The rise of Vietnam’s economy has been a long time coming. For 15 years between 2000 and 2015, Vietnam recorded average annual gross domestic product (GDP) growth of 6.9%. In 2018, the country went on to log an astounding 7.1% GDP growth in 2018, beating an IMF forecast of 6.8%.
With the end of the Sino-US trade war nowhere in sight, the escalation of protectionist measures put in place by the two global economic powerhouses may ultimately benefit Vietnam, as manufacturers looking to diversify their supply chains amid geopolitical tumult start turning to Southeast Asia as a port of safe harbor. For investors who are considering entering Vietnam, they will be glad to know that the government had in October last year announced that it is planning to remove foreign ownership restrictions for state-owned enterprises and listed companies by the end of this year. But the so-called Ascending Dragon may offer much more for emerging tech industries.
In terms of human resources, Vietnam, with a wide talent pool of digitally skilled workers, is in pole position to capitalize on the use of blockchain to propel its economy forward. This advantage is not lost on the government, which is already collaborating with Japan’s leading universities, institutes, and information technology (IT) enterprises to train local IT workers to conduct research and development (R&D) programs in the areas of blockchain, cloud computing, and cybersecurity. In addition, the development of the blockchain talent pool in Vietnam is supported by private learning institutions, such as Blockchain Education Network (BEN) and CoderSchool.
Other than HR development, the establishment of a conducive startup ecosystem is also crucial to the development of blockchain, given its relative infancy. Startups need ample development space to explore the manner in which distributed ledger technology (DLT) can be deployed in any particular industry, and they may have found that room in Vietnam. Technology media platform e27 in its “Southeast Asia Startup Ecosystem Report 2018” noted that 336 new Vietnamese startups were established in 2018 with operations spanning 11 industry verticals, with e-commerce topping the list. With that in mind, let’s explore the use of blockchain to spur the growth of Vietnam’s e-commerce market.
In a report titled “e-CONOMY SEA 2018” published by Google in collaboration with Singapore company Temasek Holdings Pte. Ltd, it was noted that Vietnam’s e-commerce market was worth US$9 billion with a compound annual growth rate (CAGR) of 38% from 2015 to 2018. This effectively places Vietnam’s e-commerce market as the leader in Southeast Asia (SEA) in terms of GDP growth. The gross merchandise value (GMV) of Vietnam’s e-commerce market amounted to 4% of the country’s GDP which is the highest among SEA countries.
To sustain Vietnam’s breakneck growth, the next leap forward for its e-commerce market lies in the blockchain space. From cryptocurrencies banking the unbanked to access retail services and reducing the risk of chargeback fraud incurred by retailers to harnessing blockchain’s decentralized and autonomous features to eliminate middlemen and slash transaction fees, blockchain certainly has much to offer to the e-commerce market.
Key players in Vietnam’s e-commerce market have already caught onto these benefits and are looking to ride the next technology wave. The Vietnam E-Commerce Association (VECOM) had in June last year launched the Vietnam Blockchain Chapter, which aims to coordinate the blockchain adoption process of local e-commerce businesses as well as enhance the use of distributed ledger technology for VECOM’s activities, in order to deliver economic efficiency to its members.
With major movement from the e-commerce sector, other instances of top-down adoption are occurring in the tourism industry. The country’s leading budget airline VietJet Air has announced plans to build a blockchain-based e-commerce platform which will offer banking services, insurance packages, hotel bookings, and consumer goods to its customers within the next two years. From the bottom-up, local startup NEXTTECH is playing its part using blockchain platforms to facilitate traditional commerce transactions, thereby creating new business opportunities without limits or borders for the industry.
At the age of 74, Vietnam is a relatively young nation, but the economic and technological boom transpiring in the land of the Ascending Dragon could see its rapid advance into a developed economy.
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