(Photo: baodanang.vn)

Keywords: State management, digital economy.

1. Issues of a digital economy

A digital economy is “an economy operating mainly on digital technology”, especially electronic transactions conducted via the Internet. Digital economies are present in all economic sectors and fields (industry, agriculture, services, production, distribution, circulation of goods, transportation, logistics, finance and banking, etc.) to which digital technology is applied(1).

In essence, these are the organizational models and modes of operation of the economy based on the application of digital technology. The growing field of digital technology has paved the way for innovation and development across the globe. The application of technological advances over the years has affected businesses as well as every aspect of life. Digital technology promotes many businesses to improve the development model, create several new industries and blur geographic boundaries.

The manifestations of digital technology appear anytime and anywhere in social life, such as e-commerce sites, online advertising or applications on food, transportation, and delivery. Digital technology is also integrated to meet customers’ needs on convenience. Furthermore, at macro level, the digital economy has also contributed significantly to the integration of Vietnamese businesses into the global technology chain.

A digital economy is characterized by the capacity of gathering in 3 main interwoven processes including material processing, energy processing, and information processing. Of these three, information processing plays the most important role, and is also the most easily digitized field.

The connectivity between subjects and the economic cycle helps to connect resources, reduce several intermediaries and increase opportunities to access global value chains, thanks to the achievements of information technology and the Internet.

Western-developed countries - the origin and main ground for the information technology boom, especially from 2000 to 2010 (Google, Amazon, Facebook, and Apple all started during this time) - recognized the importance of digital economy promotion.

Following the United States, Europe makes steps with the vision and plans for a “Single Digital Market”. Australia has “Digital Australia”, and Singapore raises the slogan “Smart Nation” to make technology a core. Digital Nation has become a vision and a target from which governments formulate national digital transformation strategies, creating new development motivation for the economy in order not to be left behind in the fierce global market competition.

The digital economy is now worth more than $3,000 billion USD and uses approximately 10% of the world’s electrical energy(2). Businesses of all backgrounds and sizes are increasing their dependence on a secure, stable and reliable internet platform that helps them perform day-to-day operations.

Thanks to the digital economy, economic performance has achieved high results and industries have made breakthrough changes in business models, from e-commerce, online advertising on social networking sites (i.e. Facebook and Instagram), and entertainment (i.e. Netflix and Pinterest), to transportation (i.e. Uber, Grab, goViet), to distribution, both wholesale and retail (i.e. Lazada and Shoppe). The appearance of business models completely different from traditional ones - global media firms who do not own news copyrights, taxi firms that do not own vehicles, hotel firms that do not have rooms - has been contributing to shaping a new economic age, an era of the digital economy. In the context of the global 4.0 technology revolution, it is the contribution of a digital economy to Vietnamese enterprises that helps them participate in the global technology chain. Vietnam must also be in tune with the world’s digital reel. So what position is the country in in the digital economy and what should we do to develop the digital economy and integrate into such a reel?

In a study by the Global Business Center of Tufts University (USA), Vietnam is now ranked 48th out of 60 countries with the fastest digital economic transformation in the world and is also ranked 22nd in the rate of digital development(3). These figures show a big change in the Vietnamese business model - a turning point that helps Vietnam’s socio-economic development to a new level.

Besides, according to experts, Vietnam has the advantage of human resources and the support of the Government. Therefore, creating a national wave and a driving force for developing the digital economy is the direction that Vietnam can promote to develop the digital economy more strongly.

2. State management in the digital economy in Vietnam today

a. Identify 3 main pillars of the Vietnamese digital economy

Many experts believe that it is necessary for Vietnam to build a digital economy based on three main pillars.

The first pillar is the digital infrastructure and services that consist of hard infrastructure and telecommunication networks as a foundation for the creation of soft infrastructure, alongside digital services that help optimize the operations of the economy.

The second pillar is a digital resource that consists of an open data and knowledge ecosystem useful for timely prediction and high economic efficiency. Currently, the national database on agriculture, finance, population, and land management has not been completed. The data of online public services is still unconnected at the provincial department level and in localities, so it has not shared information consistently. People, when coming for public services, often have to declare information many times for each service.

The third pillar is a digital transformation policy that consists of services, the policy of converting from e-government to digital government, the policy of training high-quality digital human resources, the policy of digital business investment, the information security policy, digital sovereignty, and intellectual property.

Prime Minister Nguyen Xuan Phuc also said that the building of an e-government must be associated with the role of the head, speeding up the information technology application in administrative reform, ensuring effective implementation. Therefore, Vietnam is establishing a National Committee on E-Governance led by the Prime Minister as Chairman. Committee members are deputy prime ministers and ministers directly involved in the tasks of building e-Government. At the same time, there is the participation of representatives from the private sector to promote the effectiveness of public-private partnerships in implementing this task.

b. Actions of Vietnam Government

Since the 2000s, the Party and State have always paid great attention to developing information technology applications in the activities of state bodies, identifying this as a driving force contributing to promoting the innovation to take shortcuts and proactive steps to successfully implement industrialization and modernization. In 2014, the Politburo issued Resolution No. 36-NQ/TW on promoting the application and development of information technology to meet the requirements of sustainable development and international integration with the view: “Application, development of information technology in all fields, but with focus and concentration. Prioritizing the information technology application in administrative management and provision of public services, first of all in fields related to businesses and people such as education, health, transportation, agriculture..”.. The Resolution has set specific targets by 2020 “to effectively implement the administrative reform program, closely associated to the development of e-Government and to provide high-level online public services in many sectors”. Concretizing the Party’s policy, in 2015, the Government issued the first Resolution focusing on e-Government in order to “promote the development of an e-Government, improve the quality and performance of government bodies, serving people and businesses better and better, raising Vietnam’s position on e-government according to the United Nations ranking, publicize and be transparent of activities in the bodies in the network environment”.

One of the goals set out in the Government’s Resolution No. 36a/NQ-CP on

e-Government is that “by the end of 2017, Vietnam is among the top 3 countries in ASEAN on the online public service index (OSI) and the United Nations’ e-Government Development Index (EDGI)”.

On that basis, ministries, sectors and localities have made great efforts and achieved important initial results as a ground for implementing the development of an e-government. The legal corridor in the information technology application for e-government development has gradually been established. Some databases for informative platforms, such as the National Enterprise Registration Database, National Insurance Database, National Residence Database, and National Land Database are under construction. There are already components being put into operation. State bodies have provided a number of essential online public services for businesses and citizens like business registration, tax declaration, tax payment, electronic customs, and social insurance. A number of ministries and sectors have processed documents and works on the network environment. In some localities, an electronic one-stop information system has been put into operation, gradually improving the transparency and responsibility of civil servants. The quality of human resources for information technology in Vietnam has also been paid attention to.

The implementation of an e-Government in recent years has made important and more systematic changes. Vietnam has developed national systems for things like customs, tax, and business registration. As of the first quarter of 2017, 26 of 30 ministries, ministerial-level bodies, government-directly under bodies and all 63 provinces and centrally-run cities had completed the inter-connection of document management software with the Government Office. This inter-connection formed a unified electronic management system from central to local levels, allowing automatic identification regarding the status of document processing among bodies(4).

The Government Office has essentially completed the electronic document inter-connection with Ho Chi Minh City People’s Committee. This will be a model for expanding nationwide. After that, the Government Office will continue to deploy and complete inter-connection with 7 ministries, sectors and localities, namely the Ministry of Culture, Sports and Tourism, Government Inspectorate, and provinces/cities: Da Nang, Quang Ninh, Bac Ninh, Long An and Dong Nai.

Additionally, for the public disclosure of document progress, all 63 provinces and cities and 19 out of 30 ministries and sectors have publicized the processing progress on the Government Portal. The Government Office also publicized the handling of documents by the Government Office leaders.

Regarding the provision of online public services, out of 83 online public services assigned to 20 ministries and bodies, 78 ministries and sectors have currently implemented 78 online public services. Out of 44 online public services assigned to localities, 32 out of 63 localities have made the deployment(5).

Although initially achieving some positive results, there are still many challenges and difficulties in the roadmap for building and developing an e-Government to accomplish the tasks set out in the Resolution 36a. These tasks include achieving the goal of comprehensive reform for 3 groups of online public service indexes (OSI), telecommunications infrastructure and human resources (HCI). In general, the implementation of e-Government has not achieved the expectations given by Party leaders and Government leaders. Vietnam’s position in the United Nations e-Government Development Index is still at an average level, according to the latest UN report. In the last two years, we have increased by 1 spot, ranking 88 out of the 193 countries and territories that are were assessed. In ASEAN, Vietnam ranked modestly in the 6th position(6). The results of implementing the many tasks of an e-Government are still very slow, and the performance of many locations is still formative. The development and deployment of national databases and information technology infrastructure serving as a ground for e-government development is very slow compared to the required schedule. Data information systems are still local, and there is no connection for sharing data among information systems. Data quality and information is not updated timely and accurately. Much of the implemented information hasn’t ensured the information’s safety; security and national reliability in electronic transactions is still low. The provision of online public services still focuses on quantity while the rate of online public service records is very low. The handling of administrative procedures and documents still involves paperwork and is very manual. There are still barriers in the mechanism of investment in information technology application, which makes it difficult for businesses to deploy projects. This had led to many leaders in the Government, ministries, sectors and localities not having sufficient digital data information for the managed subjects they manage.

The main cause of this problem is that many levels and sectors have not clearly defined the specific roadmap and tasks to deploy. There is still a lack of linkage between information technology application, administrative procedure reform and innovation of working methods, especially in relationships with people and businesses. The role of the leaders in implementation direction has not been promoted. There is still no platform for integrating and sharing data among state administrative bodies as well as regulations on integration and sharing mechanisms. The habit of localizing data still exists in many bodies. The assurance of safety and security for information systems in state bodies has not been given due attention. We especially lack a comprehensive legal framework for building an e-government, a lack of specific regulations on personal and organizational authentication in electronic transactions, as well as legal regulations on archives, electronic storage, and legal validity of electronic documents in administrative transactions and payment. The mechanism to ensure the implementation of e-government establishment tasks is not strong enough, which is also the cause of the ineffective and formative implementation. The participation of the private sector in building an e-government has not been maximized and lack the financial and investment mechanisms suitable to the characteristics of information technology projects.

3. Advantages and problems of the State management in the digital economy in Vietnam

a. Advantages for developing and managing a digital economy in Vietnam

Vietnam has a young population that is agile in grasping technology and is one of the top countries with growth in the number of Internet users, smartphones, and social networking. Digital transformation, while not yet requiring a national level strategy and government action, is in essence already one step ahead in the private sector.

On the other hand, the information technology and telecommunications industry has created 3G and 4G telecommunications infrastructure covering 95% of the whole country and will soon deploy 5G. This is an important foundation for the digital economy in Vietnam.

Apart from that positive aspect, at the national level, the major socio-economic issues of the digitalization process are becoming more and more evident, beyond the private sector’s solving capacity, and need the state’s action. Indeed, this is not only happening in Vietnam. These problems have also appeared in other countries and are becoming common policy problems at the global level.

In order not to miss this opportunity, first and foremost, the Government must renovate and transform itself to become a Government 4.0, having sufficient capacity to manage national development in the digital age. At the same time, the whole society, at all levels and sectors, needs to change from awareness to action, to promote the advantages brought about by the information technology application and digital technology and meet the challenges of the digital economy. With political determination, unifying the point of view “quick action, big results, steadiness in step by step” and “great overall thinking, but starting from the smallest things will have great effects”, the Government has assigned the Government Office to assume the prime responsibility for drafting the Resolution on key tasks and solutions for e-government development in the 2018-2020 period, with orientations to 2025, clearly defining objectives, roles, responsibilities, and specific roadmaps, setting up a system of performance-monitoring indicators, and avoiding formality without meeting requirements.

b. Issues in State management of the digital economy in Vietnam

Firstly, people’s Internet privacy needs to be protected. The Facebook incident, through the Cambridge Analytica scandal - when the personal data of about 80 million US user accounts was illegally exploited by third parties - was the “peak” that startled the world into looking back on how their personal information and data was being managed and exploited by businesses. In Vietnam, data leakages and the purchasing and exploitation of personal data are also common, with a few prominent cases involving large enterprises.

Secondly, there is a problem with fake news, inaccurate information and extreme statements on social media. “Gossip” is a thousand-year-old human culture. But ill speaking and fabricating in the “village bamboo” environment when it is done online - which is borderless, the speed of spreading and sharing as fast as light - becomes a problem that not only harms the interests of each individual and community but also the whole society.

In Vietnam, not only are the Party, State, and leadership attacked by fake news (information called “bad,” and “poisonous”), but every citizen and community is suffering similar problems.

Therefore, how can one balance between economic development (social networking is a platform for business) and the demand to express views, personal opinions, and share user information? How can one balance the control of “extreme speeches” and the freedom of speech and expression of the people? This is a problem that is not easy to solve and has no answer at present.

Thirdly, the economic issue focuses on management, especially on how taxes are collected for trade activities and the provision of cross-border services. The Internet is borderless; territory and geography becomes relative when one can sit anywhere and do business. Impeding the flow of information and data is like cutting the lifeblood of digital economics. But how can one collect taxes and ensure benefits for employees when Grab, Netflix, and Airbnb do not have offices in Vietnam but do business here?

Finally, the fourth issue, which is not a problem for every country but is a specific issue for Vietnam: the disputed resolution system for business, trade and civil activities in a digital environment. The judicial system is an inherent weakness in Vietnam and is a further problem in the digital era as the speed and the extent of the dispute’s impact will be exponentially worse online than it would be in reality.

Without a good judicial system to resolve disputes and to protect the population, it is likely that businesses will migrate to a country with a better judicial system. For digital businesses, the hard jurisdiction boundary is no longer meaningful, and this is not a simple warning; Vietnamese startups’ preference of Singapore for business registration is vivid proof.

Additionally, some shortcomings have been pointed out such as a slow-deploying, data-sharing technology platform. The population’s national database has especially made no steps. Public services are discrete and not people and businesses-centered, resulting in a very low number of online documents. Some services do not even generate records.

Paper and online mixed services have caused trouble for people and civil servants. Information technology human resources are still thin and tend to move to the private sector with low security. There are situations of localizing, not willing to share and inter-connect data, but there is no explanation of the head responsibility.

4. Some State management solutions in the digital economy in Vietnam

Firstly, it is necessary to accelerate the development and accomplishment of a comprehensive and adequate legal basis for the deployment and development of e-government.

According to the experience of developed countries on an e-government,

e-government institutional foundations must go ahead, even while we still lack many regulations and policies. Therefore, it is necessary to promulgate decrees on data sharing, on protecting personal data, on electronic authentication, on protecting personal data and ensuring the privacy of individuals, and on the reporting regime among state administrative bodies. We must urgently issue a decree on investment in information technology applications suitable to the characteristics of this field, replacing Decree No. 102/2009/ND-CP on investment in information technology application in the operation of State bodies and Decision No. 80/2014/QD-TTg of the Prime Minister on hiring information technology services. In the coming time, it is necessary to study and propose the development of the e-government law and guiding documents to ensure the legal corridor for developing an e-government based on open data, applying new technologies towards a digital economy, and a digital society.

Secondly, the national platform databases must be completed

In parallel with the establishment of institutions, it is necessary to focus on perfecting the establishment of national fundamental databases, especially the national database on population and land. To ensure the effectiveness of these national databases, it is necessary to establish an integrated platform for data sharing between central and local information systems, an inter-connection system for sending and receiving electronic documents, an electronic identification authentication system, an inter-connection between the Government’s specialized digital signature authentication systems and public digital signatures, and a national payment portal to ensure smooth data and information connection among all levels of government.

Thirdly, it is necessary to set up application systems to serve the people, businesses and Government’s administration and regulation

Accordingly, the Government Office, ministries, sectors and localities are actively constructing the national public service portal and implementing the one-stop information system connecting the public service portal of ministries, sectors and localities. This is an important system to connect the Government with people and businesses, demonstrating the serving spirit of the Government. The national public service portal needs to progress to be the Government’s consistent, complete and friendly digital presence to serve citizens and businesses.

To serve the management and administration of the Government, in the coming time, the undocumented Government Information Systems and Electronic system of policy consultations - a national reporting and information system towards the construction of a Steering and Executive Center for the Government and the Prime Minister - is being researched and set up.

Fourthly, it is necessary to review, rearrange and mobilize all resources, both financial and human.

In recent years, the Government has made certain investments in the information technology application. However, the investment projects are still scattered and have not created a fundamental change to build an e-government. In the coming time, in order to improve investment efficiency, it is necessary to review, rearrange and mobilize resources to deploy the prioritized tasks of e-government development, adjusting specific investment mechanisms for information technology, and enhancing socialization to promote the effectiveness of public/private cooperation in this work. At the same time, it is necessary to: organize training, coaching, exploitation and use of information systems; use of online public services at levels 3 and 4 for people, businesses and research; and develop incentive mechanisms to attract talents to participate in building and developing an e-government.

Fifthly, promote the leading roles, improve enforcement efficiency and explain responsibilities.

Manifesting the determination to build the e-government, the Prime Minister directed the establishment of the National Committee for an e-Government on the basis of consolidating the National Committee on the information technology application, of which the Prime Minister is the Committee Chairman. The Committee has members who are ministers directly related to the tasks of building an e-government and who will make a through link to ministries, sectors and localities for implementing said tasks. At the same time, the Committee has the participation of representatives from the private sector to promote the effectiveness of public/private cooperation in implementing this task. The tasks of deploying an e-Government will be assessed in association with the individual responsibilities of the heads of each ministry, sector and locality and measured through a set of evaluation criteria of efficiency and quality, and result and quality measurement in building an e-government to ensure accuracy and fairness through the Commission’s Assistant Task Group n

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l Endnotes:

(1) https://unitrain.edu.vn, “What is digital economy?”

(2) https://vov.vn, “Vietnam’s digital economy shall probably be less competitive”.

(3) https://idtvietnam.vn, “Vietnam’s position in the global digital economy”.

(4), (5) egov.chinhphu.vn, “Developing e-government in the 4th industrial revolution”.

(6) tapchitaichinh.vn, “Vietnam e-government ranked 88 in the world”, November 6, 2018