Vietnam-most active country in Asia in promoting dual transition: HSBC

The Government News on December 24 quoted a report from HSBC Vietnam as reporting that Vietnam has emerged as the most active country in Asia as well as in the world, which also keeps up with dual transition trend, taking digital transformation and green transition as its important growth drivers.

The report, themed "2024–a look back at ups and downs", was written by HSBC Viet Nam's Markets and Securities Services experts.

Dual transition - digital transformation and green transition - has become a strategic growth trend in many countries, which helps them moving towards both sustainability and digital targets, making the most of the benefits from this dual transition, according to the report.

"It is clear to see the multi-dimensional efforts of Vietnam's Government to keep up with dual transition trend. For instance, they already have a National Strategy for Digital Economy and Digital Society Development to 2025, a vision to 2030, and a National Green Growth Strategy for 2021-2030 and a vision to 2050," noted HSBC experts.

Next year will be a key milestone as Vietnam is going to achieve a lot of important goals, including the digital economy accounting for 25 per cent of its GDP and green credit accounting for 10 per cent of total outstanding debts, the report added.

According to HSBC, in response to the Government's efforts, businesses are rewiring their organizations and deploying technology integration at scale. As of 2023, 47 per cent of businesses in Vietnam have undergone some kind of digital transformation, according to Enterprise Development Agency, under the Ministry of Planning and Investment.

They have also started working out their own net zero transition plans. The awareness of local businesses has been rising. According to a PwC 2022 survey, 40 per cent of them have planned for and set themselves environmental, social, and governance (ESG) commitments.

Net zero transition was said to be critical to them by 48.7 per cent of businesses in a 2024 survey by the Vietnamese Government's Private Economic Development Research Board.

In fact, Vietnam has conducive conditions to implement the dual transition. Its demographic tailwinds include a population of over 100 million, a work force that is 70 per cent of the total population, almost 80 per cent of Vietnam's population using the internet; and smartphone ownership has doubled from a decade ago, etc.

All of these have contributed to open up a huge potential of digital consumption for Vietnam. The nation is among the fastest-growing in ASEAN with impressive growth of 16 per cent, according to the

e-Conomy SEA 2024 report. Measured by gross merchandise value (GMV), the country has the potential to become the second-largest digital market in the region by 2030.

Moreover, Vietnam's renewable energy potential is also huge. As the most naturally suited country in Southeast Asia to develop wind and solar energy, Viet Nam already ranks second among developing countries in attracting foreign direct investment (FDI) into the renewable energy space.

HSBC specialists recommended the nation improve its digital literacy, regarding it among top priorities.

Encouragingly, the National Digital Transformation Program is a good example of Government's efforts in playing an active role to facilitate the digital transformation of the economy.

All in all, digitalization brings both opportunities and challenges to Vietnam. In order to leverage its favorable demographics and achieve its digital ambitions, investments need to be channeled into not just new areas such as artificial intelligence (AI), but also foundational areas such as digital education and traditional infrastructure.

Both the digital and green transitions require enormous investments, in which finance will play a critical role. Vietnam's state budget for fighting climate change can provide about $130 billion, less than half of what is needed.

Cost is also the top challenge in digital transformation, as cited by 60 per cent of businesses in a survey by the Ministry of Planning and Investment in collaboration with the USAID.

Last but not least, Vietnam should continue to invest more on infrastructure, which is fundamental to its economic growth and quality FDI attraction. The Government is committed to pushing public investment, focusing on strategic infrastructure projects which connect economic hubs. This will be a key booster to take Vietnam into the new era of transformation, the HSBC report stressed.