Vietnam's digital economy expected to grow big in 2024

With significant progress in e-commerce, digital finance and cashless payments, Vietnam's digital economy is set to continue its robust growth.

The total gross merchandise value (GMV) of the digital economy is projected to grow by 16% CAGR [compound annual growth rate] to reach US$36 billion this year, according to the Southeast Asia Digital Economy report titled "Profits on the Rise, Harnessing SEA's Advantage" by Google, Temasek and Bain & Company.

Source: Google, Temasek and Bain & Company

The report highlights that e-commerce is the main growth accelerator of the country's digital economy, accounting for the largest share at $22 billion, reflecting an 18% growth.

Vietnam's online travel sector, growing at 16% year-on-year, is also a significant contributor to the overall GMV, reaching $5 billion in 2024.

Online travel continues to excel in monetization, particularly through higher flight commission rates, while 1P [first party] channels remain dominant as the largest revenue contributor. Driven by the recovery in intra-regional travel, visitors from APAC (excluding SEA) account for over half of all travel spending in Vietnam, up to 52%.

Meanwhile, Vietnamese visitors are also the biggest spenders in the APAC region (excluding SEA), accounting for over a third of total outbound spending. Notably, Vietnamese travelers have increased their overseas spending by up to 290% since H1/2020, with 58% of spending going on shopping.

The report noted that online media GMV in Vietnam is poised to surge to $6 billion, representing a CAGR of 14% year-on-year. It is expected to reach $11 billion by 2030.

“Vietnam’s digital economy has the potential to achieve strong growth in the long-term due to robust underlying factors such as a young and growing tech-savvy population and a dynamic entrepreneurial ecosystem,” said Fock Wai Hoong, Head, Southeast Asia, Temasek. “Temasek remains committed to deploying catalytic capital to Vietnam’s digital economy to achieve sustainable and inclusive growth so that every generation prospers.”

The report added that Vietnam's leadership has unveiled an ambitious digital roadmap for the year, emphasizing AI and semiconductor technologies alongside economic growth and improved public services. This proactive approach by the government sets the country up well for significant digital progress, despite previous limitations in infrastructure investment.

As Vietnam rapidly moves toward a cashless economy, public initiatives and innovative financial solutions are driving this transformation. The rise of e-wallets, coupled with the widespread adoption of QR code payments, has significantly reduced cash transactions. Government initiatives have standardized payment systems and improved interoperability, further encouraging the shift away from cash.

Source: Google, Temasek and Bain & Company

Andrea Campagnoli, a partner at Bain & Company, said Vietnam's digital economy continues to be driven by strong macroeconomic factors, particularly its growing and vibrant startup ecosystem, which promises to be a hotbed for AI technology and innovation.

"To fully realize the transformative potential of Generative AI, organizations must move beyond experimentation and invest in foundational elements - aligning AI initiatives with core business objectives to solve real-world problems and create tangible value, strengthening the AI talent pipeline, and building a scalable, adaptable infrastructure for sustainable growth," he said.

Marc Woo, Managing Director, Vietnam, Google Asia Pacific, said: "Over the past five years, we have seen consistently strong growth and 2024 is further proof of the potential of Vietnam's digital economy. The country's digital economy is maintaining double-digit growth rates amidst global economic uncertainties, driven by the key accelerator of e-commerce."

He added that the online media sector is growing the fastest (14%) among all SEA economies, and more Vietnamese developers are making a global impact, creating popular apps for users around the world. Vietnamese users have also shown strong interest in AI in 2024, and it's encouraging to see the country's leaders prioritizing this area.

"Google's commitment to 'Build for Vietnam, with Google AI' continues to support the growth of Vietnam's digital economy by focusing on talent, startups, and enterprises to be AI ready. We are proud to have made an impact with some of our initiatives such as the 'Google for Startup Accelerator' and the recent $1 million fund for AI study and research in Vietnam with Fulbright University Vietnam," the CEO said.