Mr. Cao Quoc Hung, Vice Minister of Industry and Trade,
Leaders, representatives of government agencies, industries,
Ladies and gentlemen,
I am very pleased to welcome you all to the this very important workshop which is jointly organized by the World Bank and the Ministry of Industry and Trade on one of the most important topics being discussed globally today: How to accelerate development of the digital economy and maximize its benefits.
Digital development has been transforming our economies globally, at a rapid pace. In 2016, the global Digital Economy was worth US$ 11.5 trillion, accounting for about 15.5% of the World’s GDP. This share is expected to reach 25% in less than a decade. Today, six (6) of the World’s top ten (10) companies are technology companies with Apple recently becoming the World’s first company to be the valued over US$ 1 trillion.
In terms of concentration of digital business platform, according to UNCTAD (2017), Asia hosts 42 entities and is ranked second only to North American (hosting 63 entities). Famous brands such as Alibaba, JD.COM, Gojek, Grab, Lazada and Softbank were all started here in Asia.
While operating in diverse industries, these companies have one thing in common – they all leverage disruptive and transformative technologies to produce and deliver products and services more efficiently. Indeed, disruptive technology is changing the ways businesses operate in three fronts; (i) collect, store, access, analyze, access data and present data (IoT, UAVs, Big Data); (ii) improve production techniques to increase efficiency, affordability and speed (3D Printing, Robotics); and (iii) interact with the world and deliver/receive services (e-government, digital finance, biometrics).
Disruptive technologies are here, in Vietnam. In the short time since I arrived in Hanoi, I have seen a strong growth of a digital economy with initial focus on services, for example:
§ The fast growing digital-technology-based ride hailing industry;
§ The growth of e-commerce platforms that compete directly with traditional retail networks;
§ The growth of digital accommodation platforms which are increasingly playing a role in the tourism sector by competing with traditional hotels in large cities such as Hanoi, Ho Chi Minh City, Da Nang and Hoi An; and
§ The rising role of Fintech and Payment Solution companies.
This vibrant digital economy holds the promise of more MSME’s being able to participate in the Vietnamese economy. It is because e-commerce platforms expose MSMEs to larger markets (both domestic and foreign) and shortens the distance to markets, especially for firms located further from the main urban cities of Ho Chi Minh City, Hanoi, Da Nang, Hai Phong. The sharing economy means that the average Vietnamese can participate more easily in the digital economy through using their homes to make an extra income through digital-accommodation platforms or using their motorcycles and cars on digital-technology-based ride hailing platforms.
While technology is potentially transformative, what are the three key enabling factors? They are policies, policies and policies! Indeed, by establishing a conducive regulatory environment, the Government can effectively facilitate and ensure this promise turns into reality. I am very encouraged by an increased focus of the Vietnamese government’s policies on disruptive technology and the digital economy within the context of Industry 4.0.
The World Bank will shortly publish a new report on the “state of play” and foundations for the digital economy in Southeast Asia. The repot aims to build an understanding of where countries are performing well and where they are lagging. In doing so, it focuses on the role of policy and regulation in either facilitating or impeding the development of a conducive enabling environment for the digital economy. This report also includes some benchmarking of Vietnam vis-a-vis other countries in this region which will be discussed in more detail by my team in the next session. Let me highlight five key findings of this important report.
First, digital payments are an essential part of a digital economy. The latest World Bank Global Findex data shows that only 19 percent of financial account holders in the Southeast Asia region access their accounts using a mobile phone or the Internet. This is well below the average of the world’s middle-income countries. Governments can help by putting the appropriate regulatory infrastructure in place and also by using digital payments in their interaction with citizens – such as paying for government services or receiving pensions. Likewise, government-run digital ID schemes can help citizens gain account access more easily.
Second, policies that promote trust are essential for growing participation in the digital economy. These cover a range of areas from data privacy, to cybersecurity, to consumer protection. Such policies also need to be better coordinated regionally, so that individuals and businesses alike know what regulations apply when their data moves across borders.
Third, there is a need to strengthen the population’s digital skills, not just to boost the growth of the digital economy, but also to ensure that its opportunities and benefits reach everyone. Although the region already has good literacy and numeracy foundations, education systems need to be more adaptable in light of changing market demands. These range from basic computer usage to advanced skills like coding and data analytics, as well as “soft skills” like collaboration and communication. Achieving this requires a focus on skills for life.
Four, improving logistics, especially for e-commerce is important. Making products reach their destinations is often expensive and unreliable. The challenging geography of many Southeast Asian countries is an important factor, but regulation also plays a role. For example, the World Bank Logistics Performance Index shows that customs is the weakest area of performance across the region’s logistics environment.
Finally, governments need to lead by example and become more digital themselves. This means not only streamlining systems on an integrated “whole of government” basis, but also offering digital services platforms that support businesses and reduce transaction times and costs. Online licensing and permit approvals are excellent examples of such digital services. Initiatives such as national digital ID can trigger direct benefits in other areas of the digital economy – such as the previously mentioned digital payments example. The World Bank is already supporting the Government of Vietnam in a number of areas including support to the State Bank of Vietnam on Digital Payments, support in designing comprehensive digital Governance reforms (through the Office of the Government and related agencies) to leverage digital technologies for administrative reforms, enable digital service delivery and administrative efficiency through better information sharing and utilization across government agencies
Key to all of the above is the need to have a coordinated and concerted effort among government agencies towards promoting a Digital Economy. The digital economy is cross sectoral by nature and therefore involves diverse sectors such as finance, manufacturing, health, education, transport, logistics, tourism, hospitality housing and food among others. Thus, in order to be competitive, Vietnam, needs to put into place the appropriate enabling environment that encourages innovation and competitiveness while also protecting the consumer through better regulation and coordination between government agencies.
All of these topics, especially in the context of Vietnam, will be explored and discussed in more detail in the upcoming sessions, and we look forward to a lively and fruitful discussion today.
I would like to thank the Ministry of Industry and Trade, and Vice Minister Hung personally for the strong leadership. The World Bank stands ready to support your ministry and other government agencies to advance the digital economy agenda for the prosperity of Vietnam.
Thank you, xin cảm ơn!