While the Covid-19 pandemic is exposing Vietnam's economic vulnerabilities, it is an opportunity for the country to step up restructuring process and address the issue of low productivity.
The digital economy could contribute an annual average of 7% – 16.5% for overall productivity growth in the next decade, indicating its key role in enhancing productivity and efficiency of the economy, according to the National Economics University (NEU).
|NEU Vice Principal Hoang Van Cuong at the launching ceremony. Source: NEU.|
The university’s annual publication titled "Annual Vietnam Economic Review: Improving Productivity in the Digital Economy", which was launched today [April 20], sets up four scenarios for the development of digital economy in Vietnam until 2030.
In the first scenario where the digital transformation process remains slow, the annual average productivity growth is estimated at 6.25%, and the digital economy contributes 0.43 percentage points to the overall growth.
The second one envisions a completion of the transformation process would help the productivity expand at an annual rate of 6.97%, while the contribution of digital economy will be the highest among the four scenarios at 1.15 percentage points.
The remaining two scenarios projects productivity growth rates at 6.32% and 6.5%, respectively when the IT industry remains an outsourcing destination for others or Vietnam turns into a digital consumer, with digital economy contributing respective 0.5 and 0.68 percentage points.
The report suggested higher productivity growth is key for Vietnam to pursue rapid and sustainable economic growth. At a time when current growth driving forces are expected to diminish, the rapid advancement of the digital economy in the forms of automation and digitalization is presenting opportunities for Vietnam to maintain its growth momentum.
According to the NEU, economic sectors that could take advantage of digital technologies for higher productivity in the immediate future are manufacturing and processing, logistics, banking – finance, hi-tech farming, among others.
At the launching ceremony, NEU Vice Principal Hoang Van Cuong said the digital transformation process would require enterprises to change their mindset in corporate governance towards greater transparency and publicity.
To Trung Thanh, head of the NEU's Scientific Management Department, added while the Covid-19 pandemic is exposing Vietnam's economic vulnerabilities, it is an opportunity for the country to step up restructuring process and address the issue of low productivity.
Higher productivity growth would help increase Vietnam's economic resilience against future shocks, Thanh said.
A UNDP report on productivity and competitiveness of Vietnam's enterprises launched last year revealed Vietnam's manufacturing labor productivity remained around a quarter of China's and Malaysia's, one third of Indonesia's and the Philippines', a half of India's and Thailand's, and just around 7% of Japan's and South Korea's.
The country's average productivity in the 2016 – 2020 period is estimated at 5.8%, higher than the figure of 4.3% in the 2011 – 2015.
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