this asserts Vietnamese Communist Party and State’s interest in the digital transformation process as well as the desire to turn Vietnam into a country with digital transformation awareness along with other advanced countries in the world.
After more-than-a-year implementation, Vietnamese national digital transformation program has achieved some remarkable results through the three criteria mentioned above: digital government, digital economy and digital society. Nevertheless, the most results are recorded in the digital economy, in which businesses are at the forefront of comprehensive digital transformation. Vietnamese digital economy has gradually increased over the years and has made great changes that have positively impacted urban residents’ lives. In 2020, Vietnamese E-commerce increased by 46%, transportation and food increased by 50%, online media increased by 18%; on the other hand, online travel decreased by 28% (due to Covid-19 pandemic impacts) (Google and Temasek, 2020). E-government is being built with the goal of creating a premise to develop digital government and to impact the digital economy and digital society. Both Vietnamese online public service index and Vietnamese telecommunications infrastructure index increased compared to those of the previous years whereas Human resource index for E-government increased insignificantly and is, currently, lower than the average. For the digital society aspect, Internet usage rate factor is used to measure effectiveness level and is considered as a fundamental factor to form the digital society in the future, with a rate of 70.3%, higher than the average in some regions and the world (WeAreSocial and Hootsuite, 2021). Compared to the 4th quarter of 2020, the value of E-commerce transactions in 1st quarter of 2021, the number of deaths increased by 5.5 times, QR Code payments by 55%, E-wallets by 51% and mobile phone transactions by 50% (VisaNet, 2021).
What is more, at the present time, the fact that digital transformation policy, focusing on developing the digital economy, will be implemented nationwide (oriented from 13th Party Congress) identifies that Vietnam is also following the appropriate digital transformation trend of Asian countries as analyzed above. This digital economy (which operates on a digital technology platform) is believed to be able to turn the country into a modern industrialized country, surpassing the low-middle income level by 2025, towards becoming a modern industrialized, high-middle-income country by 2030; and being a developed, high-income country by 2045 (Nguyen, 2021).
With some initial results in the implementation of the national digital strategy, many cities and localities also have remarkable results such as 27 cities and localities under which have had programs, plans, and goals. and digital transformation tasks up to now (2021). Some affiliated cities (Ho Chi Minh City, Hanoi Capital, Da Nang City and so on) and localities have had general goals and developed or started to develop strategies or programs to transfer arguments for their localities. Localities stop at ‘following’ the national strategy. In general, the overall goals of localities set forth in the digital transformation program are quite numerous, general and spread across all sectors and activities of that locality. Most localities do not highlight the specific characteristics and task implementation associated with development for each city. This is quite difficult in the implementation process when the resources of each locality are being in insufficient and weak; at the same time, affiliation with universities and research institutes is rarely mentioned.
Proposals for effective digital transformation in urban development
Looking at the success factors in digital transformation program of cities around the world in urban development, if Vietnamese cities and localities can inherit, adjust and apply them in Digital transformation strategy and program construction in your locality right from the start, individual locality will save time and be more effective. Current Vietnamese cities all have various advantages, listing as: young population, stable politics and supportive government besides some remaining weaknesses like: the lack of urban development characteristics, the lack of strong cooperation between social sectors and related units, scattered investment, weak infrastructure, poor connections, limited capacity structure. However, in terms of individual city and locality, they will have different strengths/weaknesses affecting the digital transformation process.
This paper does not aim at detailing the proposals towards implementation, rather, proposing fundamental solutions, the ‘initial step’ before setting goals, defining strategies, building and implementing a transformation program as absolutely reasonable and truly “smart” digital transformation, comprising as follows:
Firstly, harmoniously combining national development programs and orientations towards sustainable development. It can be affirmed that digital transformation in Vietnam has learned from the programs of other countries and measurement indicators in the world. Our national orientation towards digital transformation program is completely similar to the trend in the early stages of Europe and Asia: focusing on economy and society is just a user factor that should be considered without specifying environmental concerns. Later, European Commission has made many changes and supportive regulations related to the environment, promoting sustainable development that Asian countries have not mentioned yet. Therefore, Vietnam needs to consider this. Actually, Vietnamese national development strategy on green growth has been promulgated since 2012. Some cities and localities have included environmental assurance and green growth in their digital transformation goal. However, these objectives have not been translated into specific tasks in the implementation plan. These tasks need to be linked between the digital transformation strategy and the national green growth to create unity and effective implementation.
Secondly, it is necessary to properly understand the role of smart cities in digital transformation. Smart city development is an implementation criterion in the digital transformation program in our country along with other factors. Meanwhile, basically these factors (economy, environment and so on) are all components inside a city. Smart city is, inherently, a model in which modern technologies are applied to solve real urban problems with mobilized resources towards sustainable development and life quality. From this foundation, it can be understood that a smart city is a journey to and from, not a destination. The inclusion of smart cities as a criterion in digital transformation can cause confusion, affecting the outcome of the digital transformation program. Therefore, it is necessary to properly and fully understand the role of smart cities and the correlation between smart cities and digital transformation. Furthermore, to develop a smart city, urban characteristics or problems need to be confirmed and concretized while these factors have not been clearly expressed in most cities and localities.
Thirdly, each locality should have a specific strategy and program with one or two clear goals, a time and a roadmap to thoroughly implement this goal. The goal of digital transformation should focus on: (1) solving the current problem of the city or (2) satisfying the development needs of the locality. From here, the local characteristics will be summed up and developed. In order to set specific goals, the local strengths and weaknesses must be considered in order to take clear, reasonable and effective steps. In addition, developing priority areas needs to be focused on a specific direction, based on the set goals, from which, other aspects of the city will be integrated and developed. To realize this, local leaders must have a far-reaching vision to set the direction and thereby guide the program implementation effectively.
Fourthly, cooperating and dividing responsibilities effectively. Performing digital transformation is a long way with many programs attached. To achieve their goals, programs must be implemented with the participation of all social sectors: local authorities, businesses, universities/research institutes and communities. This consensus, with objective opinions from diverse parties, will form integrated, flexible, sustainable and aesthetically suitable solutions with the urban structure, therefore, bringing a better life quality to the residents.
Fifthly, fully defining the role of universities/research institutes to help promote effective and rational digital transformation. In a previous study, Trinh Tu Anh et al. (2020) proposed the role of universities/research institutes in digital transformation of the economy towards smart city development, specifically as follows:
The role of universities/research institutions in education and training cannot be disputed in the short and long term to create human resources with professional knowledge and digital skills necessary to take the initiative so as to cope with the changes of human resource needs in the digital age. In addition, universities/research institutions have other roles in digital transformation, including:
Universities/research institutions can collaborate with stakeholders as a specialized unit to carry out more collaborative applied research to solve urban problems, instead of just working at a few individual representatives of experts affiliated to the university. The construction of simulation labs and living labs at universities/research institutes (in developed countries) should be considered because this is where the Policy makers and decision-makers make informed decisions and minimize risks to digital transformation.
UEH Simulation Lab at UEH
In digital transformation, big data application needs to be implemented in many fields (transportation, E-government, healthcare) and connect data between sectors to create a total of national data is absolutely necessary. At that time, universities and research institutes can be a place to store, integrate, exploit and use the national data warehouse, serving research and development (R&D) and providing information to authorities responsible for decision making.
In addition, universities/research institutes with leading professors need to play the role of leading, training and changing awareness for stakeholders in new fields in the digital age.
To successfully and effectively implement digital transformation, universities/research institutes are educational and non-commercial institutions that can play the role of connecting generations (students, students, graduate students, alumni and so on) and stakeholders so as to create an integrated platform for teaching, research and project implementation.
This paper is in Book series “VIETNAMESE ECONOMY IN DIGITAL TRANSFORMATION”. Please have the full paper of “Digital Transformation Impacts in Urban Development: Opportunities and Challenges for Vietnam” research by Author group here.
Author group: Dr. Trịnh Tú Anh, MSc. Phạm Nguyễn Hoài, MSc. Trần Thị Quỳnh Mai, Institute of Smart City and Management (ISCM), UEH School of Technology and Design.
This writing is in Series Spreading research and applied knowledge from UEH. We would like to invite our dear readers to look forwards to Newsletter ECONOMY NUMBER #16 Revolution in Experimental Economics.
News, photos: Author group, Department of Marketing – Communication.