Vietnam’s digital economy is growing at the fastest rate in Southeast Asia in 2023 and is expected to remain one of the fastest-growing in the period 2023-2025.
On November 6, Google Corporation, Temasek Company, and Bain & Company released the 8th Southeast Asia Digital Economy Report. This report updates the Digital Economy trends of six countries including Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.
Despite fluctuations in the global macro economy, the report shows that the region’s gross merchandise value (GMV) continues to increase and is expected to reach US$218 billion, up 11 per cent over the same period last year. (YoY).
The report also shows that revenue from the Digital Economy of Southeast Asia is expected to reach US$100 billion this year.
Vietnam leads in digital economy growth
The report clearly shows that Vietnam has the fastest Digital Economy growth rate in Southeast Asia for the second consecutive year (2022 and 2023) and is forecast to continue to hold this position in 2025 ( tied with the Philippines).
Vietnam’s gross merchandise value (GMV) is expected to reach a compound annual growth rate (CAGR) of 20 per cent, from US$30 billion in 2023 to nearly US$45 billion in 2025. GMV growth in the two Next years will be led by e-commerce and online travel.
E-commerce in Vietnam will increase by 11 per cent from 2022 to 2023 and the compound annual growth rate (CAGR) is expected to increase by 22 per cent by 2025, aiming for a total merchandise value of US$24 billion this year. 2025.
The tourism industry is forecast to fully recover this year, mainly thanks to the strong growth of domestic tourism. Online travel has grown 82 per cent in the past year and is expected to grow by 21 per cent compound annual growth rate (CAGR) from 2023 to 2025, with a GMV expected to reach US$7 billion.
Also according to the report, other important sectors that continue to grow and contribute to promoting Vietnam’s Digital Economy include the Transportation and Food industries (Food Delivery Services) and Online Media.
This sector has grown by 10 per cent from 2022 to 2023, CAGR is expected to increase by 16 per cent from 2023 to 2025 and is forecast to reach US$4 billion by 2025.
The online media sector in Vietnam increased by 11 per cent in the period 2022-2023, with GMV expected to reach US$7 billion in 2025 with a compound annual growth rate of 15 per cent in the period 2023-2025.
Digital payment in Vietnam is exploding
According to the report, Digital Financial Services (DFS) are growing rapidly compared to initial growth and Vietnam has the fastest-growing Digital payments in Southeast Asia in 2023.
The irreversible shift from offline to online behavior continues to drive Digital Financial Services (DFS) adoption forward.
While the adoption rate of Digital Payments in Southeast Asia has reached 50 per cent, Vietnam is also driving this trend and will become the fastest-growing country in Digital Payments, increasing by 19 per cent from 2022 to 2020. 2023 and will continue to grow at 13 per cent CAGR in the period 2023-2025.
Digital Payment in Vietnam will continue to grow thanks to strong support from the Government, investment activities of commercial banks, and the popularity of QR codes. This trend is forecast to accelerate when the State Bank encourages non-cash payment services in rural and remote areas.
Mr. Marc Woo, Managing Director, in charge of Vietnam for Google Asia – Pacific shared: “Vietnam’s Digital Economy is developing in the right direction. Google will continue to comprehensively support the Digital Economy National Number, through many programs across the country, promote Vietnam’s technology startups, and invest in local talent from basic training to students and workforce through the Human Resources Development Program digital resources to provide in-depth training for technology startup leaders.”
Digital engagement needs to expand to enable the next wave of growth.
While digital inclusion has made significant strides in Southeast Asia over the years, when it comes to digital participation– active participation in the digital economy through consuming products or services in many sectors, consumers in areas outside of major urban areas are at risk of experiencing a growing digital divide.
Hanoi, Ho Chi Minh City, and Da Nang are the top three major cities in terms of digital engagement in Vietnam, but this gap is widening in areas outside the major cities. In particular, rural areas are more vulnerable to challenges from economic actors.
Addressing these gaps is a shared responsibility across many actors in the digital economy. Besides, removing barriers, such as supply and security issues, can also improve the participation of low-spending groups and help Vietnam’s digital economy achieve its growth goals.
Increasing operational efficiency and improving user experience will be key for businesses to achieve profitable growth, and AI can help make this happen.
New technologies like AI can benefit both businesses and consumers in a variety of ways. Benefits include improved operational performance in the areas of inventory management and route optimization while driving deeper digital engagement and engagement through Personalized content recommendations in online communications. AI can also play an important role in detecting and preventing fraud, increasing security for both merchants and consumers.
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