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September 05, 2023

Invest in Vietnam’s technology market

In the upcoming years, one of the most potential areas to invest in Vietnam is in the field of technology. Vietnam is also following the global trend of heading towards a more connected and efficient market with the integration of digital technologies in everyday activities. The dramatic shift fr om traditional to digital ways of working can be seen fr om Vietnam’s active online population and the disruption of the Covid-19 pandemic.

When it comes to having a youthful, educated population with easy access to technology, Vietnam is a prime destination where it is now ranked 15th in the world in population size, reported by the United Nations. According to the General Statistics Office (GSO), Vietnam’s population is reaching close to 100 million people. This country boasts a youthful, educated population that has easy access to technology and the internet. As reported by the Ministry of Information and Communications, 90.3 million people had smartphones as of the third quarter of 2021, making up 73.4% of all mobile phone subscribers. Vietnam is one of the top 15 markets with the largest percentage of smartphone users, with 53.5 million users aged 15 and over, or 84.6% of all phone users in this age group.

In addition, the Covid-19 pandemic which affected Vietnam since 2020 has driven domestic businesses to step up their digitization efforts and make use of cutting-edge technology in order to adjust to the new normal and prolonged periods of lockdown and movement limitations. 

As a result of the need for social distance and businesses' efforts to maintain operations, 2021 saw the country's digital infrastructure and apps expand quickly. Hundreds of new businesses entered Viet Nam's start-up sector using homegrown technologies to compete on a global scale. Also many international technology players have also stepped in and started to invest in Vietnam to make use of this potential market.

The digital economy has seen impressive growth wh ere the growth rate, reported by the Ministry of Information and Communications, in the first quarter of 2023 was 13.6%, up 3.99% compared to the fourth quarter of 2022. The share of the digital economy in GDP in the first quarter of 2023 was 14.62%. Considering such a growth, here we will explore a few fields of digitalization that show great potential for investors to invest in Vietnam.

Online shopping

Vietnam has the potential to become one of the nations with high consumption growth in the area as well as in Asia, according to a new report by the McKinsey Global Institute. Vietnam's consumer class, which is defined as individuals who spend at least VND 250 000 per day in purchasing power parity (PPP) terms, might grow by 36 million during the following ten years.

When compared to 2000, when fewer than 10% of Vietnam's population belonged to the consumer class, today's figure of 40% represents a significant transition. And by 2030, it may rise by over 75%. By 2030, 20% of Vietnam's population might be made up of the two highest classes of consumers (those spending 700,000 VND or more per day), whose growth is the quickest.
With the increase in the population disposable income and growing convenience of online shopping. E-commerce retail has grown into a promising field to invest in Vietnam. According to Vecom statistics, despite the overall challenges of the global and domestic economies, Vietnam's e-commerce business will continue to expand strongly and steadily in 2023.

Vietnam E-commerce Association also disclosed that with a present size of over 20 billion USD and retail e-commerce transactions accounting for 8.5% of the overall retail value of 5,680 billion dong in income from the sale of products and consumer services, the growth rate is over 25%. An encouraging sign for the stability and economic growth of the e-commerce sector is that in 2022, online retail sales of products will be 6.7% greater than overall retail sales.

This is a large market to invest in Vietnam with key players from both international and domestic origins:

  • Shopee: One of the top social e-commerce platforms in Vietnam, Shopee combines social elements with online marketplace functionality to provide a smooth purchasing experience.

  • Tiki: Another well-known social e-commerce site in Vietnam, Tiki sells a variety of things, including electronics, clothing, accessories, cosmetics, and home goods. To improve the purchasing experience and foster client confidence, Tiki takes advantage of user feedback and social media integration.

  • Sendo: A popular local social e-commerce site that connects sellers and buyers in Vietnam, Sendo focuses on creating a social shopping experience. It does this by incorporating user-generated content, social sharing features, and interactive engagement.

  • Tiktok shop: A social platform that acts as an e-commerce platform at the same time. Tiktok shop has recently risen in popularity becoming the second largest online e-commerce site in Vietnam, according to Metric. It gained popularity through livestream selling.

  • Lazada: While it is a conventional e-commerce platform, Lazada has included social aspects to improve the Vietnamese purchasing experience. Users may now connect, share, and evaluate items on the site, building a social community.

Digital banking

Vietnam is one of the countries in the early stages of digital transformation.Many banks are currently interested in implementing digital banking services, for instance: Vietcombank with its digital business model (Vietcombank digital); TPBank uses LiveBank to assist customers in registering their fingerprints, face recognition, and electronic identification (eKYC) to register and log in to their accounts; VIB uses artificial intelligence and big data to the credit card issuance process exclusively for Online Plus online shopping; and VPBank launched its digital banking service. Agribank, one of the top commercial banks in Vietnam, has been aggressively modernizing its operating methods, operations, and goods and services in order to invest in Vietnam’s digitalization of banking services.

The government has also been promoting to the general public to switch to online banking and cashless payment. Promotional efforts can be seen in the 2023 Cashless festival. The festival attracts a lot of people and tourists to open accounts, shop, and enjoy food through cashless payment channels such as scanning QR codes, bank cards, e-wallets…In Vietnam, wh ere more than 74.6% of individuals have a bank account, the digital revolution in banking and payment transformed consumers' payment habits. 3.71 million Mobile Money accounts have been established, and more than 90% of consumer transactions at several institutions are being made online.

Digital entertainment

We Are Social estimates that by the beginning of 2023, Vietnam would have 77.93 million Internet users, or 79.1% of the country's population, a rise of 5.3 million (up 7.3%) from the year's beginning. Additionally, this poll reveals that 49.2% of users listen to music online, with an average daily listening time of 1 hour and 12 minutes. According to a recent poll, 75% of Vietnamese people claim to listen to music daily. In Vietnam, this is also the preferred form of entertainment. In which up to 93% of those questioned listen to music on their mobile devices. The accessibility of music has increased along with the popularity of streaming, creating new opportunities for artists and listeners.

There are now two types of entertainment programming available on digital platforms: free and paid. Compared to commercial products, the free variant has less and less rich information. For the most popular movie streaming sites in Vietnam, FPT Play tops the charts with the streaming giant, Netflix in second place, according to a study by Q&Me Research. Another popular entertainment option for young people nowadays is Spotify, the largest music streaming service in the world. Spotify enables users to search and categorize music by record label, artist, songwriter, and theme.
According to experts, along with the trend of the world, the digital music platform and online streaming services is playing an important role in the Vietnamese entertainment market - a fertile field to invest in Vietnam.

Green energy and electric vehicle

Green energy

Green energy is produced using non-fossil fuels including solar, wind, hydro, biomass, and geothermal energy as well as sustainably sourced natural resources. These are energy sources that can eventually be replenished after usage.

According on the technology and kind of coal used, coal-fired power plants generate between 0.8 and 1 kilogram of CO2 for every 1 kWh of electricity produced, making it the fossil fuel-powered thermal power source with the highest greenhouse gas emissions. Coal-fired power stations release several dangerous compounds into the atmosphere in addition to CO2, including mercury, SO2, CO, mercury, arsenic, etc. Acid rain may result from these wastes.
Professor Mark Zachary Jacobson shared during the VinFuture Science and Technology Week 2022 convention that Vietnam has a large potential for energy sources such offshore wind and solar but has not yet fully used many of them. In actuality, developing new energy sources doesn't require much land. Vietnam scarcely exploits 0.01% of its land for wind energy.

Vietnam has a lot of potential for solar energy, which might advance more quickly than in other nations. Vietnam also has a large coastline, excellent onshore wind resources, and offshore wind resources. It may be argued that Vietnam possesses top-notch resources for the switch to green energy. Additionally linked and open to learning from other nations' experiences is Vietnam. Investing in Vietnam's renewable energy in the future is considered an essential move.

Electric vehicle

Electric vehicles are an unavoidable trend of the global auto industry, and Vietnam is no exception given the severity of air pollution. Vietnam is specifically thought of as a prospective market for electric vehicles in the near future. Since just 23 automobiles per 1,000 people are currently owned in Vietnam, there are more Vietnam investment opportunities to grow its electric vehicle industry, according to the Vietnam Petroleum Institute (VPI). This is merely a fraction of Malaysia and Thailand, respectively. This is seen as a chance for automakers to invest in Vietnam’s growing market.

In addition, electric motorbikes in Vietnam have also been growing tremendously in popularity. Due to their ease, affordability, and environmental friendliness, electric motorbikes have progressively grown more popular in major cities, particularly Hanoi and Ho Chi Minh City in recent years. In particular, the emergence of local producers with rigorous investment plans, concentrating on enhancing product quality and diversifying models, has raised consumer demand for electric motorbikes.

Although the market in Vietnam has reached saturation, the overall demand is still expected to exceed 2.7 million vehicles per year between 2023 and 2030. Electric bikes have the chance to gradually take over the market with high-quality goods that satisfy customers' expectations, establishing a habit of environmentally friendly transportation for everyone.

Investing in Vietnam’s digital field is considered quite lucrative as the country is heading towards better technological advancement. There are many fields to invest in Vietnam for investors, each has their own unique things to consider. To bring about an impact to these fields, investors are advised to do thorough research in each field before investing.

Read more:
Benefits and potential sectors to invest in vietnam in 2023

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