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Vietnam’s digital economy projected to hit US$220 billion by 2030: Report
Vietnam’s digital economy this year is expected to grow by 31% to US$21 billion – bolstered by a 53% year on year growth in e-commerce despite the shrinking online travel market – and hit US$57 billion by 2025.
Vietnam’s digital economy is projected to hit US$220 billion in Gross Merchandise Value (GMV) by 2030, placing the country second only to Indonesia in Southeast Asia, according to the e-Conomy Southeast Asia Report – Roaring 20’s: The SEA Digital Decade released yesterday by Google, Temasek and Bain & Company.
According to the report, Vietnam’s digital economy this year is expected to grow by 31% to US$21 billion – bolstered by a 53% year on year growth in e-commerce despite the shrinking online travel market – and hit US$57 billion by 2025.
Since the start of the pandemic through the first half of 2021, Vietnam has seen eight million new digital consumers with more than half of them coming from non-metro areas. Pre-pandemic digital consumers have used an average of four more digital services since the pandemic began, while overall 99% of Vietnam digital consumers intend to continue using online services going forward; indicating an overall stickiness in digital adoption.
In the report’s inaugural section on Southeast Asia’s small and medium enterprises, one in three of the country’s digital merchants believe they would not have survived the pandemic if not for digital platforms. In Vietnam, digital financial services are also becoming critical enablers, with 95% of digital merchants now accepting digital payments and 67% adopting digital lending. Further, 7 out of 10 digital merchants expect to increase their usage of digital marketing tools in the next five years.
Vietnam remains an attractive innovation hub as global capital continues to pour into the country as deal activity skyrocketed in the first half of 2021 to hit a record high of $1.37 billion, surpassing full year investments of recent years fueled by interest in digital services startups in e-commerce, fintech, healthtech and edtech.
“Through the pandemic, I have witnessed first hand how resilient the people in Vietnam are and how they can become fast and creative adopters of new technologies. This freshly adjusted forecast on Vietnam’s internet economy by 2030 shows us the great potential of the country once Vietnam accelerates its digital transformation. Google’s latest projects such as ‘Accelerate Vietnam Digital 4.0′ and ‘Coding for the Future’ that effectively provided digital skills training, coding sessions for close to one million people in Vietnam is a tangible proof of our commitment in supporting the country on its digital growth journey”, said Tram Nguyen, Google Country Director for Vietnam.
Providing a ten-year outlook, the report highlights that the region is on the path to become a $1 trillion digital economy by 2030, of which Vietnam could record $220 billion in GMV.
Propelled by a fast-growing base of digital consumers and merchants, acceleration in e-Commerce, Food Delivery and Digital Financial Services, Southeast Asia is estimated to reach $174 billion in GMV by the end of 2021. This number is further expected to surpass $360 billion by 2025, outgrowing the earlier projection of $300 billion.
The report predicts that Southeast Asia, including Vietnam, is entering its ‘digital decade’ as the internet increasingly becomes an integral part of consumers’ daily lives. The region now has more than 440 million internet users, and importantly, 350 million of them are digital consumers, i.e. internet users who have bought at least one online service.
Since the pandemic began, the region has added 60 million new digital consumers, of which 20 million joined in the first half of 2021 alone. Catalysed by the pandemic, existing digital consumers ventured further into online services, transacting in an average of four new verticals since the outbreak began. Existing users also increased the frequency of use and spend across most verticals. This increased adoption of digital services is showing no signs of reversal and 9 in 10 new users in 2020 continue to use them in 2021.
In the report’s inaugural section on Southeast Asia’s small and medium enterprises, digital merchants are found to have turned to digital platforms to ensure business continuity. Digital financial services emerged as critical enablers, with over 90% merchants now accepting digital payments. In the next five years, 8 in 10 of them anticipate more than half of their supply purchases and sales will come from online sources.
“Vietnam’s internet economy continues to attract global capital because of its strong growth fundamentals such as a large base of highly engaged digital users and its growing digital ecosystem of incubators, accelerators and innovation labs. We look forward to increasing our investments in Southeast Asia’s digital champions, using our capital to catalyse digital solutions and accelerate the economic growth and job opportunities for our local communities,” said Rohit Sipahimalani, Chief Investment Strategist, Head, South East Asia, Temasek.
“Vietnam holds the potential to become the region’s second largest economy at close to $220 billion with strong investor interest and as more of its non-metro populations come online. To accelerate growth in the digital decade ahead, Vietnam must continue to invest in momentum drivers and critical enablers such as digital payments and talent development,” said Florian Hoppe, Partner and Head of Digital Practice in Asia-Pacific, Bain & Company.
“We believe increasing penetration of digital financial services and corresponding infrastructure, continued investments in last mile logistics, coupled with the ubiquitous access to internet and structural shifts in consumer and SME behaviours will leapfrog Vietnam’s internet economy by 2030,” he added.
The annual e-Conomy SEA Report sheds light on the internet economy in the region, covering Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. The report dives into trends across five leading sectors ‒ e-commerce, online media, transport & food, online travel and digital financial services and two nascent sectors – healthtech and edtech. The report also reviews the tech investment landscape across the region and reveals what investors are looking for in the current environment.
Le Ha
Source: https://vietnamnet.vn/en/business/vietnam-s-digital-economy-projected-to-hit-us-220-billion-in-gmv-by-2030-report-791077.html