Vietnam is fastest growing digital economy in Southeast Asia: e-Conomy SEA report

Vietnam is the fastest-growing digital economy in Southeast Asia in 2022, with projected gross merchandise value to grow by 28% to US$23 billion, thanks to the growing e-commerce sector.

Vietnam’s digital economy is growing fast among the Southeast Asian countries. Photo: kinhtedothi.vn

With the theme "Through the waves, towards a sea of opportunity," e-Conomy SEA 2022 report highlighted Vietnam's digital economy and five other countries, such as Indonesia, Malaysia, the Philippines, Singapore, and Thailand.

Stephanie Davis, Vice President of Google Southeast Asia, said: "Despite the current economic headwinds, the country's GMV is on course to reach approximately $50 billion in 2025."

In the post-pandemic period, Vietnam is among the countries on the fast track to resuming its back to normal activities. However, some consumer habits and trends built and accelerated during the pandemic have remained and continued to grow. 

The report shows that e-commerce is the primary driver for growth in Vietnam's digital economy and that 90% of digital consumers intend to maintain or even increase their use of e-commerce platforms in the next 12 months. Most consumers plan to keep the same usage for food delivery (60%) and groceries (54%).

Urban digital users are the heaviest adopters of digital services in Vietnam, with e-commerce, food, and groceries having the highest adoption rates - 96%, 85%, and 85%, respectively.  

On the other hand, the Vietnamese consume media content online less frequently than the regional average. The consumption of video, music, and games is between 10 and 12% below the average. Around 23% of people said they watch videos on demand at least once a week, followed by 19% for games and on demand and 16% for music.

"This also shows that Vietnam still has great potential for substantial growth in the long run," the report noted. 

The report also mentioned key findings, including the country's strong growth of digital financial services (DFS). Digital Lending grew the fastest at 114%. Compounded annual growth rate (CAGR) and Investment is projected to take the biggest leap by 2025 with a projected +106% CAGR.  

Moreover, Vietnam tops venture capital (VC)'s long-term growth market, of which 83% of VCs expect deal activity in the country to grow in the long term, the highest in SEA.

Willy Chang, an Associate Partner at Bain & Company, said Vietnam's digital economy recovered strongly after a delayed impact from Covid-19 in 2021. 

"We expect continued strong growth momentum over the next decade given its high-quality homegrown tech talent pool, significant efforts by the government to accelerate digital transformation across sectors, and investor focus in the country," he said

Echoing Chang, Davis said fundamentals for Vietnam's digital future remain solid, thanks to its high-quality homegrown tech workforce and growing adoption of digital services across urban and suburban areas. 

"The growing awareness around environmental, social, and governance considerations will help Vietnam and Southeast Asia build a sustainable growth plan for the digital decade," she said.

The report underlined SEA's digital economy is expected to grow twice as fast as GDP in most Southeast Asian countries and could reach up to $1 trillion by 2030 if the full potential can be unlocked. Fundamentals of the digital economy remain solid, and there's substantial headroom for growth in developing sectors and unpenetrated markets. 

Progress in digital economy growth enablers such as payments, funding, logistics, internet access, and consumer trust has resulted in unprecedented digital economy growth. 

"To continue scaling sustainably, SEA digital economy needs to drive the progress of a new set of growth enablers. Accelerating on the path to profitability and achieving digital inclusion of those living in suburban areas, coupled with progress on ESG factors, will be key to progress in the digital decade," the report noted. 

Hanoi's digital economy strives to account for 40 percent of GRDP

Local consumers are shopping at Hanoi's Vincom Center. Photo: Masan Group

Since Vietnam's capital city wants to contribute to making Vietnam a future digital nation, Hanoi aims to focus on developing the digital economy and society and creating digital enterprises capable of competing globally simultaneously.

By 2030, Hanoi set the target for the digital economy to make up 30% of the gross regional domestic product (GRDP), according to the Digital transformation of Hanoi to 2025 and the vision to 2030 program.

The city also targets to stay in the top three provinces/cities in digitalization progress by 2030 and is among the leading cities in Southeast Asia in data science and artificial intelligence (AI). 

By 2025, Hanoi will complete the digital infrastructure as a platform for developing a digital government and economy.

By 2045, the capital is set to become a center for startups and innovation in Asia with high productivity and modern technologies applied in socio-economy, environment, defense, and security.

To achieve these targets, Hanoi identifies priorities, including a change in mindset of state management for a more active role of socio-political organizations in the city, developing essential infrastructure and priority hi-tech sectors, and accelerating global integration and the training of high-quality human resources.