Phong Dinh, CaVi-Tech

Technology is the key for Vietnam to get out of poverty and develop. The Prime Minister of Vietnam, Nguyen Xuan Phuc, urged the country and private businesses to invest more in technology. “If we do not make bold investments in science and technology, we would become stuck in a low-productivity, low added value” as he mentioned on May 2019, at the conference “Science-Technology-Innovation, A Pillar For Socio-Economic Development in Vietnam”.

The global and regional fierce competition, the difficulties in agriculture caused by the rising sea level, and the need for rapid industrialization after four-decade-long stagnation and isolation are the key reasons to the bursting demand for technology and machinery.

Many bilateral and multilateral free trade agreements have enabled Vietnam to become the Southeast Asian manufacturing hub and to enter the global and regional supply chains. In order to do so, Vietnamese manufacturing companies will have to buy more automated machinery. They must keep up-to-date with the latest technologies and solutions.
The biggest market in Vietnam for the following years will be in digital technologies. Commonwealth Scientific and Industrial Research Organization (CSIRO) recently released a Vietnam’s Future Digital Economy Report which examined and forecasted the mega-trends of the country’s digital economy through to 2045 with the emerging digital technologies, the projected new export markets for Vietnam, as well as, the development of modern digital infrastructure and smart cities.

“The next wave of digital technologies such as artificial intelligence, blockchain, Internet of Things, and cloud-based services have the potential to transform Vietnam into Asia’s next high-performing economy” said Lucy Cameron, senior research consultant at CSIRO.

The investment of new and advanced technologies will be a joint effort between the government of Vietnam and the business community, in return, they can share the profits from the export market. A recent survey reported by Google and Singapore’s Temasek evaluated the Vietnam’s digital market at $3 billion in 2015 and $9 billion in 2018, and it is estimated to rise to $30 billion by 2025. According to the Asia Internet Coalition (AIC), Vietnam, with its population of nearly 100 million people, has the highest speed of digital transformation among the nations in Southeast Asia. The Vietnamese government aims to turn the country into one of the 10 largest nations in the world to produce software and digital content. Vietnam’s online advertising market and e-commerce are also showcasing a strong growth. According to the Vietnam E-Commerce Association, the country’s e-commerce market is currently estimated to be over $5 billion and can potentially double over the next four years. Quint Simon, head of Public Policy in Southeast Asia at Amazon Web Services (AWS), surprised hundreds of business leaders and experts by announcing that Vietnam is one of the nations with the fastest growth of 64 per cent per annum in cloud computing expenditure.

The fast growth in exports to the US, the signing of the EU-Vietnam Free Trade Agreement (EVFTA), and the CPTPP, will also bring more order to the Vietnamese wood processing enterprises. This also makes Vietnam a great market for importing wood processing machinery and equipment.

In the beginning, Taiwanese companies accounted for 80% of the total wood processing machinery in Vietnam. In recent years, however, many leading wood machinery exporting companies from other countries such as Italy, Germany, Austria, China, Spain, and the US have also been taking part. Advanced technologies are being adopted by the wood industry at Vietnamese furniture export companies to stay competitive by improving productivity, saving resources and moving up the value chain.

Vietnam is a considerably large footwear exporter. However, the industry still has a low productivity due to its obsolete technology. This circumstance prompted many world leading companies to recently attend the leather product exhibition in Ho Chi Minh City in order to showcase their equipment, technologies for designing and manufacturing footwear, leather goods and tanning products.

With local machinery and equipment producers not being able to meet the growing demand, Vietnamese companies are forced to depend on imports. According to the General Department of Vietnam Customs, the country imported USD 26.8 billion worth of machinery in the first nine months of the year 2019, a year-on-year increase of 12.3% in imports mainly from China, the Republic of Korea and Japan.

According to businesses, competition among machinery suppliers in Vietnam will become stronger in the following years as many of the world’s leading machine producers from EU and Canada will join EVFTA and CPTPP.

Technology and machinery demand of Vietnam is forecasted to increase by at least 12-17% annually starting from 2020, according to international technology and machinery exporters.