MACROECONOMICS’s ASSASSIGNMENT DIGITAL ECONOMY INTERNATIONAL ECONOMIC HIGH QUALITY PROGRAM

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMIC INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAM =============== MACROECONOMICS’s ASSASSIGNMENT: DIGITAL ECONOMY INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAM Group number: 09 Lecturer: Ph D Hoang Xuan Binh Hanoi, 05-2021 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 No STUDENT ID FULL NAME EMAIL CLASS 2013450047 Phạm Hồng Phúc phucph19052002@gmail.com Anh 02 2013450057 Nguyễn Thị Hương Trà mikynguyen02@gmail.com Anh 03 2011450204 Trần Công Minh tcminh.forworkonly@gmail.com Anh 04 2013450069 Ngô Quang Vinh quangvinhngo0509@gmail.com Anh 01 2012450023 Phạm Khánh Linh linhpham150402@gmail.com Anh 02 2013450042 Trần Nhật Minh nhatminhtranworking@gmail.com Anh 02 2013450011 Phạm Tiến Đạt datpt.ftuforum@gmail.com Anh 03 2013450058 Vũ Thanh Trà vuthanhtra02@gmail.com Anh 01 GROUP GROUP MEMBERS INFORMATION: (8 MEMBERS) ⮚ The presenters : Phạm Hồng Phúc, Nguyễn Thị Hương Trà, Trần Công Minh TABLE OF CONTENTS K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 PART A: DIGITAL ECONOMY AROUND THE WORLD I WHAT IS DIGITAL ECONOMY? II THE REAL STATE OF AFFAIRS OF DIGITAL ECONOMY IN THE WORLD III EFFECTS OF DIGITAL ECONOMY AROUND THE WORLD PART B: DIGITAL ECONOMY IN VIETNAM 12 I THE REALITY OF DIGITAL ECONOMY IN VIETNAM 12 II CAUSES AND EFFECTS OF DIGITAL ECONOMY IN VIETNAM 16 III VIETNAM’S CURRENT POLICIES TO DEAL WITH DIGITAL ECONOMY PART C: VIETNAM DIGITAL ECONOMY FUTURE SCENARIOS 20 30 I PREDICTIONS 30 II SUGGESTIONS 33 PART D: REFERENCES 37 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 PART A: I DIGITAL ECONOMY AROUND THE WORLD WHAT IS DIGITAL ECONOMY? ❖ Digital economy is one collective term for all economic transactions that occur on the internet It is also known as the Web Economy or the Internet Economy With the advent of technology and the process of globalization, the digital and traditional economies are merging into one ❖ Digital economy is defined as an economy that focuses on digital technologies, i.e it is based on digital and computing technologies It essentially covers all business, economic, social, cultural etc activities that are supported by the web and other digital communication technologies ❖ Digital economy refers to activities and transactions driven by the public and private sectors as well as the citizens to produce, adopt and innovate digital technologies and services in relation to socio-economic functions for enhanced wealth creation, productivity and quality of life II THE REAL STATE OF AFFAIRS OF DIGITAL ECONOMY IN THE WORLD Overview The world's digital economy is worth about $3 trillion, accounting for about 3.8% of the global economy's value In ASEAN countries, this value is about 150 billion USD, equivalent to 6% of the gross domestic product (GDP) of the member countries Despite the challenging economic environment, Southeast Asia's digital sectors continue to grow strongly, reaching $100 billion in 2020 and on track to surpass $300 billion by 2025 (Pham Viet Dung, 2020) The strong development of the digital economy is clearly reflected in the change in the dominant position of companies globally K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 10 largest companies in the world in 2018 and 2008 2018 2008 Ranke d Compan y Establishe d Billio n USD Ranke d Company Apple 1976 890 PetroChina 1999 728 Google 1998 768 Exxon 1870 492 Microsoft 1975 680 General 1892 358 Amazon 1994 592 China Mobile 1997 344 Facebook 2004 545 ICBC (China) 1984 336 Tencent 1998 526 Gazprom 1989 332 Berkshire 1955 496 Microsoft 1975 313 Alibaba 1999 488 Royal Dutch 1907 266 J&J 1886 380 Sinopec 2000 257 10 JP Morgan 1871 375 10 AT&T 1885 238 Establishe d Billion USD (Pham Anh Tuan, 2019) K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 Vietnam's digital economy has reached billion USD in 2015, increased to billion USD in 2018 and reached a total value of 14 billion USD in 2020 The Southeast Asia (SEA) 2020 Digital Economy Report published by Google, Temasek and Bain & Company on November 10 said that the e-commerce industry in Vietnam grew by 46% and Vietnam is the country with highest percentage of new Internet users in Southeast Asia Digital economy’s trend (McK insey & Company) How Digital Economy control our life K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 (McKinsey & Company) Size of the Digital Economy (McKinsey & Company) K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 Factors affect the digital economy ❖ Emerging digital technologies: Emerging digital technologies such as blockchain, artificial intelligence, big data analytics and the Internet of Things can make a big leap in infrastructure upgrades industrial layer, simplifying logistics and supply chains, and help businesses operate more efficiently (Cameron A, 2019) ❖ Higher demand for cybersecurity and personal security: The number of businesses and consumers participating in the digital economy increase leads to a higher demand for cybersecurity and personal security, especially when critical areas such as financial systems and government are increasingly digitized ❖ Modern digital infrastructure: A developed digital economy requires quality digital and energy infrastructure – especially for energy-intensive technologies like the Internet of Things or Artificial Intelligence Telecommunications network also needs to be set up to ensure broadband Internet is available can process large amounts of digital data for transportation launch new applications ❖ Demand for Smart Cities: A country with rapid urbanization and population aging, smart cities will contribute to the management and use of resources more efficiently, while solving the problem of waste, pollution, pollution, and traffic congestion ❖ The rise in digital skills, services, and businesses Digital and the freelance economy: Demand for the service industry and digital products and services increase, which means investing more in higher education, digital literacy, start-up skills and develop a bright innovation ecosystem create Vietnam The decreasing trend of jobs with safe, fixed, repetitive; increasing demand for the basis of labor and products to generate income and services move more creative industries in the labor market (Cameron A, 2019) ❖ Changing consumer behavior: Consumer behavior is changing with the rise of the middle classes Asia, towards using products and services with high value from the digital economy At the same time, consumers also increasingly adapting to the digital economy, which K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 increases the influence of groups, celebrities/ influencers in the digital economy – on supplier behavior and consumers III EFFECTS OF DIGITAL ECONOMY AROUND THE WORLD Advantages of the digital economy ❖ Saves time Before, if you needed office supplies, you would have to make a journey into town and purchase Now, you can make an order over the internet and it will arrive the next day ❖ Reduced costs for business Firms can save on renting expensive buildings by running most of their business through the internet A digital economy enables firms to cut out an aspect of the retail chain and send personalized goods directly from factory or warehouse to people’s goods, rather than through shops This enables lower costs and lower prices (Tejvan Pettinger, 2020) ❖ Lower barriers to entry In some markets, aspects of the digital economy make it easier for new firms to enter If an entrepreneur has an innovative idea that catches on, they can create a new product which challenges traditional firms The digital economy has brought many new services which were inconceivable before, such as online home deliveries for grocery to dating apps ❖ Big data usage The mass production of data can help inform governments and charities about what is happening in the economy For example, in tracking of COVID-19 spread, the use of an app on mobile phones may indicate where local hotspots emerge (Tejvan Pettinger, 2020) ❖ Benefits for developing world The digital economy is opening up opportunities for the developing world For example, computer programmers in India can easily underbid western counterparts, leading to new job opportunities and higher income in India (Tejvan Pettinger, 2020) ❖ Enables people to work from home The digital economy has been a huge asset during the COVID lockdown Without digital technologies, the decline in economic activity would have been even greater The digital economy gives greater scope for people working from home and having greater flexibility in their hours (which may suit parents with children) Working from home can reduce contact and spread of a virus It can also help reduce traffic congestion and pollution K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 Problems of digital economy ❖ Monopoly power of tech giants Despite the potential for new start-ups, many aspects of the digital economy have become dominated by firms with monopoly power For example, Amazon has cornered the market for online sales, meaning many firms have to go through the Amazon market place to reach consumers who go to Amazon out of habit Similarly, Google and Facebook have all developed very strong brand loyalty and market share in their respective markets This has made a few tech giants very profitable With monopoly power, Google are able to charge high prices for online advertising and Amazon have the market power to undercut traditional booksellers (Tejvan Pettinger, 2020) ❖ Less community A traditional bookshop can act as a focal point for local community It may holds events, book signings and individuals may enjoy the experience of browsing physical books With the digital alternative undercutting traditional firms, old fashioned bookshops are forced out of business Although books may be cheaper, we have lost physical interaction between sellers and buyers which was an important aspect of the buying experience ❖ Addictive nature of technology Whilst, in theory, the internet can save time, e.g finding bus times is much easier with internet than paper copies, this time saved may be outweighed by the time we waste checking Facebook, twitter, internet searches Also, the sheer volume of information can cause us to drown in information and lose sight of what we actually need More choices not necessarily lead to better outcomes When faced with a bewildering range of outcomes, we can take time to decide and it becomes easier to procrastinate ❖ Privacy issues Harvesting and using data has become big business Facebook collects a large range of data on its users and this has been bought by political interests who can give very targeted political ads to its users ❖ Bypassing of labour laws The digital economy has created a trend towards using self-employed freelancers, who are not protected by the same labour laws For example, delivery drivers for Deliveroo and Uber drivers have often been employed on zero-hour contracts This enables firms to cut labour costs, be more flexible, but it can leave workers without sick pay or employment protections ❖ Social media has led to more graphic content The anonymous and distant nature of social media has exacerbated trends to personal attacks and the posting of conspiracy theories or posting of violent/sexual images The digital economy has enabled the proliferation of content that is damaging to human well-being 10 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 and across sectors Further modernization of the regulatory framework for logistics also enables faster, cheaper and more reliable shipping services The Government should invest heavily to prepare citizens in various stages of their careers to adapt to new challenges of the digital age This is where the private sector should be engaged closely given the rapid pace of change for relevant skillsets While Vietnam already has developed a master plan for the digital economy, it should consider broadening the scope and coverage to go beyond the development of ecommerce sector towards the whole economy There is also a need to translate the plan into detailed, time-bound action plans, with adequate oversight over implementation and effective intersectoral coordination The Government can lead by example by becoming more digital itself Vietnam is on the right track by launching numerous initiatives towards building a digital government The rollout of an E-Cabinet to streamline government business processes and a national E-Services portal for public service delivery in 2019 are encouraging moves in this direction Vietnam is also planning for the introduction of digital ID At this stage, the proposed digital ID scheme is to enable electronic transactions with government agencies only But in the longer term, the national digital ID system should be expanded to facilitate greater financial inclusion (enabling people to open bank accounts with much easier know-yourcustomer requirements), and more efficient delivery of social services through effective targeting and information management Digital transformation holds tremendous potential for Vietnam to achieve not only sustained but also inclusive economic growth To reap the full benefits while managing the associated risks and vulnerabilities, Vietnam should prioritize investment and regulatory reforms to reinforce these six building blocks The World Bank has been a partner on Vietnam journey to reduce poverty and build infrastructure and we are ready to support this exciting new phase of growth and ensure that new achievements in the digital economy won’t leave anyone behind (Ousmane Dione, 2020) How Vietnam government develop digital economy 2020-2021 “Resources are gathered to develop a number of shared technological platforms and national key database systems,” reads the conclusion “It is necessary to boost the formulation of policy frameworks and complete these for new business models and for digital transformation.” 24 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 Meanwhile, Prime Minister Nguyen Xuan Phuc last week approved a national programme on digital transformation until 2025, with a vision to 2030 Together with the Politburo’s hallmark Resolution No.52-NQ/TW released last September on a number of guidelines and policies to actively participate in the Fourth Industrial Revolution, and Conclusion 77, this programme is a big addition to Vietnam’s effort to showcase its strong determination to become a digital economy, in which new products, services, solutions, and business models are accepted in tandem with the country’s gradual completion of legal frameworks (Bui Thanh Tuan, 2020) “The government will create new policies to stand ready to accept and pilot new technological solutions controllably There must be a culture of accepting and piloting new things,” stated PM Phuc “Vietnam’s technological businesses are the key developers of infrastructure, platforms, services, and solutions of the digital transformation They will have to master core technology and then expand their presence to the global markets.” (Ousmane Dione, 2020) Vietnamese enterprises are to be facilitated to co-operate with global technological giants to research, develop, transfer, and apply new technologies and models in Vietnam In its digital economy development programme, the government will aim to develop four types of digital businesses, namely major trade and service groups focusing on digital technology investment and core technologies, IT firms focusing on research and development (R&D) and production, and digital startups that create innovative products Notably, Vietnam plans to shift from assembly and processing towards creating ‘Make in Vietnam’ products, meaning creating, designing, and producing products in Vietnam Moreover, the country will “research, develop, and master all technologies, and produce digital equipment such as smartphones, smart TVs, tablets, and Internet-of-Things equipment, while meeting all technical standards on ensuring cybersecurity.” (Ousmane Dione, 2020) Jeff Paine, managing director of the Asia Internet Coalition (AIC), told VIR that Vietnam is full of potential to become a digital economy In recent years, the country has taken steps to attract overseas Vietnamese to come back home This has enabled a burgeoning entrepreneurial scene, where startups and small businesses that leverage technologies have emerged “With the ongoing trade tensions between the US and China, Vietnam also is well poised to meet the demand of companies shifting their production capacity out of China into Southeast Asian economies like Vietnam,” Paine said “The opportunities from these developments are enormous, as the availability of local tech talents in a country with almost 100 million people will create a foundation upon which global tech companies can 25 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 invest and develop innovative products and services for both local and regional markets Grab, which opened an R&D centre in Ho Chi Minh City in 2017, is an example.” (Ousmane Dione, 2020) According to Dang Hoang Hai, general director of the Ministry of Industry and Trade’s Department of E-commerce and Digital Economy, currently in Vietnam, one of the firm foundations for developing a digital economy is the boom of e-commerce “Success in e-commerce development will also help Vietnam soon reach its goals and successfully develop its own digital economy,” Hai said He estimated that currently there are about 24,250 websites with e-commerce applications in Vietnam, 143.3 million mobile phone subscribers, and 62 million social network users and internet users “All these stats show great potential for Vietnam to develop its e-commerce industry, which is now considered the biggest highlight in Vietnam’s drive to develop its digital economy,” Hai said Vietnam’s open policies have enabled it to attract leading global technology companies who have chosen the country as a place to build major manufacturing facilities that supply equipment and products to the world, creating more jobs and developing human capital “Today, we are seeing a shift higher up the technology value chain, to software development and digital application-based services These foreign investments are critical to Vietnam, especially for transfer of knowledge and international best practices, which will support the development of a local ICT industry that is globally competitive,” Paine said According to financial and accounting consultancy firm Deloitte, amidst the proliferation of physical channels, digital platforms are also emerging in the retail market, which is part of a digital economy, with players such as Adayroi, Lazada, Shopee, and Tiki leading the pack The growth potential of Vietnam’s digital retail market has also captured the attention of several e-commerce giants, with Amazon launching an initiative together with the Vietnam e-Commerce Association to provide digital services to a group of 140 local businesses Targets for Vietnam’s digital economy over the next decade Basic targets until 2025 ❖ Vietnam will be among the 70 nations taking the lead in e-government in the United Nations Department of Economic and Social Affairs’ E-Government Development Index (EGDI); 26 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 ❖ ❖ ❖ ❖ ❖ ❖ ❖ ❖ ❖ ❖ ❖ ❖ The digital economy will account for 20 per cent of GDP; The ratio of the digital economy in each industry will reach at least 10 per cent; Annual labour productivity will increase at least per cent; Vietnam will be among the 50 nations taking the lead in global competition; Vietnam will be among the 35 nations taking the lead in innovation Basic targets until 2030 Vietnam will be among the 50 nations taking the lead in e-government in EGDI; The digital economy will account for 30 per cent of GDP; The ratio of the digital economy in each industry will reach at least 20 per cent; Annual labour productivity will increase at least per cent; Vietnam will be among the 30 nations taking the lead in global competition; Vietnam will be among the 30 nations taking the lead in innovation (National programme on digital transformation until 2025, with a vision to 2030) In another case, founded in 2010 as a web-based book retail business, Tiki has since then expanded its offerings to a wider range of products, including home appliances, electronics products, and healthcare products In March 2017, Tiki announced that it would be transforming its business model from a business-to-customer platform to a business-to-business-to-consumer platform This strategic shift appeared to be wellreceived by investors, following a $50 million investment from JD.com at the end of 2017 and another $10 million from STIC Investments in early 2018 (Ousmane Dione, 2020) “Vietnam has become an attractive spot for e-commerce development, with many types of firms,” said Tran Hai Linh, CEO of Sendo Technology, which has over 10,000 buyers nationwide “E-commerce development is laying a firm groundwork for Vietnam to successfully develop its digital economy.” According to the Vietnamese Ministry of Planning and Investment, one of the key factors for the successful construction of a digital economy and the successful implementation of Industry 4.0 is that the government will issue special incentives for foreign firms to establish R&D centres in Vietnam Disadvantages First of all, the legal and institutional environment for digital economy development in our country is weak, lacking coherence, comprehensiveness, transparency, and constructiveness Several laws are unable to keep up with the rapid transformation of business models in the digital economy Due to the fast-moving development of science and technology, digital economy, new business methods, and innovative ideas, the state management agencies have been quite confused in managing digital business activities 27 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 => For example, there is the issue of managing and collecting taxes from online commerce activities, especially business through social networks and cross-border services; ensuring the rights of workers and consumers through the internet; and handling and resolving disputes and conflicts over activities as well as interests of entities participating in business, commercial and civil activities in a digital environment Just like in the traditional business environment, if we not have a good legal environment to resolve disputes and conflicts, then digital businesses will move to a more secure place Besides, if the management policy is too tight, foreign enterprises with strong financial power, the ability to business across borders, and un-governed by Vietnam’s policies, can create unequal competition with domestic enterprises (Ousmane Dione, 2020) Second, human resources have not met the requirements of the digital economy Human resources, especially information technology personnel – the most important factor in the competition and development of the digital economy – are few in quantity and not yet guaranteed in quality Vietnam is in the shortage of high-quality labor force, especially in the fields of information technology, high-quality communication, and new technology such as artificial intelligence (AI) Vietnam’s education has not kept up with the rapid development trend of the digital economy and the creative economy of the Industrial Revolution 4.0 This issue, if not properly focused in the coming time, will be a great obstacle for the development of the digital economy in the country Additionally, in the next 15 years, about 50% of jobs in developed countries is projected to be replaced by automation processes; this rate is higher than in developing countries such as Vietnam because the labor force’s added value is low compared to the world average (Ousmane Dione, 2020) Therefore, the demand for the training and educating of human resources to meet the requirements of the digital economy has become urgent Third, the telecommunications infrastructure is below the requirements In a digital economy, data is a resource From data, digitalized models will create optimal personalized services and effectively utilize idle social resources However, the data system in Vietnam is still scattered, unable to share and interconnect Therefore, Vietnam faces a big challenge in building a common national database system Currently a number of ministries, departments and agencies have built their own databases, but the ability to connect them is still limited Vietnam currently has only dedicated data centers for businesses, far less than neighboring countries like Thailand, Singapore, and Indonesia This is an important bottleneck to solve since having a good source of input data is a basic foundation to create advantages for domestic technology enterprises, helping them 28 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 to solve the problem of how Vietnam can compete fairly with multinational public services and technology across the world Fourth, the assurance of network security, confidentiality, and information security in our country is still at risk The digital economy is based on information technology While the internet poses a great risk for information security, finance, and data privacy of digital economic stakeholders, Vietnam is one of the countries with the most cyberattacks and is also vulnerable to cyber-attacks According to the Vietnam Cybersecurity Emergency Response Teams (VNCERT), there were a total of 10,000 cyber-attacks on Vietnam’s internet in 2017, causing a loss of 12,300 billion VND According to research statistics from Kaspersky Security, Vietnam was in the top most cyber hacked countries in the world in 2018 (Ousmane Dione, 2020) This shows a huge vulnerability for Vietnam to ensure network and information security This problem will hinder the goal of making the digital economy one of the main pillars of our economy In particular, in an increasingly connected world, as digital technology becomes more common, preventing and resolving cyber-attacks becomes an urgent issue because it is not only a matter of security and safety in the economy and information security of individuals and businesses, but also the matter of national security and interests Currently, many foreign businesses are already operating R&D centres in the country, such as Singapore’s Grab, South Korea’s Samsung, Sweden’s ABB, and Germany’s Bosch The US telecommunications giant Qualcomm is also considering founding such a centre in Vietnam 29 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 PART C: I VIETNAM DIGITAL ECONOMY FUTURE SCENARIOS PREDICTIONS Big question: Vietnam’s economy is changing dramatically through the application of new digital technologies, so how can we foresee how it will turn out to be? A megatrend is a deep-set and gradual pattern of change building with increasing momentum to change the economy Megatrends occur at the intersection of multiple trends more specific to a time and place There are megatrends that are expected to drive the development of Vietnam’s future digital economy, leading to the four potential future scenarios described in this report: ❖ ❖ ❖ ❖ ❖ ❖ Emerging digital technologies Internationalization Increasing Need for Cybersecurity and Privacy Modern Digital Infrastructure The Push To Smart Cities Rise Of Digital Skills, Services, Gigs And The Entrepreneur 30 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 ❖ Changing Consumer Behaviors – Digital Tribes, Influencers, Higher Value Consumption (Cameron A, 2019) From these megatrends, research has shown that there are four future scenarios for Vietnam’s digital economy in 2045 These will be determined by a range of external and internal factors, and have been created based along two axes:• whether or not Vietnam is a net buyer or seller of digital products and services• level of adaptation to new digital products and services across government, the community and industry SCENARI HERITAGE O TRANSFORME DIGITAL D EXPORTER DIGITAL CONSUMER Descriptio n High levels of digital transformation across all industries and government services Growth in exports of ICT products and services Broad industrial transformation across Vietnamese industry, but ICT industry has struggled and ICT exports are not a significant component of Vietnam’s exports Low levels of digital transformation and small ICT industry Slow industrial transformation but fast growing pockets of ICT industry Overseas companies use Vietnam ICT workers due to their lowcost labour 31 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 Events to make this scenario occur Economic crisis – internal, regional or global Low investment in digital skills and infrastructure – both energy and telecommunicatio ns Increasing cyber attacks and privacy breaches leading to social distrust of the digital economy Benefits Low investment and initial debt accumulation Some people continue to lead a ‘low tech’ and ‘back to basics’ lifestyle Stable economic conditions – internal and external to Vietnam Low or fluctuating national growth due to varying economic conditions High levels of investment in skills, infrastructure and industrial transformation Limited and targeted investment in skills and infrastructure by government and/or industry Broad transformation policies and regulatory reform Transformation to a more service-based economy Increased productivity Relatively inclusive growth Stable economic conditions Broad investment in digital transformation across industry Growth and investment in energy and telecommunicatio ns infrastructure Importation of most digital products and servicers Greater Take-up of the focus and use of global investment in labour market non-digital platforms to sectors such as sell ICT goods mining and and services agriculture Lower investment requirements than the Transformed Scenario Exports increase in ICT-related sectors Inclusive growth and improvements in services Increased productivity Leverages Vietnam’s traditional market strengths – such as agriculture, mining and tourism 32 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 Transitioning slowly to a knowledgebased economy Primary risks Low productivity leading to the loss of economic competitiveness, and increased relative poverty across the population Inequality in a Cybersecurity and the threat of two-speed economy nation-wide cyber attacks Cybersecurity with little internal capacity to build secure systems Over-borrowing to pay for supporting infrastructure and training leading to a large national debt Labour productivity is still low across most of Vietnam and most industries lose competitivene ss Lack of adequate human resources to leverage the full impact of digitalisation in most sectors Vietnam remains in the middle income trap Reliance on external companies to provide ICT products and services – allowing greater foreign influence in labour and product markets Transition issues related to jobs displaced by automation Inequality Over borrowing for infrastructure and industrial transformation (Cameron A, 2019) 33 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 II SUGGESTIONS First, building and perfecting the institutions, policies, and laws to create a favorable environment and space for innovation, entrepreneurship, and digital economic development In particular, it is necessary to reform administrative procedures and create mechanisms and policies to adjust the operations of organizations, individuals, and businesses that are compatible with the digital economy It is also needed to develop policies supporting the mobilization of resources, including tax incentives for the software industry, hi-tech parks, and software parks Creating a favorable legal corridor for start-up activities, investments and businesses in a digital economy environment; building, encourage, and ensuring a fair and healthy playground for different types of businesses and economic sectors in the startup environment, investment, rights, and tax obligations; reforming and improving the legal system according to the requirements of international integration and development of the digital economy; and complying with international standards in the digital economy environment While building the legal corridor for digital operations, it is also needed to take into account the development trend and the impact of digital currencies, such as Bitcoin and Libra Coin, or the expansion of the Forex market in economic transactions and virtual financial markets Furthermore, it is essential to perfect the legal system and strongly reforming administrative procedures related to the digital economy, such as the development of electronic documents or digital signatures Develop and implement policies to connect the domestic science and technology community with foreign countries, especially the Vietnamese community abroad It is necessary to firmly restructure FDI inflows, as well as screen, select and classify the investment structure towards high quality projects and high-tech industries, with longterm commitments to create great added value, orient toward on-the-spot R&D and transfer of advanced technologies to Vietnam Second, improve the quality of education and training labor force for the digital economy The shortage of information technology human resources is considered to be one of the major challenges for the development of Vietnam’s digital economy Therefore, along with changing the curriculum to keep up with new technology trends, as well as accelerating the socialization of information technology education by allowing students to approach this field early, it is also needed to change educational methods towards increasing self-study and lifelong learning Besides upgrading and completing the infrastructure, Vietnam needs to focus on investing in science, technology, and education and focus on the importance of education and training innovation as required 34 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 by the Industrial Revolution 4.0 and the digital economy This includes developing a strategy for training and attracting national and international technology talents and developing human resources in technology – especially information technology both in quantity and quality – innovating, updating and acquiring global training programs and textbooks associated with the trend of digital economy development, especially the training of labor forces in information technology, financial technology in the digital age, and creating conditions for students at all levels to access the information technology knowledge and core technology areas of Industrial Revolution 4.0 Furthermore, there should be promotion of international cooperation in training, educating, and building a workforce for the digital economy to be capable of protecting, supporting, and promoting the interests of Vietnamese enterprises in the environment of international integration into the global digital economy Also, Vietnamese businessmen need to focus on fostering and adapting knowledge to meet the requirements of the digital economy and to integrate into the global market Having knowledge and ideas about the digital economy is important but having integrated thinking and adapting to the international digital economy market and the Industrial Revolution 4.0 is even more important for the existence and development of either large or small enterprises in dealing with the increasingly fierce international competition through cyberspace Third, planning and establishing plans about the development and application of information technology, then promulgating regulations and standards for information exchange among agencies and units to create linkages and synchronism in the process of investment and infrastructure development based on information technology application Promoting the e-Government Program, including transport and tourism, to accelerate the application of information technology in all fields Accelerating the digitization work in all departments and sectors including the construction of national data infrastructure; drastically reform administrative procedures related to digitalization, cyberization, and information transparency Besides, it is necessary to build electronic payment infrastructure by supporting non-cash payment, the development of e-commerce, electronic contracts, and digital signatures To facilitate the development of e-commerce, the national electronic payment system, electronic document authentication, and transaction verification platform, management, and monitoring mechanisms to settle disputes and handle violations in e-transactions should be completed soon Fourth, concentrating on the protection of economic security, information security, and network security through supervision, prevention, and control of 35 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 cybercrimes and hi-tech crimes Focusing on ensuring information and network security, not only at the national level but also at each department and unit at all levels, as well as at every enterprise, especially the financial-monetary system and digitalized government agencies Along with building and developing a modern telecommunication infrastructure to be a cornerstone of the digital economy, it is necessary to ensure network safety and security to facilitate equal opportunity for citizens and businesses to easily access digital content development Moreover, ensuring safety and cybersecurity will help Vietnam gain trust from foreign partners as a safe place for business investment This is also an opportunity for Vietnam to develop products for network security There should be proactive exploration and participation in mechanisms and initiatives for international and regional cooperation in the fields related to the development of the digital economy, especially cybersecurity and data confidentiality, privacy, and prevention and fighting against cybercriminals In this aspect, it is important to promote cooperation and linkages in multilateral institutions at the regional and global level, such as within the United Nations and ASEAN community, to develop common rules of coordination and conduct, as well as agreements and conventions on related issues arising from the development of the digital economy to ensure information and network security This study identifies generalizations about the digital economy and digital economy in Vietnam; at the same time, this paper points out difficulties and challenges for the development of the digital economy in our country, and from there, it offers solutions to promote the development of the digital economy in Vietnam in the coming time This is an urgent issue that needs to utilize resources and create the environment and favorable conditions to promote the development of the digital economy, contribute to creating new content and motivation for the country’s renovation and successfully implementing the process of industrialization and modernization, soon turning our country into an industrialized country towards modernization 36 K59 INTERNATIONAL ECONOMIC HIGH-QUALITY PROGRAMGROUP 09 PART D: REFERENCES Ashhar Firdausi, 2021 Digital Economy [Website] Available at: https://www.toppr.com/guides/business-environment/emergingtrends-in-business/digital-economy/ Atharva Deshmukh, 2020 Why Vietnam’s Expanding Digital Economy Presents Opportunities for Investors [Website] Available at: https://www.vietnam-briefing.com/news/why-vietnams-expandingdigital-economy-presents-opportunities-for-investors.html/ Boxme Blog, 2020 Vietnam’s E-Commerce Landscape 2020 [Website] Available at: 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[Website] Available at: https://vietnaminsider.vn/what-e-commerce-marketplaces-invietnam-look-like-in-2020/ 15 Vietnam Investment Review, 2020 Country to go digital through decade of allpurpose action [Website] Available at: https://www.vir.com.vn/country-to-go-digital-through-decade-of-allpurpose-action-77077.html 38 ... OF CONTENTS K59 INTERNATIONAL ECONOMIC HIGH- QUALITY PROGRAMGROUP 09 PART A: DIGITAL ECONOMY AROUND THE WORLD I WHAT IS DIGITAL ECONOMY? II THE REAL STATE OF AFFAIRS OF DIGITAL ECONOMY IN THE WORLD... Asia Digital economy? ??s trend (McK insey & Company) How Digital Economy control our life K59 INTERNATIONAL ECONOMIC HIGH- QUALITY PROGRAMGROUP 09 (McKinsey & Company) Size of the Digital Economy. .. and services with high value from the digital economy At the same time, consumers also increasingly adapting to the digital economy, which K59 INTERNATIONAL ECONOMIC HIGH- QUALITY PROGRAMGROUP 09