Industry 4.0: A double-edged sword of opportunity and risk for Vietnam

10:50 | 10/01/2018 Information Technology

(VEN) - The fourth industrial revolution is characterized by the convergence of breakthrough technologies, providing opportunities for smart industry development. For Vietnam it provides an unprecedented opportunity to improve its low labor productivity and increase the economy’s competitiveness.

a double edged sword of opportunity and risk for vietnam

Vietnam’s potential

New technological solutions heralded by the fourth industrial revolution, such as advanced robotics, autonomous system, internet of things and artificial intelligence are changing production worldwide. Developing countries have proven they are able to catch up with developed nations in the fourth industrial revolution – and even to overtake them. Vietnam has many advantages allowing it to participate in this game.

Prime Minister Nguyen Xuan Phuc addressed Vietnam’s potential on December 5 at Smart Industry World 2017, a conference held for the first time in Vietnam to discuss future orientations and methods to attract investment and develop the Vietnamese smart industry. Phuc told participants that with the active participation of the government and business, Vietnam has achieved initial positive results in carrying out the fourth industrial revolution. Ministries, departments and localities have focused on promoting IT application and most public services can be accessed online (88 percent).

Vietnam’s 4G networks now cover 95 percent of the nation’s population. Vietnam has 52 million internet users, accounting for 54 percent of the population, ranking fifth in the Asia-Pacific region in terms of internet access. With 55 percent of its people having smartphones, it is projected that by 2020, Vietnam will be among the leading countries in the region in terms of mobile users. This is an important foundation for Vietnam to quickly catch up with new technology trends.

The number of new startups in 2017 has nearly doubled over last year, from about 1,800 in 2016 to more than 3,000 in 2017. In addition to the 40 international venture capital funds that have been established and are operating in Vietnam, corporations and major banks are also involved in mobilizing and using large financial resources to support innovation in 2017.

Deputy Minister of Science and Technology Pham Dai Duong said to create favorable conditions for Vietnamese businesses to increase their accessibility and make the most of opportunities, the prime minister issued Instruction 16/CT-TTg on capacity building for accessing the fourth industrial revolution. It concretizes solutions and tasks for ministries and departments in developing IT infrastructure, improving the business environment to promote business development, prioritizing the building of the digital economy and smart industry, agriculture and cities, promoting a national innovative startup ecosystem, and changing the contents and methods of education and vocational training in order to provide human resources capable of implementing new technological trends.

Potential risks

In addition to opportunities, Vietnam will face many challenges as it seeks to benefit from the fourth industrial revolution. Labor-intensive industries like garment and textile and leather and footwear will face risks. In addition, artificial intelligence, virtual reality technology and robotics might cause multinational companies to move their plants back to developed nations and Vietnam would find it hard to become the new workshop of the world and could face higher unemployment and socio-economic instability.

Countries around the world have come up with different approaches to make the most of opportunities provided by the fourth industrial revolution, such as the German Industry Program 4.0 and the US advanced manufacturing cooperation program with the “Internet Industry Community” initiative. Most developed and developing countries in Asia, such as Japan, the Republic of Korea, China and Singapore have also launched digital economy development strategies.

Nguyen Van Binh, head of the Communist Party of Vietnam (CPV) Central Committee’s Economic Commission, said the fourth industrial revolution is fundamentally changing the world’s production. The CPV and state are determined to formulate relevant guidelines and policies but Vietnam has not yet launched its own digital economy development strategy.

Binh explained that due to different development stages among the country’s regions, the digital economy development strategy must be designed with specific, adapted roadmaps.

Vietnam did not catch up the third industrial revolution due to war and historical circumstances. Therefore, during the fourth industrial revolution, Vietnam must quickly grasp opportunities and overcome challenges to ensure sustainable development in the future.

Quynh Nga & Lan Anh