Trade in the Digital Age: The new growth opportunity for Vietnam
The Vietnamese government issued a directive in 2017 to strengthen the country’s ability to access Industry 4.0 technologies by developing the requisite IT infrastructure and encouraging businesses’ investment in this area between now and 2020. Digital trade will be crucial for this vision, especially given that Vietnam is heavily trade dependent, being one of the world’s top 30 net exporters and amongst the top 5 markets by exports and imports relative to GDP respectively. The value that digital trade creates in Vietnam’s domestic economy today is estimated at VND 81 trillion (US$3.5 billion), a value equivalent to 1.7 percent of its GDP. If digital trade is fully leveraged, it is estimated that this value could grow by 12-fold to reach VND 953 trillion (US$42 billion) by 2030. Beneficiaries of digital trade extend beyond manufacturing to include sectors such as infrastructure and financial services.
Besides creating value from abroad through digital exports, digital trade also supports large productivity improvements in Vietnam’s domestic sectors. Yet, traditional economic measures fail to adequately measure the value of digital trade to exports and Vietnam’s economy.
A robust fact base is thus crucial to ensure that the value of digital trade is fully appreciated and taken into account when formulating trade and economic policy. This includes assessing (a) the current and future value of the digital trade opportunity for Vietnam’s exports and the domestic economy; (b) perceived concerns relating to digital trade abroad and how these could be addressed without unduly impeding digital trade flows; (c) priority areas Vietnam could focus on in order to fully harness the benefits while managing the potential risks of digital trade.
This research by AlphaBeta was commissioned by the Hinrich Foundation, and conducted in collaboration with the Central Institute for Economic Management (CIEM).