[Podcast] Party’s Perspectives and Government’s Policies and Laws on Digital Economic Development in Vietnam

Keywords: Digital economy; Party’s perspectives; Government’s policies and laws; Vietnam

Digital economy, with new business and management organization models, has profoundly changed many aspects of economic and social life in many countries worldwide. After 5 years (2019-2024) of implementing the Party’s policy on digital economic development, Vietnam has achieved positive results. The researcher from University of Economics Ho Chi Minh City (UEH) focused on presenting the role of the digital economy in Vietnam’s socio-economic development, the Party’s viewpoints, the Government’s policies and laws on digital economic development, and the initial results of current digital economic development in Vietnam.

Digital economy and its role in Vietnam’s socio-economic development

The term “digital economy” first emerged in Japan in the 1990s. In 1995, Don Tapscott titled his book Digital Economy: Promise and Peril in the Age of Cyber ​​Intelligence. In 2001, Thomas Mesenbourg proposed three main components of the concept of “digital economy”: e-business infrastructure, e-business and e-commerce. Although the term “digital economy” was mentioned before the term “Fourth Industrial Revolution” in 2011 in Germany, it was only officially used popularly when the concept of “Fourth Industrial Revolution” was raised by the World Economic Forum (WEF) in 2016.

Currently, in Vietnam, the concept of digital economy is interpreted in Decision No. 411/QD-TTg dated March 31, 2022 of the Prime Minister as follows: “ICT digital economy is the information technology industry and telecommunications services. Platform digital economy is an economic activity of digital platforms, online systems connecting supply and demand, and online services on the network. A field digital economy refers to digital economic activity in industries and fields. Of which, developing ICT digital economy focuses on enterprises and digital technology products “made in Vietnam”.

From the above concepts, digital economy can be understood as an economic activity that uses digital technology and data as the main input, uses the digital environment as the primary operating space, uses information technology – telecommunications to increase labor productivity, innovate business models and optimize the structure of the economy.

The digital economy has the following outstanding characteristics: The digital economy is global in scale with many changes in the international division of labor and the global value chain, and less limited by geographical factors. In the digital economy, the scope and the structure of the market change, the production model and the role of enterprises in the digital economy change, and the digital economy are based on a knowledge platform, knowledge convergence, and unlimited knowledge connection. In terms of technology, the digital economy takes place through the process of digitalization and digital transformation.

Although the digital economic development model is being relatively new in the world, the digital economy, along with new ways of organizing business and management, has profoundly transformed many aspects of economic and social life at a fast pace, on a large scale, and systematically. The application of new technology and digital technology will have a wide impact on businesses, individuals and organizations, changing production and business in the tendency of optimization and intelligence, the way people work, study and entertain, the relationship between individuals and the government, international trade as well as means of production in the economy of each country and globally.

For Vietnam, the digital economy will create opportunities for rocketing development for inherent countries thanks to new production methods and new business models, because the digital economy is not a sequential development but a leapfrogging development with the global market, not limited by space and time. The digital economy also creates opportunities for rapid growth with low capital, mainly requiring appropriate thinking, institutions and technological knowledge, which is very suitable for the current situation of Vietnam. Especially, the successful development of the digital economy will contribute to the early realization of the goal set by the 13th National Congress (2021) of the Party: “By 2025, our country will be a developing country with modern industry, surpassing the low-middle income level. By 2030, our country will be a developing country with modern industry and high-middle income. By 2045, our country will become a developed country with high income”. In addition to the potential strengths for national development, digital economic development causes difficulties and challenges. Accordingly, employment is reduced because of the use of robots and artificial intelligence. Government in the digital economy also faces difficulties in the management of import and export of non-physical goods, tax issues, network security, information security, consumer rights in the digital space, conflicts, and competition between traditional business models and mechanisms with newer ones emerging in the digital economy. The connection between employers, employees and customers is not tight, and is only based on short-term commitments.

Party’s policies and Government’s laws on digital economic development in Vietnam

On September 27, 2019, the Politburo of the 12th Party Central Committee issued Resolution No. 52-NQ/TW on “Guidelines and policies to proactively participate in the Fourth Industrial Revolution”, in which digital transformation and digital economic development are major and important contents. Regarding the goal of digital economic development, the Resolution indicates that:

– By 2025, building digital infrastructure that reaches the advanced level of the ASEAN region with broadband Internet covering 100% of communes. The digital economy accounts for about 20% of GDP. Labor productivity increases by an average of over 7%/year. Basically complete digital transformation in party and state agencies, the Fatherland Front, and socio-political organizations. Be among the top 4 ASEAN countries in the e-government ranking according to the United Nations assessment. Have, at least, 3 smart cities in 3 key economic regions in the North, South and Central regions.

– By 2030, 5G mobile network will cover the whole country. All citizens have access to broadband Internet at low cost. The digital economy accounts for over 30% of GDP. Labor productivity increases by an average of approximately 7.5 %/year. Complete the construction of digital government. Form smart urban chains in key economic regions in the North, South and Central regions. Gradually connect with smart urban networks in the region and the world.

– By 2045, Vietnam will become one of the leading centers of smart manufacturing, services, startups and innovation in Asia with high labor productivity and have the capacity to master and to apply modern technology in all fields of economy, society, environment, national defense and security.

The Resolution sets out specific guidelines and policies on digital economic development: Innovation in thinking, unification of awareness, strengthening the leadership role of the Party, management of the Government, promoting the participation of the Fatherland Front and socio-political organizations, perfecting institutions to facilitate proactive participation in the Fourth Industrial Revolution and the national digital transformation process, policies on developing essential infrastructure, policies on developing and enhancing national innovation capacity, policies on developing human resources, policies on developing priority industries and technologies, policies on international integration, policies on promoting digital transformation in Party, Government, Fatherland Front, and socio-political organizations.

Resolution No. 52-NQ/TW of the Politburo has demonstrated relatively completely and systematically and marked an important development step in the Party’s awareness of digital transformation and digital economic development.

The 13th National Party Congress on digital economic development emphasized: “Promoting national digital transformation, developing the digital economy based on science, technology, innovation, improved productivity, quality, efficiency and competitiveness of the economy” and “Must innovate thinking and action, proactively grasp promptly, effectively exploit opportunities of the Fourth Industrial Revolution associated with the international integration process to restructure the economy, develop the digital economy and society, considering this a decisive factor to improve productivity, quality, efficiency and competitiveness”. It also affirms that “The legal system must promote innovation, digital transformation and develop new products, services and economic models”. In the country’s development goals, related to the digital economy, the 13th National Congress determined that by 2025, the digital economy will reach approximately 20% of GDP, and by 2030, the digital economy will reach approximately 30% of GDP.

The tasks and the solutions for digital economic development set by the 13th Congress include “Building a legal framework and a facilitative environment to promote development, start-ups, innovation, digital transformation, and digital economic development supporting and encouraging the emergence and operation of new fields and new business models”, concurrently, “building and perfecting the legal framework, testing specific mechanisms and policies to promote the digital transformation process, digital economy, and developing new economic models” to “implement national digital transformation, develop digital economy, improve productivity, quality, efficiency, and competitiveness of the economy”, “building a synchronous and modern infrastructure system”, “focusing on developing information and telecommunications infrastructure, creating a national digital transformation platform, gradually developing digital economy and digital society”.

Implementing the Party’s policy, in the period from 2016 to the present, the Government has perfected and promulgated policies and laws to promote digital transformation and develop the digital economy.

Regarding laws, there are a law on Information Technology (amended and supplemented in 2017), law on Cyber ​​Security in 2018, law on Commerce (amended and supplemented in 2019), law on Radio Frequency (amended and supplemented in 2022), law on Science and Technology (amended and supplemented in 2022), and law on Electronic Transactions in 2023, etc.

In addition to the law, the Government’s decrees, decisions, directives, programs, and projects on digital economic development have also been issued. In particular, the Government has issued two important documents on policies to promote Vietnam’s digital economic development, including Decision No. 749/QD-TTg dated June 3, 2020 and Decision No. 411/QD-TTg dated March 31, 2022.

Decision No. 749/QD-TTg dated June 3, 2020 on Approving the “National Digital Transformation Program to 2025, with a vision to 2030”, has identified tasks and solutions for digital economic development. It encourages the promotion of digital economic development with a focus on developing digital technology enterprises, shifting from assembly and processing of information technology to making digital technology products, Industry 4.0, developing digital content, creative industry, platform economy, sharing economy, e-commerce, and smart manufacturing; the promotion of digital transformation in enterprises to improve the competitiveness of enterprises and the whole economy; the development 04 types of digital technology enterprises, shifting from assembly and processing to products “made in Vietnam”, designed in Vietnam and manufactured in Vietnam; the development of digital content products, digital communications, digital advertising; the implementation of the project to support small and medium enterprises, traditional industry enterprises, and manufacturing enterprises to transform for products and services on digital platforms and smart manufacturing; the gradual restructure of enterprises to improve internal capacity of enterprises, and the development of e-commerce.

Decision No. 411/QD-TTg dated March 31, 2022 on Approval of the “National Strategy for Digital Economy and Digital Society Development to 2025, with a Vision to 2030″ sets out the basic goal of developing the digital economy in Vietnam to 2025, 2030 and a vision to 2045 as developing the digital economy to help the citizens become richer, bringing Vietnam beyond the low-middle income level by 2025, reaching the upper-middle income level by 2030 and reaching the high-income level by 2045”.

Results achieved

Over the past 5 years (2019 – 2024) of implementing the Party’s guidelines and the Government’s policies and laws on digital economic development, Vietnam has achieved the positive results:

• Telecommunications and internet businesses in Vietnam have grown remarkably and reached a revenue of 6.1 billion USD, creating more than 851,000 jobs for society.
• E-commerce has grown significantly in terms of revenue and market size, currently at 5.2 billion USD. The trend of mergers and acquisitions among e-commerce businesses in Vietnam has also grown steadily in both value and number of deals. In 2019, Vietnam’s retail market revenue was estimated at 211 billion USD, of which E-commerce revenue reached approximately 10.4 billion USD, equivalent to 4.92% of the country’s retail market share. In 2020, Vietnam’s e-commerce growth rate reached approximately 18% with a scale of about 11.8 billion USD. In a short time, E-commerce in Vietnam has made a strong breakthrough with an average growth rate of 25% – 30%/year, expected to reach 50 billion USD and account for approximately 12% of the domestic retail market by 2025.
• Telecommunications enterprises have invested heavily in developing infrastructure to ensure sustainable development in the context of increasingly intensive international economic integration. 4G mobile networks have been widely deployed with more than 40,000 stations, covering more than 90% of the population. Vietnam has become the 5th country in the world to master 5G technology, produce 5G infrastructure equipment, and produce 5G phones. Big enterprises listed as Vietnam Posts and Telecommunications Group, Military Telecommunications Group, and Mobifone Telecommunications Corporation have invested in upgrading and developing new fiber optic cables and BTS stations to provide high-quality services. In 2020, Vietnam’s ICT industry revenue was estimated at 120 billion USD, of which hardware industry revenue was over 107 billion USD (including FDI enterprises), software industry revenue was over 5 billion USD, and digital content industry revenue was over 900 million USD.

It can be affirmed that the Party’s viewpoints and the Government’s policies and laws on digital economic development are the right direction for Vietnam to continue to promote industrialization, modernization, and economic model transformation. In the current context, for successful digital transformation and digital economic development, it must continue to consider the best pathway to take advantage of opportunities so as to shorten the country’s industrialization and modernization process. Digital economic development must aim to promote restructuring and innovation of the economic growth model, shifting from a growth model that is mainly in breadth and depth to a growth model that is dependent upon the scientific and technological advances, quality of human resources, quality, efficiency and competitiveness of the economy. Furthermore, digital economic development must actively contribute to realizing the goal of the 13th Party Congress to implement the roadmap so that by 2045, Vietnam will become a developed, high-income country according to the international criteria and standards.

The full-text article on Party’s perspectives and the Government’s laws and policies on digital economic development in Vietnam can be accessed HERE.

Author: Dr. Hoang Xuan Son – University of Economics Ho Chi Minh City (UEH).

This article is part of the series spreading research and applied knowledge from UEH with the message “Research Contribution For All”. UEH cordially invites readers to read the next UEH Research Insights newsletter.

News and photos: Author, UEH Department of Communications and Partnerships