Why Vietnam has fastest-growing digital economy in Southeast Asia
While big tech in the West is experiencing a tumultuous time, digital economy growth enablers are creating unprecedented economic growth across Southeast Asia, with Vietnam leading the charge forward. But what is driving this change in the digital landscape?
Recently, we have witnessed substantial tech layoffs across Silicon Valley and beyond. By contrast, Southeast Asia's digital economy is predicted to hit US$200 billion GMV this year, outpacing previous predictions by several years.
A recent viral video documenting a day in the life of a Twitter employee suggested that some tech workers in the US were getting a little too complacent and seemed more focused on being pampered than changing the world. While the West is battling the prospect of a recession and a growing sense of entitlement from some workers, Southeast Asia is reaping the benefits of the digital transformation of everything.
A recent report by Google, Bain, and Temasek highlights how a homegrown tech workforce is mainly responsible for driving innovation in Vietnam. While much of the world is struggling with an economic downturn, uncertainty, and a tech skills shortage, Vietnam is celebrating the accolade of being the fastest-growing digital economy in Southeast Asia with a 28% YoY increase in GMV.
Southeast Asia currently has around 460 million internet users, but 100 million have come online in the past three years. Many suggest that the pandemic has played a vital role in driving adoption. But this only tells half the story as the winds of technological change transform digital and financial inclusion and put the region on course to reach its goal of being a US$1 trillion digital economy by 2030.
The rise of digital inclusion
The report reveals that digital consumers in Vietnamese cities have the highest digital adoption around e-commerce, food, and groceries as users increasingly embrace digital platforms. The rise of digital inclusion has also ushered in a race where so-called digibanks are racing to secure unbanked consumers. In addition, traditional banks are fast-tracking digitalization efforts across all financial services, from payments, remittance, and lending to investments and insurance.
In a bid to diversify its supply chain, tech giant Apple is in the process of relocating the production of its Apple Watch and Mac products to Vietnam. But this is just the beginning of the nation's ambitions as it aims to attract half of the Fortune-listed 500 global largest corporations to the area by 2030 and enter the top 60 countries in the World Bank's Ease of Doing Business rankings.
Businesses in Southeast Asia are also rushing to the cloud, with Vietnam once again dominating headlines with a CAGR of 32% between 2018 to 2023. The International Data Corporation (IDC) predicts that digital will empower one in three companies across the region to generate more than 15% of their revenue from online products and services.
Last year, Techcombank partnered with Amazon Web Services to transform the bank's cloud capabilities as cloud adoption in Vietnam's financial services industry continues to mature. Although Vietnam is grabbing all the headlines, a much bigger trend is emerging. Indonesia and the Philippines also have a cloud market CAGR of 31%, while Thailand (26%), Malaysia (25%), and Singapore (22%) are also gaining momentum.
Cloud technology empowers businesses to quickly scale their digital services and unlock opportunities by improving speed, efficiency, and productivity. Predictably, the usual suspects, Amazon and Microsoft, can be found trying to leverage the enormous cloud opportunities in the region as innovation and digital sustainability enter the conversation.
The gateway to Web3
In 2023, we expect adoption to increase and digital services and products to rule across Southeast Asia. As impressive as the numbers are, many will find it more interesting how ASEAN enterprises are beginning to lead the way in building diverse teams of people from various backgrounds with creative, critical thinking, analysis, and tech skills. Collectively these multi-skilled teams are enhancing their security capabilities from the ground up to drive agile innovation.
How we navigate our hybrid lives in online and offline worlds is ushering in a new world of decentralization. There are more than 400 blockchain-related startups in Singapore alone, as many increasingly see APAC as the gateway to Web3 and the rise of cryptocurrencies, NFTs, DAOs, decentralized finance, etc.
Ultimately, Vietnam's success story highlights what can be achieved with government support and how it empowers businesses to improve customer experience and adapt to digital trends to serve their local communities in a better way. These trends suggest that APAC could be on track to dominate the digital economy and further prove that technology really does work best when it brings people together.
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