Digital economic development must be intrinsically intertwined with green economic principles. This dual transformation is no longer a matter of choice but a paramount national imperative, representing an existential requirement for businesses in the 21st century.
Vice Chairman Tran Du Lich of the Vietnam International Arbitration Center asserted that digital transformation optimizes business processes, reduces costs, and boosts competitiveness through automation and data analysis. Simultaneously, green transformation minimizes environmental impact via renewable energy and clean technologies. This dual approach fosters sustainable economic models balancing growth, environmental protection, and improved living standards.
However, many experts contend that significant strides are still required to realise Vietnam’s green and digital transformation potential. Digital transformation has primarily manifested within large enterprises and those with foreign direct investment, with limited penetration among small and medium-sized enterprises (SMEs).
The green economy currently constitutes a mere 4-4.5 percent of Vietnam’s national economy, leaving over 95 percent reliant on traditional, carbon-intensive practices. Statistics from the Ministry of Natural Resources and Environment reveal that Vietnam’s green economy is valued at approximately US$7 billion, representing roughly 2 percent of GDP, concentrated predominantly within the energy and agriculture-forestry sectors, with sectors such as industry, transport, telecommunications, waste management, and construction lagging behind.
For businesses, integrating green strategies is no longer optional but a prerequisite for accessing global markets. Green production transcends mere compliance with environmental regulations and waste management; it necessitates a holistic approach encompassing the entire value chain, from raw materials to finished products and post-consumer waste, ensuring minimal environmental impact. Crucially, this includes the adoption of clean energy sources in production processes, a facet inextricably linked to digital transformation.
Imperative of digital transformation
“The current economic landscape differs markedly from previous eras, characterised by the simultaneous emergence of the digital economy, green economy, circular economy models, and sustainable development imperatives. These converging factors necessitate integrated and synchronized implementation by businesses,” observes General Director Nguyen Anh Duc of Saigon Co.op.
Digital transformation drives rapid growth, while green transformation ensures long-term sustainability, both relying heavily on digital technologies. General Director Do Duc of ETLABS Australia noted that while digital transformation offers opportunities like enhanced efficiency and new revenue streams, Vietnamese businesses face challenges including regulatory gaps, skills shortages, leadership preparedness, and cybersecurity risks.
Government support is crucial, requiring clear legal frameworks, innovation incentives, and robust data privacy measures. Specifically, guidelines on data protection and digital transactions are needed to build public trust. Furthermore, continued investment in nationwide digital infrastructure, especially in rural areas, is essential for equitable participation in the digital economy.
“SMEs, the backbone of Vietnam’s economy, contributing approximately half of GDP and a third of state budget revenue, face significant barriers to digital technology adoption due to resource constraints. Targeted government support, including financial assistance, tax incentives, and digital training programs, is essential to facilitate their digital transformation. Public-private partnerships can also foster knowledge transfer and collaboration between large enterprises and SMEs,” proposed Chairman Nguyen Ngoc Hoa of the HCMC Business Association.
Meanwhile, Chairman Klaus Schwab of the World Economic Forum cautioned that as AI and digitalization reshape industries, certain job categories will face displacement. The Vietnamese Government should proactively address this through human capital development initiatives, focusing on workforce retraining for high-tech sectors. This should involve vocational training coupled with digital skills development programs, ensuring Vietnam’s workforce remains competitive in the global economy.
Driving dual transformation through policy leadership
Dr. Carmelo Ferlito, CEO of the Center for Market Education in Malaysia, affirmed that Vietnam is emerging as one of the fastest-growing innovative economies, ascending 30 places in the Global Innovation Index within a decade and consistently exceeding expectations within its peer group for 13 consecutive years.
However, he suggested that to establish a long-term, innovation-driven sustainable growth trajectory, Vietnam should implement targeted adjustments to its reform agenda, focusing on cultivating an education system that fosters intellectual freedom and creativity.
Strengthening institutional frameworks supporting the formation of free markets, both domestically and internationally, is also crucial. Critically, the Vietnamese Government should streamline administrative procedures and cultivate a business-friendly ecosystem conducive to investment, prioritizing not only attracting foreign investment but also stimulating domestic entrepreneurship.
Concurrently, a robust and adaptable financial system must be developed to support business transformation.
Essential role of green infrastructure
Rich McClellan, Country Director of the Tony Blair Institute for Global Change in Vietnam, observes that digital transformation is at the vanguard of the industrial revolution, with technologies such as artificial intelligence (AI), the Internet of Things (IoT), as well as advanced robotics revolutionizing production processes and business models.
These advancements reduce costs and facilitate the implementation of precision manufacturing, thereby reshaping global industrial operations. Consequently, leveraging digital transformation presents substantial opportunities to enhance Vietnam’s competitive position and drive innovation in sectors such as electronics, manufacturing, and services.
However, to fully capitalize on these opportunities, Vietnam must address existing challenges, including shortages of high-tech skills and the need for more comprehensive digital education and training programs. This must be coupled with policies promoting clean energy adoption, sustainable industrial parks, and green finance mechanisms. Furthermore, Vietnam should prioritise methodical urban planning, robust environmental management, investment in sustainable infrastructure, and the development of a market for green financial products.
