AI in Vietnam: Opportunities and Challenges for Foreign Investors
Numerous sectors in Vietnam have already embraced AI, a groundbreaking technology with vast potential for streamlining processes and procedures. However, as foreign firms seek to capitalize on this trend in Vietnam, they should be mindful of certain challenges.
As nations strive to harness the transformative potential of artificial intelligence (AI), Vietnam stands at the precipice of a promising opportunity. With its dynamic economy, young population, and eagerness to adopt new technology, Vietnam presents an attractive landscape for the application of AI. However, there are still some challenges regarding regulatory frameworks and skills-gaps that firms may face when entering this market.
By examining the current state of AI adoption, this article sheds light on how Vietnam can navigate the path towards becoming an AI-powered nation, the opportunities and challenges for foreign firms in AI in Vietnam, as well as some key sectors already using this promising new technology.
AI development in Vietnam
In 2022, the revenue of the entire ICT industry was estimated at VND 3,893,595 billion (US$164.6 billion), up 12.7 percent compared to 2021 and 1.5 times higher than the country’s forecast GDP growth in 2022, according to the Ministry of Information and Communications.
Oxford Insights, in its Vietnam’s Government AI Readiness Index in 2022 also scored the emerging economy 53.96 out of 100, up seven places from the year before, and ranking Vietnam 55 out of 181 countries. These are promising results.
However, AI in Vietnam faces crucial labor shortages. FPT Digital’s DxReport found that Vietnam has nearly 400,000 engineers specializing in information technology (IT) and more than 50,000 IT students graduating each year. But combined, these serve just 25 percent of Vietnam’s total demand for IT workers.
AI opportunities in Vietnam
Vietnam has a lot of potential and a number of advantages with respect to developing AI technology. In addition to a fertile startup ecosystem and a young population that adapts quickly to new technology, the government has also has put policies in place to support the development of AI.
Government initiatives and support
Vietnam has approved a National Digital Transformation Program to 2025, with an orientiation to 2030. This program’s goal is to promote a digital transition in governance, the economy, and society more broadly, as well as establish Vietnamese technology firms as global players.
This plan lays out a number of goals to be achieved by 2025. These includeL, for Vietnam to be in the top 50 leading countries in information technology, in the top 70 on the E-Government Development Index (EGDI), and ranked in the top 35 in the Global Innovation Index (GII).
With this in mind, Vietnam is clearly committed to a digital transition and cannot ignore the role that artificial intelligence will play in achieving these goals.
Vietnam now boasts a promising technological startup environment, and the number of unicorns is steadily expanding. Although Vietnam is a new market, the number of unicorn businesses (that is businesses worth more than US$1 billion) doubled during Covid-19.
This was as a result of a startup ecosystem that has been designed to drive investment in Vietnamese technology and startups, as well as an entrepreneurial, young, and motivated workforce.
A tech savvy, golden population
Vietnam has a big advantage with its golden population structure. Currently, 68.9 percent of Vietnamese people are of working age, according to the General Statistics Office.
Vietnam’s human resources are very flexible. They are fast learning and adapt quickly to new things. For example, by the end of 2022, smartphones had a penetration rate of 66.7 percent, according to Statista.
Challenges for AI
Although Vietnam currently has many opportunities and a lot of potential for AI applications, there are still some challenges for companies joining this sector.
There are already many AI solutions available to solve a number of problems; however, Vietnam’s legal system has not kept up with the necessary regulations to ensure their smooth development and operation.
Because this is still relatively new technology, and application is limited or specialized, there have not been a lot of opportunities to truly look at questions of how AI solutions can be ethically applied.
The National Strategy On Research, Development And Application Of Artificial Intelligence Until The Year 2030, however, was issued in March of 2021. This strategy outlines a number of key goals and directives for developing AI technology in Vietnam. It is, nonetheless quite broad and will require a number of supporting documents in order to create a clear path forward.
Despite having a young population, Vietnam lacks specialized AI expertise and abilities. Due to this, it may be challenging for foreign firms to locate the personnel they need to spearhead their AI projects.
Hoai Xuan Nguyen, Director of the Vietnam Institute of Artificial Intelligence, has noted the country’s lack of human resources for artificial intelligence. Finding someone skilled in all areas of AI is challenging because of how swiftly and thoroughly this technology evolves.
For example, according to the Vietnam IT Market Report by TopDev, the lack of programmers and engineers in Vietnam is expected to continue from 2022 to 2024, despite the fact that the compensation and bonuses in this profession are rising dramatically.
Sectors applying AI
Currently, the banking industry is one of the pioneers in AI testing and application. For example, VPBank has used artificial intelligence in areas, such as foreign currency transactions, personal credit, and digital banking. It also developed an artificial intelligence-based transaction monitoring system to detect frauds and risks through VPDirect. Another example is Vietcombank, which cooperated with FPT Smart Cloud Company to develop a customer care chatbot platform called VCB Digibot.
Traffic and transport sector
The traffic and transport sector is also an industry that applies AI a lot in its operations. For example, the Intelligent Transport System (ITS Solution) is a technology used to solve road traffic problems, such as public security monitoring, traffic jam warning, and traffic violation detecting, vehicle traffic counting system.
This system has been used in many developed countries around the world and was initially applied in some big cities in Vietnam, such as Hanoi, Ho Chi Minh City, Binh Duong, and Quang Ninh.
The health sector in Vietnam is also gradually applying AI in many activities, such as clinical decision making, electronic health records, and diagnostics.
DrAidTM, produced by VinBrain Company, a subsidiary of Vingroup, aids in the diagnosis of heart and lung disorders, and can evaluate bone injuries fromX-rays. Another attempt to ease the burden on medical personnel is the use of robot calls, which use AI to automatically call patients to check on their health and update their medical information.
However, the trend of using AI in the healthcare industry is still at a new and experimental stage, so there are still many challenges.
According to Nam Truong Nguyen, Deputy Director of Information Technology Department, at the Ministry of Health, specific regulations when applying new technologies to the field of medical examination and treatment are currently not available. Furthermore, new technology products are often expensive and difficult to deploy, so the cost for patients can be very high. This creats a challenging environment for deploying these products.
AI in Vietnam presents lucrative opportunities for foreign firms seeking to invest in the country. Despite challenges, such as the lack of a skilled workforce and regulatory frameworks, Vietnam’s dynamic economy and young population make it an attractive destination for AI-driven investments.
By collaborating with local educational institutions, providing training programs, and actively participating in the development of AI infrastructure, foreign firms can help address these challenges and unlock the full potential of AI in Vietnam.
By seizing these opportunities, foreign firms can not only benefit from Vietnam’s growing market but also contribute to the development of a robust AI ecosystem in the country.
For more information on the best ways to deploy AI technologies in Vietnam, contact the business advisory experts at Dezan Shira and Associates.
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Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at email@example.com or visit us at www.dezshira.com
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