By Donna Webster

Vietnam is one of the world’s fastest growing economies and is one of Asia’s most promising business and investment destinations. Now the third-largest consumer market in South-East Asia, Vietnam has consistently achieved annual GDP growth between 5% and 7.5% in the past two decades.

With a young, dynamic and tech-savvy population, Vietnam’s digital economy is evolving rapidly, and there are plenty of opportunities for Australian tech enterprises, innovators and entrepreneurs. 

But this digital transformation is not risk-free, with significant skill gaps and a difficult intellectual property environment, Australian business will need to navigate the commercial and regulatory environments carefully.

On the tailwinds of the China-US trade dispute, Vietnam’s economy has continued to thrive, with real GDP rising 6.7% in the April-June quarter, marking one of the highest growth rates among South-East Asian economies. The latest data from the Foreign Investment Agency (FIA) shows that foreign direct investment in Vietnam in the first five months of the year reached a four-year high of US$16.74 billion. This inflow represents a year-on-year increase of 69.1%.

“On the tailwinds of the China-US trade dispute, Vietnam’s economy has continued to thrive, with real GDP rising 6.7% in the April-June quarter.”

Vietnam is also home to one of the largest young populations in the world – in fact, about 40% of its 97 million inhabitants are under the age of 24, and the average age in the country is just 30.

This young, tech-loving population is helping power Vietnam’s transformation, making it home to one of the most vibrant and evolving start-up scenes in the world. According to Austrade, Vietnam has the third-highest rate of business start-ups in South-East Asia.

These young entrepreneurs, social innovators and business leaders are also playing a role in helping to expand links between Australia and Vietnam, with bilateral trade growing at 12% per year (in the five years to 2017).

Recently, I had the opportunity to meet some of these young leaders in Ho Chi Minh City, during the 2019 Australia-Vietnam Young Leadership Dialogue (AVYLD), supported by Asialink Business and other partners.

I was impressed by the remarkable personal stories behind each of the 20 leaders who represented both Vietnam and Australia. They came from diverse industries and organisations, ranging from the Vietnam Grand Prix Corporation to fintech company Sargon, established property firm Alphanam Real Estate to food rescue group OzHarvest, as well as other social enterprises including cricket farming, agriculture and education.

Drawing on their well-connected networks, particularly in Vietnam, these young entrepreneurs are applying their digital smarts not only for business returns, but to help tackle big-picture social and economic challenges and sustainable development goals.

Vietnamese social enterprise, Imagtor, for example, works to create employment opportunities for people living with disabilities. Imagtor has become one of the leading digital marketing providers for Vietnam’s booming real estate industry, offering innovative solutions such as virtual staging and interactive 3D floorplans. As a social venture, it supports free training (in IT, English and other vocational skills) and has already upskilled 1000 Vietnamese workers who are living with a disability. Its co-founder (and AVYLD speaker), Nguyen Thi Van, was named in March 2019 as one of the nation’s 50 most influential women by Forbes Vietnam.

Riding the digital wave

Vietnam is undergoing massive digital transformation, with technology redefining how business is done across almost all industries and sectors, from e-commerce to artificial intelligence, robotics, the Internet of Things, smart infrastructure systems, cybersecurity, education, ag tech and green energy.

Vietnam’s local start-ups are in good company, with global tech giants Samsung, IBM, Intel, Siemens, Sony, HP and Toshiba also having a significant presence in Vietnam. For example, in 2010, Intel opened its factory in Ho Chi Minh City and within the first year increased its investment from US$300 million to US$1 billion. By 2015, it had moved 80% of its manufacturing of computer processing units to Vietnam.

But Vietnam will have to make an enormous transition as it moves into the next wave of the digital economy. A key challenge will be to lift labour productivity while maintaining high employment levels, social inclusion and equality. Ensuring policy and regulatory settings support a vibrant digital economy will also be important, especially to support the free flow of data vital for Vietnam’s global integration, while also balancing security and cyber risks.

During AVYLD, I led a session on the key challenges for Australia and Vietnam post 2030, featuring a discussion with the Australian consul-general to Ho Chi Minh City, Julianne Cowley, and Lucy Cameron from AustraIia’s CSIRO Data61 data research innovation hub.

Social innovation and large-scale upskilling of the local workforce will be required to spread the benefits of Vietnam’s rapid economic growth and help mitigate the risk of job loss to automation.

CSIRO’s Data61 in Australia and Vietnam's Ministry for Science and Technology are undertaking a major joint study exploring how different rates of digital transformation could create a number of alternative futures for Vietnam's digital economy.

The study analyses the differing impacts on Vietnam’s key industrial sectors of manufacturing and agriculture, which collectively account for more than half of the country’s employment.

Partnering on Vietnam’s workforce of the future

CSIRO predicts that by 2020, Vietnam will be short 500,000 data scientists and up to 1 million ICT workers. This pressing need to upskill the local workforce has seen big opportunities for online education in Vietnam. Topica Edtech Group, for example, was the first in the world to launch an augmented reality app for speech tutoring and its Edumall is the largest platform of short courses in Vietnam and Thailand, offering video learning content on everything from using Excel to learning guitar. Topica founder Bobby Liu predicts Vietnam’s ed tech sector could be worth US$250 billion by 2020.

Education, more broadly, also remains one of the greatest opportunities for Australian providers, with Australian institutions attracting 23,000 enrolments from Vietnamese students in 2018.

Victoria’s RMIT has become a leading university in South-East Asia, through its well established RMIT University Vietnam campuses in Hanoi and Ho Chi Minh City. Swinburne University has announced a partnership with Hanoi’s FPT University to provide courses in information and communication technology, innovation and entrepreneurship.

These are good examples of the exciting new opportunities emerging for Australian universities to provide practical skills-based training or deliver online learning to Vietnam’s workforce of the future.

Careful navigation

Over the past 50 years, Vietnam has moved from being one of the poorest countries in the region to a development success. Success markers are well documented, but at the same time, challenges do lie ahead.

With digital clearly shaping the next wave of development, Australian businesses looking to be part of Vietnam’s growth will need to not only understand the opportunities, but also navigate the risks. For example, intellectual property (IP) protection remains precarious to date. While the illegal nature of counterfeiting, particularly of food products and medicines, is widely known in Vietnam, it is not well known that other types of IP infringement are also crimes.

Proper due diligence is required. International businesses looking to tap into Vietnam’s skilled, lower-cost tech workforce will need a deep understanding of the current business and regulatory environment, including how digital technologies will shape the future.

Arming yourself with trusted local partners, networks, market insights and a strong understanding of local legal requirements are all essential.

And while AI, robotics and the internet of things may be transforming Vietnam’s workplace and digital economy, building the soft skills and cultural intelligence needed to collaborate will remain critical when partnering with Vietnam on its digital rise.

Donna Webster is the director of capability development at Asialink Business. She supports Australian enterprises on their journeys to unlock new growth in Asian markets.

Donna Webster is the director of capability development at Asialink Business. She supports Australian enterprises on their journeys to unlock new growth in Asian markets.

Read more: