The energy in Vietnam’s cities is electrifying. As armies of scooters weave and whiz past each other, footpaths are booming with shops selling everything from the latest iPhone to fortune-telling.
Over the last four decades, Vietnam has gone from a war-ravaged poor nation to an economic powerhouse, and it’s poised to continue this growth. Its economy will overtake Singapore’s in 10 years, a report predicted this week.
But the Vietnam of the next few decades will look very different from the one today as much of its growth will be driven by technology. To find out what its future holds, the country has worked with the Australian Government, using foresight and scenario planning to find ways to tackle the biggest challenges the nation will face in 2045.
The foresight exercise found that energy security will become a major challenge for Vietnam as more industries and infrastructure are powered by technology. “Confidence in the digital systems will require reliable energy supplies. Energy to power increased use of digital networks will become an issue in the next decade or so, and that needs to be sorted out in conjunction with investment in ICT infrastructure,” says Dr Lucy Cameron, who has led the project and is Senior Research Consultant at Data61, a specialist innovation unit in Australia.
For instance, Vietnam plans to launch 5G networks by 2020. While this technology is said to use less power, there will be more data downloaded and uploaded as smartphone adoption rapidly grows. “I can’t imagine that will reduce the net power use, or reduce the burden on the energy network,” she says.
There are two key areas that Vietnam will need to watch: renewable energy and smart grids. The country is largely dependent on coal-powered plants with modest investments in renewable sources: it aims to have 10% of energy coming from renewable sources by 2030. “Peer-to-peer energy sharing apps” – which allow people to trade the excess solar energy they produce – could encourage the take-up of renewable energy.
Meanwhile, smart grids will make Vietnam’s energy supply both efficient and reliable. They analyse sensor data across electricity grids to predict energy demand by location and more reliably distribute it across the nation.
But the government has limited funding for the energy sector. The major state-owned energy companies lack funding to grow existing infrastructure. To meet the goal of 10% renewable energy, the country needs US$10 billion a year until 2030, and will need more private investment in energy in the future. Vietnam could consider using new funding sources such as the G20’s new Global Infrastructure Hub to diversify energy generation and ensure energy supplies into the future, the report says.
Robot tax and jobs
Despite high economic growth, Vietnam is worried about job losses in the future. Up to 38% of existing jobs changed or displaced due to automation by 2045, the foresighting study found. With the risk to jobs, Vietnam will need to cut inequality and redistribute income.
It should look into the use of “experimental taxes” like robot taxes and universal basic income to offset disruption from automation of jobs, the study says. “These could be reviewed or even piloted in the Vietnam context.”
Robot taxes were floated by Bill Gates in 2017, and the idea is to tax owners of robots to fund retraining or jobs which humans are particularly suited to, like taking care of the elderly or children. South Korea has taken the first step towards a robot tax by cutting tax deductions for business investment in automation.
The country must gather data on inequality to benchmark itself globally and domestically across provinces, Cameron believes. “We would like to see them develop a dashboard or a map of where the digital takeup is greatest, and get some kind of idea of what the digital divide is.” This will require setting up systems to collect reliable data to measure and compare progress, she adds.
Vietnam’s govtech industry can be a great driver of growth, particularly among local startups, Cameron believes. She recommends that the government partners with early-stage technology companies to commission new solutions for public sector challenges.
This will require changes to the procurement process to better engage with the local tech industry. One new approach is mission-led innovation, where governments issue open challenges to industry and citizens to solve large-scale problems. “It’s a way to signal to the local industry that the government is in the business of buying new technology that isn’t yet developed,” she says.
Alongside these, it will need to support broader industries to trial and use cutting-edge technologies like artificial intelligence. The country’s national carrier Vietnam Airlines, for instance, has been using AI to scan planes for repair and defects.
Security and trust
Security and trust will be crucial challenges for Vietnam to address, Cameron says. “What you don’t want is people suddenly to be suspicious of the network, and start to get off the network, when they can be incredibly enabling and they can boost the economy.” She recommends using blockchain to secure sensitive government networks, registries, police and payment systems.
The country also needs to develop its own cybersecurity capability by attracting high skilled workers with scholarships and international collaborations. It could appoint an independent, trusted and high profile e-safety commissioner to address cybersecurity complaints, and build toolkits with tips and notifications to keep citizens and businesses safe.
The study recommends creating a dedicated panel to identify and investigate the impact of laws on tech like biometrics in public places. Cryptocurrencies, AI, privacy, intellectual property, drones, and e-government are some of the areas in need of regulatory reform.
There is a great sense of optimism for Vietnam’s future – both from the numbers and among its people. But to fulfill its prophecy, the government must seize this opportunity to shape a country which can adapt quickly.