(Tiểu luận) topic the 4th industrial revolution and its impact on financial markets in vietnam

Trang 1 FOREIGN TRADE UNIVERSITY FACULTY OF BANKING AND FINANCE ---o0o--- ASSIGNMENT REPORT TOPIC: THE 4TH INDUSTRIAL REVOLUTION AND ITS IMPACT ON FINANCIAL MARKETS IN VIETNAM Course nam

FOREIGN TRADE UNIVERSITY FACULTY OF BANKING AND FINANCE

-o0o -

ASSIGNMENT REPORT TOPIC: THE 4TH INDUSTRIAL REVOLUTION AND ITS IMPACT ON FINANCIAL MARKETS IN VIETNAM

Course name: Money and Banking

Course code: TCHE303(GD2-HK1-2223).2

Group number: 08

Instructor: PhD Nguyen Thu Thuy

MSc Hoang Huy Khoi

Hanoi, December 2022

GROUP ASSESSMENT Class: TCHE303(GD2-HK1-2223).2 - Group: 08

Topic: The 4th Industrial Revolution and its impact on financial markets in Vietnam

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TABLE OF CONTENTS

INTRODUCTION 3

1 Theoretical basis 4

1.1 Industrial Revolution 4.0 4

1.1.1 Definition 4

1.1.2 Roles 4

1.2 Financial markets 5

1.2.1 Definition 5

1.2.2 Roles 5

2 Situation in Vietnam 7

2.1 Industrial Revolution 4.0 and its impact on Vietnam's economy 7

2.1.1 Positive influences 7

2.1.2 Difficulties and challenges of Industrial Revolution 4.0 8

2.2 Vietnam’s Financial Market 9

3 Vietnam's financial market in the context of Industrial Revolution 4.0 10

3.1 Chances 10

3.2 Challenges 12

4 Suggestions for Vietnamese Government and Businesses 13

4.1 For Vietnamese Government 13

4.2 For Vietnamese Businesses 14

CONCLUSION 17

REFERENCES 18

INTRODUCTION

In the present industrialization and modernization age, science and technology are playing a particularly important role As our country moved to socialism from a popular economy of small production, manual labor was common and what we lack is industrial modernity Therefore, we must step into the industrialization and modernization age In this day and age, industrialization must go hand in hand with modernization Industrialization and modernization in our country aim to build a material and technical basis for socialism That

is the central task during the transition to socialism in our country

Currently, the world is starting to enter the fourth industrial revolution, a new manufacturing revolution associated with unprecedented breakthroughs in technology, related to Internet connectivity, cloud computing, 3D printing, sensor technology, and virtual reality, This new manufacturing revolution is expected to have a strong impact on every country, every government, every business and every person around the globe, and fundamentally change the way we live, work, and produce The essence of the fourth industrial revolution is based

on digital technology and integrates all smart technologies to optimize production processes and methods The new era of increased investment, productivity and living standards is all driven by human creativity and will have a profound impact on the world's political, social and economic systems

This is both a challenge and a great opportunity for our country to shorten the process of industrialization and modernization The cause of building socialism in our country can only

be successful as long as we can implement the cause of industrialization and modernization

of the country, science and technology to improve labor productivity, and product innovation Improving the competitiveness of goods in the market, and building national capacity, is the foundation for the industrial revolution 4.0 The industrial revolution 4.0 affects all fields such as the economy, tourism, and culture Therefore, it is extremely necessary to explore and research the 4.0 revolution and its influence

Within the framework of one subject, the essay focuses on researching concepts related to the industrial revolution 4.0, its influence on the financial market in positive and negative aspects, and the opportunities and challenges of Vietnam's financial market in the fourth industrial revolution

a) Combination of virtual and entity systems

The ongoing technological revolution is characterized by a fusion, without boundaries between the technological, physical, digital and biological domains This is the trend of combining virtual and entity systems, Internet of Things (IoT) and Internet of Things (IoS) systems This fourth technological revolution is changing the way of production and manufacturing In "smart factories", machines are connected to the Internet and linked together through a system that can visualize the entire production process by itself and make decisions that will gradually replace production lines before Thanks to the connectivity of billions of people around the world through mobile devices and access to large databases, information processing capabilities will be multiplied by technological breakthroughs in areas such as artificial intelligence, robotics, the Internet of Things, self-driving cars, 3-D printing, nanotechnology, biotechnology, materials science, energy storage and quantum computing

b) Scale and speed of development – There is no precedent in human history

If the previous industrial revolutions took place at an additive (or linear) speed, the growth rate of this fourth industrial revolution is exponential The time since technology and innovation ideas were conceived, realized in laboratories, and large-scale commercialization

of new products and processes created in the world The global scope is significantly shortened Technological breakthroughs taking place in many of these areas at a rapid pace and mutually reinforcing interactions are creating a world that is digitized, automated, and increasingly more efficient and intelligent

The fourth industrial revolution has enormous economic, social and environmental impacts

at all levels – globally, regionally and within countries These impacts are very positive in the long term, but also create many correctional challenges in the short to medium term However, this technological revolution is creating challenges related to short - to medium-term adjustment costs due to the uneven impact on different industries: some sectors will grow strongly and other industries will have to shrink significantly In each industry, including growth industries, the impact is also different between enterprises, with the emergence and rapid growth of many businesses creating new technologies and the shrinking, even the elimination of companies that are out of step with technology That is why the Fourth Industrial Revolution is redrawing the economic map of the world, with the decline

of the power of countries based mainly on resource exploitation and the increase in the power

of nations relying heavily on technology and innovation

a) Bringing capital from places with excess capital to places with a shortage of capital

This is the main economic function of financial markets Through the activities of subjects

in the market, financial sources are circulated so that the supply and demand for capital are met The movement of capital in the financial markets increases the process of converting savings into investments Thus, it is the financial market that helps the capital to move from the place of excess capital to the place of lack of capital, making the capital exchange process quick and efficient Thereby taking advantage of sporadic, temporarily idle capital sources

to put into production, business, and construction investment to bring benefits to market

participants, and at the same time serve the development needs of customers in the entire economy

b) Fake formation of financial assets

Through the interaction between buyers and sellers, the price of financial assets is determined,

or in other words, the required return on a financial asset is determined The factor that drives businesses to call for capital is the level of return that investors require, and it is this feature

of financial markets that signals how capital in the economy should be distributed among financial assets That process is called price formation

c) Create a liquidity province for financial assets

Financial markets provide a mechanism by which investors can sell their financial assets It

is through this feature that it is said that financial markets provide liquidity to the economy

If there is a lack of liquidity, investors will be forced to hold debt instruments until maturity

or hold equity instruments until the bankrupt company has to liquidate assets However, the level of liquidity varies between markets

d) Minimize contact and information costs

For transactions to take place, buyers and sellers need to find each other; To do so, they need

to spend money and time on advertising their intentions and finding partners Those are the search costs In addition, there are information costs associated with determining the investment value of a financial instrument, i.e the volume and certainty of the expected cash flows from the investment Thanks to the centralization, large volume and transaction value, and complete and fast information provided, financial markets allow to reduce these costs e) Stabilize and regulate money circulation

Besides the above functions, the financial market also has the function of stabilizing and regulating money circulation, ensuring the healthy development of the economy Through the purchase and sale of bonds and government bills by the central bank in the financial market, the government can generate revenue to cover the budget deficit and control inflation

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2.1 Industrial Revolution 4.0 and its impact on Vietnam's economy

Vietnam's population is about 96 million, GDP ranks 42nd in the world with 362,6 billion USD (2021) The Vietnamese economy is in the process of shifting from a centrally planned economy to a market economy with a socialist orientation Vietnam's economy is one of the most dynamic in the world, with a consistently high annual GDP growth rate (6.19% period 2008-2019) But in 2021 the GDP of VietNam grew only 2.6% compared to last year This rate is three-tenths of one per cent less than the figure of 2.9% published in 2020 Particularly, labor productivity is extremely low, only 6% that of Singapore and lower than Laos Variables that are increasingly lowering the importance of labour and increasing the role of capital and total productivity in Vietnam's economy (including technology) The Fourth Industrial Revolution, the wave of globalization, and increased international integration have had significant positive and negative impacts on the Vietnamese economy

2.1.1 Positive influences

Vietnam is one of the developing nations that would benefit greatly from Industrial Revolution 4.0 Modernization and industrialization are key goals as Vietnam makes the transition to socialism Vietnam now has the chance to modernize and accelerate its transition

to a modern industrial nation thanks to Industrial Revolution 4.0 If the first industrializing nations, like the UK, took hundreds of years, then Japan would shorten the time to 50 years, and East Asian NICs, like South Korea, would do so in less than 30 years, then Industrial Revolution 4.0 offers opportunities for Vietnam and other developing nations to accelerate their industrialization Industrial Revolution 4.0 will bring about a thorough change in everything from market structure to modes of production, consumption, and state administration Vietnam now has the chance to increase labor productivity, boost the competitiveness of its traditional industries, and gain access to the global market via digital and internet platforms, enabling it to grow quickly and sustainably

Digital economy, smart manufacturing, and services are and will continue to present opportunities Industrial Revolution 4.0 will also present the potential for other sectors of the economy, including agriculture, finance, banking, logistics, and robots and intelligence

Industrial Revolution 4.0 offers significant advantages to the State, firms, and consumers by increasing labor productivity and reducing production and administration expenses When Vietnam has access to information, knowledge, and cutting-edge services, Industrial Revolution 4.0's impact on consumer behaviour can be viewed as highly good This is viewed

as an economic opportunity Our nation's economy now has a new capacity system for future development that will be more rapid and long-lasting Although these policies may not directly relate to Industrial Revolution 4.0, Vietnam already has policies in place to create a knowledge economy and high technology Therefore, the State Bank's "Non-cash Payment" projects; the Ministry of Information and Communications "Digitalization"; the Ministry of Science and Technology's "Technological Innovation"; and higher-level directives The Ministry of Science and Technology is also aggressively establishing a playground for business creativity through the "Start-up Innovation" programme The Government approved the Project "Digital Vietnamese Knowledge" in May 2018, and the Ministry of Science and Technology will also carry it out

2.1.2 Difficulties and challenges of Industrial Revolution 4.0

The first issue and challenge is employment; as a result of the fourth industrial revolution, many occupations in the service industry have been replaced by artificial intelligence (AI), the internet of things (IoT), and big data Vietnamese workers are now dealing with the effects of the fourth industrial revolution, which has different labour requirements in terms

of skills and level than those of the second and third industrial revolutions, although they have not yet adjusted to the second and third industrial revolutions The World Economic Forum estimates that in the ASEAN region, automation technologies would result in the loss

of 7.5 million employment for Vietnamese employees over the next ten years (ASEAN) Vietnam will soon need to adapt its approach to education and training to the Fourth Industrial Revolution

The second challenge is using technology to boost labor productivity Vietnam's labor productivity in 2018 was only $11,142 per worker, which was lower than Singapore's, Malaysia's, Thailand's, Indonesia's, and the Philippines's by 55.9 per cent, 44.8 per cent, 44.8 per cent, and 37 per cent, respectively Only Cambodia's labor productivity, which was

$6,963, is higher in Southeast Asia than Vietnam's Outdated technology and practices are

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the main causes of the aforementioned predicament Up to 76% of machinery and technological lines imported from outside belong to the 1960 generation, and 75% of private businesses utilize technology that is two to three generations below the global average 50%

of the equipment is refurbished, and it has depreciated

The lack of modern technology will prevent Vietnam from catching up to other ASEAN nations in terms of labor productivity; as a result, the country's level of development cannot only be prolonged but also runs the risk of slipping further behind To improve labor productivity and lay a solid foundation for cutting-edge science and technology, Vietnam will need a suitable strategy for science and technology development

The Vietnamese government faces issues as a result of Industrial Revolution 4.0 The effects

of the fourth industrial revolution changed how public institutions operate and are structured The State's capacity is crucial in determining how to fix the flaws and shortcomings of the market and direct the economy for efficient development Particularly in Vietnam, a socialist-oriented market economy is being pursued, therefore the State's participation is crucial to ensuring that the State economy always plays a leading role and promotes social orientation tenet; Another significant difficulty is getting the government to function effectively in the age of Industrial Revolution 4.0

2.2 Vietnam’s Financial Market

There are many different ways to divide a financial market The terms of the financial market which are commonly used by Vietnam at present include capital market, money market, and foreign exchange market Here are some different conjugations

Based on the duration of the credit, financial markets are divided into two types of money markets (where the trading of financial instruments with a term of less than 1 year) and capital markets (where transactions of derivative instruments are principal with a term of over 1 year) In developed economies in general, the money market is usually implemented

by banks Medium-term and long-term capital needs are mainly taken directly from the stock market In contrast, in Vietnam with its characteristics, most of the short-term, medium-term and long-term capital is provided by commercial banks and other types of markets are very small in scale In other words, in Vietnam, mobilization and distribution