Vietnam remains fastest growing digital economy

HO CHI MINH CITY: Vietnam remains the fastest growing digital economy in South-East Asia for a second year in a row and is expected to hold this position until 2025, according to a report.

The eighth South-East Asia Digital Economy Report released by Google, Temasek and Bain & Co last week covering Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, said despite global economic headwinds, the region’s gross merchandise value (GMV) remains on an upward trajectory, growing at 11% a year, and is set to reach US$218bil.

The region’s revenues from the digital economy are poised to hit US$100bil this year. Vietnam’s GMV is expected to grow from US$30bil this year to around US$45bil in 2025 driven by eCommerce and online travel. The former will grow by 11% this year, and at a compound annual growth rate (CAGR) of 22% between 2023 and 2025, reaching around US$24bil.

Full recovery in the travel sector is expected this year, driven primarily by sharp growth in domestic travel. Online travel will grow at 21% to US$7bil.

According to the report, the irreversible offline-to-online behaviour shift continues to drive growth in digital financial services adoption, including digital payments.

While the adoption of digital payments in South-East Asia has reached 50%, Vietnam is also embracing digital payments and is the fastest growing country, increasing by 19% in 2022 and 2023 and at a projected CAGR of 13% from 2023 to 2025.

Strong support from the government, investments by banks and the widespread usage and popularity of QR codes will continue to drive digital payments adoption in Vietnam and digital payments will accelerate as the central bank promotes cashless payments in rural and remote areas.

Andrea Campagnoli, office head and founding partner of Bain & Co Vietnam, said: “It is remarkable that South-East Asia’s digital economy GMV and revenues continued their double-digit growth momentum, with revenues expected to break the US$100bil mark in 2023.”

The report also points out that high-value users (HVUs) continue to drive sustainable unit economics but significant growth prospects lie in increasing digital participation.

Marc Woo, Vietnam managing director for Google Asia-Pacific, said while over 70% of digital economy transaction values were made by the top 30% of South-East Asia spenders, non-HVUs also represented a significant opportunity.

In Vietnam, HVUs spent 5.4 times more than non-HVUs. While HVUs were more likely to increase spending over time, non-HVUs also presented a growth opportunity. — Viet Nam News/ANN