Vietnam firms rank higher than global average in digitalisation: DBS

[HO CHI MINH CITY] More companies in Vietnam have adopted a “strategic, consistent or radical” approach to digitalising customer experience and engagement than the global average, according to a study by DBS.

DBS ranked Vietnam second behind only Singapore in this area, and above eight other surveyed markets including Australia, Hong Kong, India, Indonesia, Mainland China, Taiwan, the UK, and the US.

The survey found that the majority of Vietnamese companies (63 per cent) were satisfied that digital transformation had helped them achieve overall profitability. This was followed by an improved customer insight (61 per cent) and competitiveness in the market (57 per cent).

Over half of the Vietnam firms (56 per cent) said they have been using digital technology in customer service and engagement most effectively.

However, gaps in talent (42 per cent) and data privacy issues (35 per cent) remained the biggest concerns hindering Vietnamese firms from accelerating the digital transformation process.

In addition, about six in 10 companies said the lack of collaboration between their commercial function and the finance and treasury function made the digital transformation “more challenging than it needed to be”. They also said the difficult access to data was the most frequent challenge for their teams working together towards digital transformation.

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Earlier this year, Vietnam’s government issued a masterplan for 2021-2030 with a goal to become a developed and high-income nation by 2050. That plan noted that Vietnam will strive towards being a digital, green and circular economy with science, technology and innovation being the main growth drivers.

In a news release on Monday (May 15), DBS Vietnam’s head of institutional banking group Joo Young Park said that Vietnam’s ambitions will drive the strategic priorities of forward-thinking Vietnamese companies.

“It is important that these businesses set well-defined goals for digital transformation to capitalise on favourable long-term market prospects and stay competitive,” he said.

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“Building strong internal data infrastructure, developing robust data governance policies, and investing in enabling technology such as cloud and advanced analytic tools, will help the developing digital leaders in Vietnam to realise their potential, and cement the country’s place as a leader in digital transformation.”

Vietnam’s digital economy as a whole grew 28 per cent year on year to reach US$23 billion in 2022, according to a report by Google, Temasek and Bain & Company.

Researchers predicted that Vietnam will become the fastest-growing digital economy in South-east Asia with an annual growth rate of 31 per cent between 2022 and 2025.

In an effort to better navigate this digital future, Vietnam recently tightened rules on data localisation and personal data protection by putting into force several decrees guiding the implementation of the 2018 Cybersecurity Law.

These rules mandate that all local companies and certain foreign firms that provide services in areas such as telecommunications, e-commerce and online payments must store specific types of data in Vietnam for at least 24 months. They must also implement management and technical measures to protect personal data.

Given that foreign companies currently hold a roughly 80 per cent share of Vietnam’s cloud-computing market, observers said these rules will help local businesses play a stronger role in the country’s ongoing digital transformation push.

US market research and consulting company Arizton forecast that the size of Vietnam’s data centre market will nearly double to US$1.04 billion by 2028 with a compound annual growth rate (CAGR) of nearly 10.8 per cent.

Meanwhile, Vietnam’s cloud service market is projected to hit US$603 million in 2026 with a CAGR of about 19 per cent, according to a report by Research and Markets.