AI, Digital Transformation and Vietnam’s Economy: A Leap Toward Sustainable Prosperity
Vietnam is in a unique position in its economic development. The nation, which has a strong agriculture sector and has long been known for its labor-intensive manufacturing economy is becoming a dynamic player in the global digital economy. Artificial Intelligence (AI) and digital transformation are not just technological upgrades, but it is a paradigm shift in how Vietnam is going to grow – from relying on cheap labor and capital accumulation to innovation-based and high productivity growth. The shift enables Vietnam to fulfill its ambitious goal of becoming a high income country by 2045.
The digital economy is already contributing a significant portion to the total GDP, accounting for about 14% of GDP in the mid-2020s (around $72 billion value added) in Vietnam, compared to lower double digits in previous years of the decade. The government aims to contribute 25-30% by 2030 and has implemented policies to support this, such as the resolution of breakthroughs in science, technology, innovation and digital transformation, Resolution 57-NQ/TW. The benefits of AI are expected to grow by upwards of $120-130 billion by 2040, thanks to productivity gains, new consumer services and efficiencies across sectors.
My article examines the relationship between AI, digital transformation and the economic development of Vietnam, providing some historical background, present trends, sector-specific effects, challenges and potential future directions.
Historical Context
The digitalization journey of Vietnam really began to take off in the early 2020s. The National Strategy for Research, Development, and Application of Artificial Intelligence until 2030 (Decision 127/QĐ-TTg, 2021) was an important milestone, which targets Vietnam to become one of the top AI positions in ASEAN. This was supported by the National Digital Transformation Program (Decision 749/QĐ-TTg) with targets for e-government, digital infrastructure, and skills development.
By 2024-2025, bolder steps emerged. Resolution 57 catapulted science, technology and digital transformation as the main growth driver. The Law on Artificial Intelligence (which takes effect in 2026) and other guidelines and regulations have implemented risk-based regulation, ethical guidelines and infrastructure investments, such as the National AI Supercomputing Centre. The policies reflect a mix of ambition and pragmatism – promoting innovation and protecting sovereignty, data privacy, and national security.
Vietnam has a large population of young people who are tech-savvy and more than 85 million internet users, and a vibrant startup ecosystem (with hundreds of AI-related startups). The nation is the second largest in Southeast Asia in terms of AI startups behind Singapore.
Broadening the Economic Base
The scope of the digital transformation includes e-commerce, fintech, cloud computing, the 5G rollout, and data utilization. E-commerce has experienced a rapid growth in Vietnam, with the gross merchandise value projected to hit between $31-39 billion by 2025, as platforms continue to be a major contributor. The rise of cashless payments and the adoption of digital services in traditional industries. The boom in cashless payment, and the digitalization of traditional industries.
In the past few years, the revenue of the ICT sector was over $150 billion and hardware and electronics exports were over $130 billion. Over 80,000 digital technology enterprises operate nationwide, creating jobs and attracting FDI.
Digital tools are used in manufacturing to optimize supply chains, predictive maintenance, and quality control, the backbone of Vietnam’s export-led growth. There are more than $16 billion in productivity gains possible in this sector alone via AI-driven automation. Precision farming is beneficial for agriculture, which has a considerable workforce, even at times of climate challenges.
Government services have become quickly digitized. The NPNP (National Public Service Portal) processes thousands of procedures electronically, resulting in billions of dollars in cost savings. Hanoi, Ho Chi Minh City, and Da Nang are piloting smart city projects with the help of AI. The cities of Hanoi, Ho Chi Minh City, and Da Nang are implementing smart city projects through the use of AI.
Economic Impacts and Growth
Digital transformation and AI contribute to multiple channels of growth:
- Productivity Enhancement: Labor productivity has improved but there is still room for improvement. AI can complement human efforts and automate repetitive tasks to address these.
- Job Creation and Transformation: Some current roles will be phased out while new positions will arise within the field of AI engineering, data science, cyber security and digital services. Net effects are related to upskilling and in adaptive economies, global precedents show a net gain of work created over lost work.
- FDI and Exports: AI and digital infrastructure make Vietnam more attractive for bringing in higher tech investments. AI can help eliminate trade barriers and improve exports.
- Inclusive Growth: Digital tools can help reduce urban-rural gaps, strengthen SMEs and facilitate green growth.
Vietnam’s digital economy continued to grow at a higher rate than other countries in the region, establishing it as the region’s fastest growing digital economy.
Challenges
Incredible improvements were made, but there are still challenges to address:
- Talent Shortage.
- Infrastructure Gaps.
- Data and Governance.
- SME Adoption and Inequality.
- Global Competition.
All of these needs were met by coordinating investment in education (particularly STEM), the public/private partnership, regulatory sandboxes and international cooperation.
Strategic Recommendations
To maximize benefits:
- Invest in Human Capital: Improve and expand AI curricula, vocational training and lifelong learning. Incentives for attracting world-class people and reversing the brain drain.
- Build Sovereign Infrastructure: 1) Speed up data centers, 2) sovereign cloud, 3) open datasets, and make sure they are interoperable.
- Foster Ecosystem Collaboration: Improve the relations between government, academia and industry. Help startups with startup funding, vouchers and sandboxes.
- Sectoral Prioritization: Focus on high impact topics such as smart manufacturing, precision agriculture and public services.
- Ethical and Inclusive Framework: Incorporate moral and inclusive AI principles for trust and equity.
- Monitor and Adapt: Keep strategies up to date with global trends and domestic results.
A successful implementation of AI and digital transformation could help Vietnam continue its high growth trend regardless of unfavorable global trends, making it a more diverse economy and increasing its global value. The $120-130 billion in AI contributions by 2040 and 30% of digital GDP sound lofty, but possible with targeted action.
It is a Vietnam story of resilience and adaptability—a recovery from the war and an Asian Tiger aspiration! This spirit is reflected in the use of AI and digital solutions, which are opportunities for inclusive and sustainable prosperity. Vietnam is set to do more than just keep up with the AI revolution in the coming years; it will determine the future of the rest of the world. The country has great potential to write a new page into economic achievement with vision, team work and practical policies.
Copyright © 2026 by Muhammad Ali Pasha. All rights reserved. Reproduction or distribution of this content, in whole or in part, without prior written permission is prohibited.
