Expert flags bottlenecks in Ho Chi Minh City’s digital economy

With an average annual growth rate of around 20 percent, the digital economy is widely seen as the key to helping the southern metropolis achieve double-digit growth.

Vietnam has set ambitious goals to become a modern, developed nation by 2030 and 2045.

As the country’s economic engine, Ho Chi Minh City has significant opportunities to realize these ambitions sooner and more fully, provided it acts decisively.

Building 'dual infrastructure' for new growth

To reach a GRDP growth rate of over 10 percent in the 2026-30 period, far above the projected 8.3-percent for 2025, Ho Chi Minh City should not just rely on expanding traditional, labor- and resource-intensive industries.

New growth momentum must come from productivity gains driven by the digital economy, which is expanding at three times the pace of overall GDP.

The city’s digital transformation strategy should focus on a ‘dual infrastructure’ approach and reposition its value chains around three core pillars.

The city should attach great importance to the shift from assembly to design and innovation in hi-tech industries.

It is vital to concentrate on design, testing, and advanced packaging in semiconductors and microelectronics instead of competing to attract large-scale assembly plants that demand extensive land and energy – both increasingly scarce in the city.

Ho Chi Minh City already hosts a hi-tech park and a semiconductor and microelectronics center, forming a solid foundation for developing ‘Made in Vietnam’ products such as chips for smart cities, Internet of Things (IoT) applications, environmental monitoring, and healthcare.

Controlling the design stage ensures that higher value-added products remain in the city instead of flowing overseas.

Besides, the development of ‘dual infrastructure’ requires the combination of technology, culture, and workforce.

A sustainable digital economy depends on not only 5G networks and data centers (hard infrastructure), but also a compatible social operating system (soft infrastructure).

A research by the Vietnam Institute for Digital Economy Development showed that the main bottleneck is not simply a lack of technology, but a shortcoming in compliance culture and digital mindset.

The transition to a digital economy must begin with standardizing data and processes within small- and medium-sized enterprises, enabling them to join global supply chains through transparent digital platforms.

Moreover, it is necessary to boost comprehensive digitalization of logistics and port infrastructure.

With the Can Gio international transshipment port project and an existing port system, the city needs to apply AI and blockchain to operation management to transform logistics into a high value-added service sector, rather than merely a transport function.

For instance, Saigon Newport Corporation has adopted e-port solutions and AI to optimize cargo flows, reduce waiting times, and cut logistics costs – key factors in boosting the competitiveness of Vietnam’s exports.

Identifying most critical bottlenecks

Despite its strong potential, the city’s digital economy faces serious constraints, primarily in hard infrastructure and institutional frameworks.

The city is under pressure from a ‘compressed urban’ model.

Chronic traffic congestion, flooding, and environmental pollution not only erode quality of life but also raise operating costs across the economy.

A digital economy relies on the rapid movement of goods and people, but current transport infrastructure remains weak, undermining the efficiency of e-commerce and fast-delivery services.

The second bottleneck is institutional frameworks with fear of making mistakes.

While technology evolves by the hour, legal frameworks often change over years.

Vietnam still lacks clear regulations for emerging areas such as digital assets, cross-border data governance, and artificial intelligence.

This legal uncertainty makes technology investors hesitant to commit large capital or establish R&D hubs due to perceived regulatory risks.

Delays in public investment disbursement are another concern.

The city needs to mobilize more than VND804 trillion (US$30.5 billion) in investment, yet disbursement rates remain persistently low.

When state seed capital is blocked, digital infrastructure and key projects stall, discouraging private investment in turn.

Fully seizing ‘diamond opportunity’

Ho Chi Minh City is stepping up efforts to address its most critical bottleneck – institutional and operational lag – by fully leveraging Resolution 98, which outlines pilot policies for the city’s development.

It is widely regarded as a ‘diamond opportunity’ for pioneering unprecedented breakthrough mechanisms.

The city is rolling out controlled pilot mechanisms (sandboxes) for new technology and financial sectors.

As part of its plan to build an international financial center, the city is drafting legal frameworks that allow fintech and digital asset firms to operate in a supervised environment, with liability exemptions for non-deliberate risks.

This directly addresses the fear of making mistakes and encourages innovation.

To remove bottlenecks, three priorities stand out.

The first one is shortening sandbox trial timelines.

Resolution 98 has a five-year lifespan, nearly half of which has already passed.

As such, approval processes for sandbox participation need to be accelerated.

Policymakers should allow beta-testing sharing-economy models, AI, and digital assets on a small scale such as Saigon Hi-Tech Park or Quang Trung Software City to generate rapid feedback.

The second one is shifting from ‘managing’ data to ‘enabling’ data.

Instead of focusing solely on tight control, authorities should expand open data initiatives.

Publishing anonymized datasets on traffic, planning, and the environment would empower tech start-ups to help solve urban challenges, generating innovative solutions without additional public spending.

Also, there must be concrete protection for officials willing to pioneer change.

As digital transformation inherently involves risk, without clear mechanisms to protect public servants who dare to innovate in good faith, the administrative system may slow down due to fear of error.

* This article was originally written in Vietnamese by Dr. Tran Quy and translated by Tuoi Tre News.