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Covid-19 pandemic and the golden season of digital transformation



On September 5, when the Covid-19 outbreak was still rampant, the new school year started online for millions of students. 

Covid-19 pandemic and the golden season of digital transformation

The legal corridor for the development of 4.0 technologies in Vietnam is still primitive.

Difficulties appeared, and immediately, Prime Minister Pham Minh Chinh assigned the Ministry of Information and Communications to implement a program to promptly support online learning and promote development of the digital society.

According to Viettel, during the time of social distancing, Viettel Study software had nearly 50 million visits within one month and was used in thousands of schools, with 30,000 lessons at different levels. As for VNPT E-learning software of VNPT, the number of visits increased by four times, peaking at 100,000 visits in one hour.

That’s the education sector. In socio-economic life, many activities from the real world have been transferred to the digital world under the pressure of the Covid-19 pandemic.

When it broke out, online meetings and online conferences became an indispensable part from small levels like businesses, to national and international levels.

On August 8, remote medical examination and treatment support platform (Telehealth) was officially launched and connected to 100% of district across the country. Online medical examinations have become an important solution in taking care of people’s health in Vietnam.

According to medical experts, this is the breakthrough they have long wanted to effectively support in timely diagnosis and treatment, to deal with overloading in upper-level hospitals and reduce contact between patients and doctor. This system also helps doctors and nurses in remote areas feel more secure and confident in treating seriously ill patients.

In mid-June 2021, farmers in Luc Ngan district, Bac Giang province made the first-ever livestream to sell their lychee. A 40-minute livestream of a farmer in Bac Giang on an e-commerce platform attracted tens of thousands of viewers. Only 12 hours after offering their products online, Bac Giang farmers sold 30 tons of lychee.

In Vietnam, digital transformation and digital economy have been mentioned for a long time, but for many people it is still far away and very difficult to implement. But during the Covid pandemic, digital transformation and the digital economy have become closer and easier to understand.

Video conferences have been around for a long time and many agencies had already equipped this system, but most of the meetings used to be face-to-face. People used to have the habit of meeting each other, shaking hands, talking directly to come to a conclusion. But when the Covid-19 pandemic broke out, online meetings became an indispensable part from small levels like businesses to national and international levels.

The implementation of remote medical examination and treatment had been discussed for a long time but when the pandemic occurred, in just 2.5 days, Viettel and VNPT completed the installation of Telehealth systems for 328 district-level health facilities in 47 provinces and cities.

During the time of social distancing, most production and business activities and events have taken place online, saving a lot of money and human resources.

The pandemic has caused the disruption of many traditional economic activities, forcing businesses and organizations to be bolder in researching and applying digital platforms in management, production, and business activities. That has helped businesses realize more clearly that digital transformation is no longer a risky experiment or a situational solution but a strategy to change fate.

After pandemic is the golden season for digital economics

Covid-19 pandemic and the golden season of digital transformation

According to experts, with digital transformation, 70% is the vision and determination of people while technology accounts for only 30%. The epidemic has created pressure to bring great strides. What we have done in the past year is equal to the whole things we did in many previous years. Without the pandemic, such rapid and long-term progress would not have been possible. In just a short time, many activities from the real world have been transferred to the digital world in a very natural and effective way.

Nguyen Quang Vinh, General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI), says that the transition from the traditional economic model to the digital economy has changed the operating methods, leadership, working processes, and management culture at agencies and organizations. The fact shows that in the world, economies that deploy digital transformation early have better resilience.

According to Nguyen Trung Kien, Strategy Director of VNPT Information Technology Company (VNPT-IT), in Vietnam, over 80% of business leaders think digital transformation is becoming more urgent, and about 65% of business leaders plan to increase investment in digital transformation. Priority solutions are large-scale telework, cybersecurity, e-commerce and e-marketing, and process automation.

Bui Tuan Minh, Deputy General Director of Deloitte Vietnam, says that there are many similarities between the way that business leaders in the world and in Vietnam are redefining priorities and goals, and action during this period. In particular, digital transformation is a top priority and will no longer be an option if you want to grow.

According to economic expert Le Dang Doanh, recent studies show that, for developing countries, the Covid pandemic will create about 30% of new customers using digital services. After the pandemic is over, 95% of these will continue to use the digital services they are familiar with. Thus, the market of digital transformation has high potential and growing.

Vietnam is striving to become a high-income country by 2045. With the current per capita income of about $3,000 per year, Vietnam must achieve annual GDP growth rate of 7.5-8% for the next 25 years. To achieve this goal, the inevitable path will be science and technology, innovation, the 4th industrial revolution and digital transformation.

The digital economy currently accounts for 15% of global GDP. It is 21% for the US, 30% for China and about 10% for Vietnam. If we maintain the current growth rate of the digital economy, it can account for 25% of GDP by 2025. Developing the digital economy and digital society requires a modern digital infrastructure. The Ministry of Information and Communication aims to develop Vietnam’s digital infrastructure to reach the world top 30 by 2025.

However, the digital economy in Vietnam is facing some major barriers. Infrastructure for the digital economy is not synchronized, and the digital connection capacity is still low. In addition, the institutional system has not really facilitated the development of the digital economy. The legal system still lacks appropriate regulations and legal corridors for some digital-based economic models.

Vietnam also lacks proper attention to the development of some core technologies of the 4.0 industrial revolution such as artificial intelligence (AI), blockchain, machine learning, etc. Legal corridor for the development of 4.0 technologies is still primitive. For the field of artificial intelligence, there is no law and legal framework governing social relations related to AI, intellectual property rights, etc.

According to the report “Southeast Asia’s Digital Economy”, Vietnam’s digital economy in 2019 was worth 12 billion USD (5% of GDP), four times higher than that of 2015 and is predicted to reach 43 billion USD by 2025, with the fields of: e-commerce, online travel, online communication and ride-hailing. Vietnam’s digital economy, along with Indonesia, lead for growth in Southeast Asia (38% per year compared to 33% for the whole region since 2015). Hanoi and Ho Chi Minh City are two of the seven major cities developing the digital economy of the ASEAN region

Realizing the importance of digital economy, on September 27, 2019, the Politburo issued Resolution No. 52-NQ/TW on a number of guidelines and policies to actively participate in the Fourth Industrial Revolution. Accordingly, the set target is that by 2025, Vietnam’s digital economy will reach 20% of GDP, developing a community of digital technology businesses in the country.

Tran Thuy



Vietnam trade to climb to new peak



Vietnam trade to climb to new peak

A container ship is seen at Tan Cang Cai Mep Terminal in the southern province of Ba Ria-Vung Tau. Photo by VnExpress/Dang Khoa

Vietnam’s trade could reach a record high of $600 billion in 2021, the Ministry of Industry and Trade has said.

This would be 10 percent higher than last year as against a government target of 4-5 percent, it said.

It had reached $510 billion as of Oct. 15 with a marginal deficit.

Vietnam, which has been recording a trade surplus for years, has been suffering a deficit this year as social distancing and travel restrictions imposed to curb the spread of Covid-19 hurt exports.

So the final value would be dependent on curbing Covid-19 and recovering manufacturing and exports, the ministry said.

If there are no more major outbreaks in the remaining months and southern-based companies regain their growth momentum, the deficit could be wiped out and there could even be a surplus, it added.

Several large FDI plans announced recently seem to substantiate the ministry’s forecast.

South Korean electronics giant LG Display in August announced an additional investment of $1.4 billion in its manufacturing facility in Hai Phong this year.


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HDBank affirms position among top 5 prestigious banks in Việt Nam



With its outstanding business results and accompanying the economy in overcoming the pandemic, HDBank affirms position among top five prestigious banks in Việt Nam. — Photo courtesy of the bank

HCM CITY — HDBank has once again been honoured as one of the most prestigious private institutions in the country by Vietnam Report, affirming its position as among the most dynamic banks in terms of growth.

The award was presented at the Vietnam Top 50 Public Companies (VIX50) in 2021 ceremony organised by Vietnam Report on October 21 in Hà Nội.

Techcombank, ACB, VPBank, and TPBank also won awards.

The awards were based on three criteria: financial capacity as shown in the latest year’s financial statements; communications prestige assessed by media coding method; and surveys of relevant stakeholders done in June 2021.

HDBank did well in all three criteria.

Its positive business results in the first six months of 2021 was a bright spot.

Overcoming the adverse impacts of the COVID-19 outbreak, HDBank achieved 82 per cent of its full-year profit target in the first nine months.

Its total assets as of September 30 were worth over VNĐ346 trillion (US$15.2 billion), up 26.7 per cent from a year earlier.

Return on equity (ROE) was 24 per cent compared to 21.1 per cent in September 2020. The capital adequacy ratio (CAR) and liquidity were maintained at high levels, with CAR (according to Basel II) at 13 per cent, far above the minimum requirement of 8 per cent.

The bank’s total operating income in the first three quarters topped VNĐ12.1 trillion ($532.3 million), 23.6 per cent up from the same period last year. Operating costs continued to be optimised with the cost to income ratio reduced to 39 per cent from 43.8 per cent a year earlier.

Its standalone and consolidated non-performing loan ratios were below 1 per cent and 1.4 per cent, both lower than in a year earlier.

Services continued to be its bright spot in the first nine months, as net income rose 88.6 per cent year-on-year.

Notably, net income from services for the parent bank more than tripled from the same period last year thanks to growth in the bancassurance and payments services segments.

This helped HDBank develop in a more comprehensive way, no longer depending on credit while minimising risks and improving the revenue structure in a sustainable manner.

In the first nine months of the year, HDBank actively undertook digital transformation to promptly meet the transaction needs of customers in the context of the pandemic.

To help prop up the economy, since the pandemic outbreak HDBank has earmarked over VNĐ42 trillion to support individual and corporate customers.

Besides preferential interest rates, the bank has also offered support in terms of waiver and reduction of various fees.

In August, it won the Best Bank and Best Digital Transformation Bank in Vietnam in 2021 awards at the Global Brand Award. —


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Covid-19 pandemic and the goal of 1.3-1.5 million enterprises by 2025



The target of having 1.3-1.5 million enterprises by 2025 may be difficult to achieve as many obstacles and the Covid-19 pandemic have affected business seriously. A strong recovery and reform program is needed to encourage Vietnamese businesses.

Một trận 'đạn pháo' và giấc mơ 1,3-1,5 triệu DN vào năm 2025

In early 2021, the Government assigned the Ministry of Planning and Investment to develop a resolution on enterprise development for the period of 2021-2025, with a vision to 2030, which targets 1.3-1.5 million enterprises by 2025.

According to the Vietnam General Statistics Office, by the end of 2020, the country had about active 810,000 enterprises. To achieve the target, Vietnam must have 100,000-150,000 new businesses coming into operation annually.

This year, due to the heavy influence of the Covid pandemic, a large number of enterprises has withdrawn from the market. It is estimated that by the end of 2021, the number of active businesses will be lower than that of 2020. The question is the target will be fulfilled?

Unified anti-pandemic policy needed

Entrepreneurs complain that with the policy “each locality is a fortress to prevent the epidemic”, many provinces have prioritized the fight against the epidemic with the desire to achieve “zero Covid-19” and this has affected business and production operations.

In many localities, hundreds of pandemic checkpoints have been set up at entrances and highways, which have hindered circulation of goods. The Vietnam Association of Logistics Service Providers lamented that as provinces apply different epidemic prevention measures, goods transport has been seriously affected, doubling the burden on businesses that have had to struggle to survive in the pandemic.

The characteristic of production and business activities is chain connections, regardless of administrative boundaries. Therefore, when local governments apply different policies and regulations on social distancing and goods transport and some provinces even close their doors to ensure “zero Covid”, input materials cannot reach factories and goods are kept in stock. This is seen as the fastest way to push enterprises to the risk of bankruptcy.

Recent statistics from the General Statistics Office show that in January-September 2021, up to 90,300 enterprises withdrew from the market, up 15.3% over the same period of last year.

On average, 10,000 enterprises were leaving the market each month. In fact, the number may be higher because when provinces implemented strict social distancing, many businesses could not complete closure procedures.

This situation has never happened in the past 10 years. Experts estimate that from now until the end of 2021, the number of businesses that will stop operating or be dissolve will be around 120,000.

Prolonged lockdowns have hit the economy hard. However, when switching to “living with Covid-19”, there are still many obstacles. In some provinces, the risk of “sub-license” rises again, making it difficult for businesses to resume operations.

Ly Kim Chi, Chairwoman of the HCM City Food and Foodstuff Association, said that businesses are already exhausted. If local governments issue more sub-licenses and regulations that cause difficulties for business operations, enterprises will “collapse” completely.

Another challenge for business and production recovery is labor shortages, as tens of thousands of migrant workers have left cities to return to their hometowns to avoid the pandemic.

Stronger reform

Một trận 'đạn pháo' và giấc mơ 1,3-1,5 triệu DN vào năm 2025

Nguyen Dinh Cung, former director of the Central Institute for Economic Management, said that in 2017 the Institute had proposed that the Government remove three quarters of the existing 4,000 business conditions. However, in official documents issued later, the Government only asked to reduce and simplify 50% of these. In 2018, ministries and branches began reducing and simplifying business conditions under the Government’s direction.

“But I don’t think that it really works because we recommended removing and abolishing, not simplifying business conditions,” Mr. Cung said. Therefore, there has been no substantive impact on the business environment, and no positive effect on enterprises. Half-hearted reform has led to the risk that business conditions are recovering.

The Vietnam Chamber of Commerce and Industry (VCCI) commented that the recent reform and reduction of business conditions and support for enterprises to enter the market has not been substantial. Ministries and state agencies claimed to have cut business conditions by up to 60%, but it is on paper only. In reality it’s only about 30-40%. The market entry procedures are still complicated and overlapping.

In 2016, the Government issued Resolution 35/NQ-CP on supporting and developing enterprises, which set a target of having 1 million enterprises operating by the end of 2020, but it failed. According to experts, the main reason is that the business environment still has many barriers for enterprises to enter the market.

Therefore, in the period of 2021-2025, if there are no drastic reforms in the business environment and to changes in behavior detrimental to production and business activities, the dream of having 1.3-1.5 million enterprises by 2025 will be unreachable.

Facing difficulties caused by the Covid-19 pandemic, businesses need a strategy to restore safe production and business activities in the new anti-epidemic state. It is important for Vietnam to take action now, to maintain its competitiveness on regionally and globally, and not to fall behind in the economic recovery process.

Economic experts said that it is necessary to take action immediately and have a comprehensive economic promotion program. Otherwise, recovery will be slow and painful.

Tran Thuy


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