Digital technology, artificial intelligence, the digital economy, the green economy, low-carbon emissions, and the pursuit of Net Zero are essential trends of the new era. These developments also present opportunities for nations to make breakthroughs in socio-economic growth, narrow development gaps across regions, and promote prosperity and sustainability goals.

The topics of revolution in digital and green transformation were discussed from multiple perspectives at the recent Vietnam New Economy Forum 2024, themed “Ushering in a new economy: A revolution in the twin digital – green transition & the pioneering role of businesses”.

New growth model

Emphasising that digital and green transformation will be essential for economic development in the current period, Deputy Director of the Central Institute for Economic Management, Nguyen Hoa Cuong, noted that Vietnam’s economy has nearly exhausted the advantages of cheap labour and high resource consumption. Therefore, it is crucial to leverage science, technology, and innovation and adopt new approaches to achieve higher economic efficiency.

In the past five years, the Ministry of Planning and Investment has focused on building new economic models, such as the night economy, the sharing economy, and the circular economy, and developing the National Strategy for the Fourth Industrial Revolution by 2030. Additionally, numerous national strategies have been introduced, including those for digital economy growth, digital society, digital workforce, and, most recently, a Human Resource Development Programme for the Semiconductor Industry by 2030, with a vision to 2050, approved by the Prime Minister. These strategic preparations aim to establish new models, spaces, goals, and opportunities.

According to information shared at the forum, to achieve the goal of becoming a high-income and developed country by 2045, Vietnam must sustain a minimum economic growth rate of 6-6.5% for the next 20 years. Achieving this requires groundbreaking reforms in mechanisms and policies to lay the foundation for new growth drivers, harness the potential of emerging economic models, and transform Vietnam’s growth model.

In recent years, Vietnam has actively engaged in the Fourth Industrial Revolution across various socio-economic fields, achieving impressive results recognised regionally and internationally. Vietnam’s digital economy growth rate is noted as the fastest in Southeast Asia, with projections that the digital economy will account for 20% of GDP by 2025. Additionally, Vietnam continues to climb the ranks in the Global Innovation Index, with three indicators ranking first globally in 2024: high-tech imports, high-tech exports, and creative goods exports.

Dr Le Duy Binh, Director of Economica Vietnam, stressed the need for specific regulations to define digital economy support for green transition efforts. Additionally, policies that standardise digital technology applications in production processes are essential to advance green transformation and facilitate investments in digital transformation, supporting green growth goals. This process requires resources from various sectors, especially support from the government, international donors, financial institutions, and credit organisations.

Significant resources needed

According to Tim Evans, CEO of HSBC Vietnam, Vietnam’s readiness for change has brought it a long way to reach its current position. Vietnam's growth is now driven not only by FDI and exports but also by new factors propelling its growth to new heights. The digital and green transformation will pave the way for Vietnam's long-term growth, yet this transition requires significant resources. Currently, Vietnam allocates only 1% of its GDP to digital transformation, while an estimated 270 billion USD is needed for a full-scale digital transformation across both the public and private sectors.

Nguyen Dinh Tho, Director of the Institute of Strategy and Policy on Natural Resources and Environment (ISPONRE), noted that Vietnam’s growth drivers have primarily centred around infrastructure investments, including airports, and efforts to position Da Nang and Ho Chi Minh City as Asian financial centres. However, a pressing issue now is the transition from a brown to a green economy. As of 2020, only 2% of Vietnam's economy was "green", a figure that has now risen to about 4-4.5%. Thus, for successful digital and green transformation, Vietnam must focus on green finance, green technology, and enhancing green capacity.

To boost new growth drivers from the digital economy and digital and green transformation, the Ministry of Planning and Investment recommends that the government should strengthen partnerships and organise economic dialogues with comprehensive and strategic partners. A key approach involves a dedicated task force to work closely with individual businesses and investors to attract multinational corporations and strategic investors in sectors like semiconductors, artificial intelligence, and chips. Additionally, the government should consider substantial and practical policy packages to support businesses and drive growth, effectively implement the Semiconductor Industry Development Strategy, and enhance connectivity and data sharing with the national population database under Project 06. Relevant agencies must also improve mechanisms and policies to maximise the effectiveness of the National Innovation Centre and promote innovation ecosystems at the central, regional, and local levels to promote the development of the startup and innovation ecosystem.

Economists highlight that the recognition of the breakthrough nature of digital and green transformation, along with a thorough assessment of these processes in current practice, is of immense importance to Vietnam’s economy. It provides a foundation for new perspectives, strategies, and actions. In the near future, competitiveness among nations, economies, and businesses within the global supply chain will depend not only on the ability to produce and supply goods but also on proficiency in digital, green, and inclusive transformation.