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Why Vietnam is Forecast to be the Fastest Growing Internet Economy in Southeast Asia
Vietnam is projected to be the fastest-growing internet economy in Southeast Asia in the next 10 years according to the e-Conomy SEA 2021 report by Google, Temasek, and Bain, Southeast Asia’s Internet economy research program. It also predicts that by 2025, the country’s overall internet economy will likely reach US$57 billion in value with a compound annual growth rate (CAGR) of 29 percent.
By 2030, Vietnam’s internet economy is expected to rank second in Southeast Asia, reaching US$220 billion in gross merchandise value (GMV).
Despite a 45 percent decrease in GMV of online travel in 2020-21, it is expected that the sector will record an increase of 44 percent by 2025. Meanwhile, e-commerce, transport and food, and online media witnessed double-digit growth in GMV within the same period. These industries are forecast to experience an uptrend towards 2025.
The report also noted that since early 2021, Vietnam has added 8 million digital consumers, of which 99 percent reported their plan to continue using online services post-COVID-19.
Vietnam remains an attractive innovation hub with strong growth fundamentals and a growing digital ecosystem, attracting foreign investment in the digital market.
To see what’s driving this growth we look specifically at e-commerce, fintech, and education technology (Edtech).
The pandemic has paved the way for the increasing digital consumption in Vietnam’s e-commerce market, posting the fastest growth rate in Southeast Asia. Vietnam is the third-largest e-commerce market in Southeast Asia just after Indonesia and Thailand.
Since the beginning of the pandemic, customer demand for online purchases has increased dramatically. More than 70 percent of Vietnam’s population has internet access, 50 percent have used online shopping, and 53 percent have used e-wallets or online payments.
Responding to this, many merchants have embraced digital tools as 99 percent of digital merchants now accept digital payments while 72 percent have adopted digital lending solutions. As an important driver in the country’s internet economy, the industry has attracted significant government investment and support.
While several Vietnamese e-commerce platforms have jumped into to capture this market, most recently, Decree 85/2021/ND-CP (Decree 85), has imposed significant regulations on cross-border transactions via e-commerce and specific requirements for market access for foreign entrants.
This article was first published by VietnamBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected].
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