VNU Journal of Science: Policy and Management Studies, Vol. 39, No.

2 (2023) 34-45

Original Article
Impacts of Digital Transformation on Manufacture in Vietnam

Nguyen Minh Trang*

Diplomatic Academy of Vietnam, 69 Chua Lang, Dong Da, Hanoi, Vietnam

Received 07 January 2022

Revised 12 May 2023; Accepted 30 May 2023

Abstract: Digital Transformation is becoming a common term in all economic and social sector,
which is often understood as the process of changing from a traditional business model to a digital
one by applying new technology such as Big Data, Internet of Things (IoT), Cloud computing
(Cloud),... aiming to change the operating method, leadership, working process and company
culture. Besides, market trends and consumer behavior are changing rapidly, all industrial sectors
have to face enormous challenges and fierce competition, in which the manufacturing sector is not
an exception. In the complicated context of the COVID-19 epidemic, the role of digital technology
in production and business activities, become more significant than ever before due to limitation in
transportation and logistics. In the brutal context of the epidemic, digital transformation is regarded
as a "vaccine" for the economy. It is necessary to have a deep understand about the impacts of digital
transformation on manufacture to suggest some solutions to promote socio-economic development,
contributing to the fight against the epidemic and economic recovery.
Keywords: Impacts, Digital Transformation, Vietnam.

1. Overview of Manufacture in Vietnam** industries such as electronics, textiles, leather

and footwear,... grow at a high rate and become
The manufacturing sector is considered to be a key factor contributing to the development of
the main growth driver of the Vietnamese Vietnam's industry.
industry as a whole. In 2022, this sector plays a
leading role in the economy with a growth rate 1.1. Digital Transformation Trends in the
of 9.5%, contributing 86 percent to the country's Manufacturing Sector
total export value and accounted for more than
25% of national GDP [1]. Manufacturing sectors Digital transformation is the process of using
currently develop positively in line with the digital technologies to create new or modify
orientation of industry restructuring. Key existing-business processes, culture, and
________
* Corresponding author.
E-mail address: [email protected]
https://doi.org/10.25073/2588-1116/vnupam.4375
34
 N. M. Trang / VNU Journal of Science: Policy and Management Studies, Vol. 39, No. 2 (2023) 34-45 35

customer experiences to meet changing business improving the quality of the products
and market requirements. In the era of 4.0 manufactured and increases the speed of
revolution, digital transformation becomes a response to changes in market demand. If a firm
vital requirement with all sectors, especially in is successful in doing business automation, it can
the field of manufacturing. However, managers foster a culture of innovation, preparing the
are also faced with how to transform digitally in company to anticipate any disruption; improve
the context of a technology boom, with an internal integration and collaboration by
increasing number of integration options that facilitating cross-departmental communication;
must be aligned with business goals and budgets. support for decision making by deepening data
The ongoing trends of Digital Transformation in analysis (Big Data) and attract new talent.
the manufacturing industry still focus on some
core strategic objectives, including improving 1.2. SWOT of Digital Transformation in
operational efficiency and resilience, identifying Manufacturing Sector
cost savings, enhancing customer growth and
supply chain integrity. The COVID-19 epidemic 1.2.1. Strength
has exposed the risks of supply chain disruption The Flexibility, Creativity and Capacity of
of essential products due to overdependence on Human Resources to obtain new knowledge
production centers in some countries. Therefore, In the context of deeper international
the potent trend of investment shifting and global integration, the requirement for the quality of
supply chains will bring Vietnam many Vietnamese human resources is to prepare the
opportunities and advantages to access potential workforce to be able to meet and benefit from
international markets. Currently, digital international commitments. Vietnam is having
transformation is the key for businesses to seize obvious advantages in terms of a golden
chances for international integration. Digital population structure, abundant labor force, and
transformation is the key to Smart Factory gradually increasing educational level.
implementation while digitization is the stepping Vietnamese young people are smart enough,
stone in carrying out this target. The digitization hardworking, creative and inquisitive, quick to
of data helps businesses solve many painful grasp technology. This is the basic foundation
problems in management and operation. that creates developers, coders, etc., capable of
In order to implement digital transformation catching up very quickly with new technology
in manufacturing, enterprises need to increase trends. Therefore, Vietnam is always in the top
the ratio of business automation (also known as of countries with growth rates in terms of
BPA), using of digital software connected to Internet users, smartphones, and social network
enterprise portals to automatically control many users. Vietnam is now investing early to prepare
overlapping work steps, in order to transform the a high-quality human resource. In which, the
firms from labor intensive to machinery manufacture and production system must
intensive. Digital transformation help combining innovate in the spirit of considering science and
practices and techniques to improve skills and technology as the main pillar of development.
income, which reducing costs by saving time in Moreover, the stable political situation also
processes. It also decentralizes production by joins hands to create conditions for production
facilitating movement and remote and business to expand and develop. This is a
communication to improve operational guarantee for coherence to implement consistent
efficiency and productivity. Besides, digital economic policy. This has created favorable
transformation opens the door to new business conditions for Vietnamese enterprises to access
and revenue opportunities, allowing the creation new technologies, especially digital technology.
of new products and services, which create a They feel safe and free to create digital content.
competitive advantage for the company by This is the premise for our country to compete
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with the world's technology. It is necessary to foundation of the digital economy in Vietnam. If
continue building, developing and perfecting all Vietnamese people have smartphones, install
technology and telecommunications basic services, as well as promote mobile and
infrastructure, enhancing network security, and online payments, the whole society will
ensuring safety and security for people and transform. This is the historic urge for many
customers. Above all, preparation for industries and manufacturing to reach out to the
information technology infrastructure, internet, international market.
4G bandwidth connection, 5G pilot… should be 1.2.3. Weakness
carefully monitored and effectively committed.
Relatively low Accessibility of domestic
1.2.2. Preferential Policies Manufacturing Enterprises
In the approved National Digital Many experts claim that domestic
Transformation program, digital transformation enterprises are still slow and not used to
for businesses plays a huge role, which is said to innovating. About 80% of Vietnamese
be the most important component of the digital businesses are still on the sidelines of digital
economy. The Ministry of Planning and transformation. Most of Vietnam's industries
Investment has developed a program with the give scores below 2.5 on a 5-point scale of
goal that 800,000 Vietnamese enterprises can readiness for 4.0 revolution [2]. According to a
competently apply digital technology, thereby study by the Ministry of Science and
improving productivity, quality and Technology, the percentage of enterprises
competitiveness, whether large, medium or having research and development function
small enterprises. In 2020, Vietnam has (R&D) in manufacturing industries is still low,
officially announced the development specifically: only 17% in the production of
orientation of digital businesses - the "Make in electrical equipment; 15% in the chemical
Vietnam" strategy for the first time. The number industry; 9% in the food industry; 5-6% in
of digital technology enterprises increased by Textile and clothing industry [3]. Research from
28%, reaching nearly 60,000 enterprises and this the World Bank has shown that only 9% of
force is ready to participate in transformation Vietnamese enterprises use computer-controlled
programs [2]. The Government has also machines, less than 1% use advanced
advocated a mechanism for testing new policies, technologies while most businesses still use
products, solutions, services, business models machines controlled by people. Besides, the
and technologies, such as: Sharing economy, results also show that more than 75% of small
night economy, smart city, timely response to the and medium enterprises, 66.7% of large
development requirements. As a result, in recent enterprises in the survey are skeptical of the
years, the industrial structure has had positive economic benefits when investing in new
changes in the direction of industrialization and technologies [2].
modernization, gradually reducing the share of
The driving reasons are due to limited
low-resource industries and gradually increasing
resources, especially internal resources and
the share of medium- and high-tech ones.
support policies. Accordingly, the
Moreover, late digitization seems to be a competitiveness of domestic enterprises is not
disadvantage, but it is a great strength because high, the added value created in the country is
the Vietnamese economy is not tied to old still low compared to external countries, the
technologies and has the potential to apply new manufacturing industry mainly depends on
technologies. The information technology external resources, and the proportion of highly
telecommunications industry has created 3G, 4G trained workers is limited. On one hand, slow
infrastructure, covering 95% of the country, and payback period as well as less attractive profit
will soon deploy 5G, which is an important margins compared to real estate or finance also
 N. M. Trang / VNU Journal of Science: Policy and Management Studies, Vol. 39, No. 2 (2023) 34-45 37

lead to the limited investment in production. On industry itself does not have a strategy or plan to
the other hand, Vietnam is lacking a complete, develop high-quality human resources. In real
synchronous and attractive legal framework, life, the large proportion of untrained workers
mechanisms and policies to support domestic along with the low quality of training and not
industrial enterprises to improve their reasonable structure of occupations have caused
competitiveness and innovate technology. At the society, on the one hand, a shortage of qualified,
same time, there is also a lack of linkage between capable and skilled workforce, and on the other
domestic enterprises and the FDI sector to take hand, an excess of untrained and manual labor.
advantage of technology transfer and market access. 1.2.4. Opportunity
Labor shortage in the COVID-19 Production Cooperation and Investment
The fourth wave of COVID-19 has caused Connection
production enterprises to "struggle" due to the Up to now, Vietnam has built trade relations
shortage of human resources, mainly focusing on with more than 220 partners, of which 71
Southern enterprises. Manufacturing enterprises countries have recognized our market economy
are facing problems of the workforce in both status. Vietnam has also joined 15 free trade
quantity and quality as a result of the prolonged agreements (FTAs) and been in the negotiation
social distancing period in many provinces and round of 2 FTAs, including "new generation"
cities. If the labor market is to be broken, it will ones such as the Comprehensive and Progressive
require a large amount of cost and time to restore Agreement for Trans-Pacific Partnership
the normal state. (CPTPP), Vietnam - European Union Free Trade
Before the outbreak of the COVID-19 Agreement (EVFTA), Regional Comprehensive
epidemic, the total number of employees Economic Partnership Agreement (RCEP) [5].
working in the EPZs and IZs in Ho Chi Minh On the basis of signed agreements, the
City was 288,000 people. When the epidemic economic, scientific, technical, cultural, social
broke out, only 720 enterprises in HCMC development programs are coordinated to be
implemented the "3 on-site" production model implemented among member countries. Each
with a scale of 64,000 employees [5]. However, member has favorable conditions to exploit
businesses performing this model then faced optimally the national advantages in the
difficulties because of high costs and even international division of labor, then gradually
stopped producing. All businesses are looking shift its production as well as import-export
forward to reopening their operations but have structure towards more efficiency. These
difficulty in labor as well as raw material supply. agreements also facilitate conditions to expand
Statistics of HCMC Export Processing and the market share of manufacturing industries,
Industrial Zones Authority (HEPZA) show that strengthen the development of trade relations
about 31,000 employees working in HCMC and expand two-way trade markets.
EPZs and IZs have returned to their hometowns, Vietnam is considered as one of the fastest-
mainly in Binh Duong, Dong Nai, Ba Ria-Vung growing economies, the most impressive among
Tau, Long An,... emerging economies in Asia, deeply integrated
In addition, highly qualified labor is into global trade in recent decades. Although
considered a key factor contributing to the Vietnam's economy cannot be compared with
success of the digital transformation process. other superpowers, we also have some subjective
However, despite promoting human resource advantages: political stability; potential human
training and also recording some impressive resources suitable for the acquisition and
results, in fact, high-quality human resources in development of digital technologies; ability to
recent years are still quite limited, yet to meet strongly attract foreign investment from the
new requirements and tasks. The manufacturing world's leading multinational technology
38 N. M. Trang / VNU Journal of Science: Policy and Management Studies, Vol. 39, No. 2 (2023) 34-45

corporations such as IBM, Microsoft, and advantage of the technology transfer to apply
Samsung. So, our country is now considered to and improve our own country, promoting added
have a very developed production capacity in a value in the manufacturing sector.
number of industries such as phones & Moreover, over the past time, Vietnam has
components, electronic products, textiles,... At been considered as one of the countries
the same time, Vietnam has the objective benefiting the most from the trade conflict
advantage of being adjacent to an area with the between the US and China. Besides, the rapidly
fastest-growing digital economy in the world increasing competitiveness in the manufacturing
such as China, Taiwan, and Japan. If the digital sector has also contributed to Vietnam's rise to
economy integration is successful, the reputation become an export power in the ASEAN region
of Vietnam, in general, will be enhanced and in particular and Asia in general. In the current
manufacturing enterprises, in particular, can situation, with a high vaccination coverage rate
increase their competitiveness in the of more than 80% with over 65% of the
international arena. population having received 2 doses. If Vietnam
Opportunity to become a Major Production promptly restores production and re-establishes
Center manufacturing lines, factories, and industrial
Despite the impact of the COVID-19 parks, we can completely seize the opportunity
pandemic, more and more FDI enterprises are to turn up to become a major production center
looking to invest in Vietnam's industrial zones, in the region and around the world.
especially in localities such as Bac Ninh, Hai 1.2.5. Threat
Phong, Bac Giang, Thanh Hoa and Da Nang. High requirements for Infrastructure
The geographical location adjacent to the sea, a Investment
stable political economy and many attractive According to the announcement of the
investment attraction policies have made World Intellectual Property Organization
Vietnam in general and industrial zones, in (WIPO), Vietnam is currently ranked 48th out of
particular, become an attractive destination. The 132 economies in the Global Innovation Index
trends of foreign manufacturing companies 2022 (Global Innovation Index-GII). Although
moving out of China, such as Samsung, are there have been many advances compared to the
believed to be due to the supply chain past, we still have to improve a lot to catch up
breakdown that has lasted more than half a year with countries in the ASEAN region such as
in this country. Faced with that situation, Singapore, Malaysia,...
Vietnam and manufacturing enterprises can take
Table 1. Ranking of global innovation index of ASEAN countries

Country 2015 2016 2017 2018 2019 2020 2021

Indonesia 97 88 87 85 85 85 87
Malaysia 32 35 37 35 35 33 36
Philippines 83 74 73 73 54 50 51
Singapore 7 6 7 5 8 8 8
Thailand 55 52 51 44 43 44 43
Vietnam 52 59 47 45 42 42 44

Source: Global Innovation Index.

The development of digital infrastructure is contributing 10-20% to the whole economy GDP
a launching pad for digital transformation in in the period 2021-2025, especially for the
order to promote the digital economy, manufacturing sector that contributes the most.
 N. M. Trang / VNU Journal of Science: Policy and Management Studies, Vol. 39, No. 2 (2023) 34-45 39

So as to adapt to the new context, businesses are to be very clever and to balance the investment
forced to build safe and secure digital properly to avoid this risk.
infrastructure to transform business models. In The Vietnamese government has
addition, enterprises need to develop products coordinated with a number of countries such as
and services to meet the new needs of the the United States, Japan and large organizations
market; closely connect with partners, improve such as USAID to assist manufacturing
innovation capacity and competitiveness in enterprises in accessing financial resources and
the market. bank loans through improving corporate
The leaders in the manufacturing industry governance capacity, financial transparency,
themselves need to do in-depth research on the building effective production and business plans
infrastructure that can help businesses such as to meet loan requirements. At the same time, the
modern, smart Internet of Things (IoT) and Government's affirmation of its commitment to
postal infrastructure that can participate in the creating the most favorable conditions for
commercial value chain. Electronic and logistics investors to do stable, long-term and effective
help people get rich and get out of poverty. If this work also expressed hopes of stronger
challenge can be addressed, the information investment flows into Vietnam in the coming
technology industry will be able to thrive in the time. However, the problem of capital has never
direction of the big data industry, forming new been simple, sometimes even quite difficult.
economic driving regions, creating many unique Having specific and feasible roadmaps and plans
products, services and models, solving domestic in the near future is something that the
problems, and thereby helping Vietnam's Vietnamese government itself and the managers
manufacturing industry reach out to the world of manufacturing enterprises need to pay
market. attention to and stick to if they do not want to be
left behind in the process of international
1.2.6. Large Capital Requirement economic integration.
Businesses should come up with long-term
thinking and strategies because digital
transformation requires large capital 2. Impacts of Digital Transformation on
investments. In the digitalization race, if Vietnamese Manufacturing Sector
businesses are not under financial pressure, but
transformation activities are not organized in a 2.1. Positive impacts
coordinated way with others will lead to great
cost wastage. Digital transformation is 2.1.1. Promoting Trade
equivalent to changing almost all working Export activities are always among the top
processes, cultures and operating methods, priorities focused by the Vietnamese
which requires a large investment capital as well government to promote economic growth. One
as resources. The concern of manufacturing of the most important characteristics of the
enterprises when carrying out digital export activities is the meeting between potential
transformation is the fear that the amount of businesses to create partnerships and form cross-
capital spent is not commensurate with the border relationships. Previously, Vietnamese
results achieved, or even when the plan is enterprises had to spend a lot of money to
broken, that capital will be considered to participate in trade fairs to find suitable
disappear. Given the pressure of such a large partnerships. The stages in business exchange
amount of money, it is completely also faced many difficulties because of
understandable why companies are still geographical distance. Therefore, partnerships
confused. And unfortunately, the cost of were mostly conducted with familiar partners in
technology has never been small. It is necessary a close distance such as China, Taiwan, and
40 N. M. Trang / VNU Journal of Science: Policy and Management Studies, Vol. 39, No. 2 (2023) 34-45

Japan. Digital transformation will help of the high cost, the risk is also very high,
businesses cut operating costs by reducing labor especially when the offer fails or for some
and reduce the price, improving the reason, the fair or product show is canceled. For
competitiveness of enterprises. This is especially Vietnamese small and medium enterprises, this
important when businesses need to save capital is a big challenge if they want to conquer
to fight the pandemic. new markets.
Digital interactions are not limited by Thanks for the development of digital
geographical distance and do not require contact, transformation, the export turnover of Vietnam
so exhibitions and online sales sessions will help has marked a continuous increase despite the
increase the export value, even helping COVID-19 pandemic interrupted and stopped
businesses expand their markets compared to the many economic activities around the world.
previous period. This is clearly demonstrated in During this period, digital transformation is
the chart below since the US is currently the almost a mandatory condition for businesses to
main export market of Vietnam, not the continue to put their name on the market.
traditional Asian markets like China or Japan Overall, digital transformation has had a positive
anymore. In the process of international impact on export value, helping Vietnamese
economic integration, digital transformation is businesses find foreign partners, thereby
considered a stepping stone to great progress. maintaining revenue and export value at an
Trade promotion activities in the past were acceptable level, even in the most difficult times
organized mostly by bringing goods to different of the pandemic. Over the past decade, our
countries, presenting them at fairs or exhibitions. country's import and export turnover recorded an
This brings about a high closing rate but requires impressive growth rate and with the policy of
logistics-related costs, especially bulky items. building a digital foundation and promoting
Moreover, this method is also greatly influenced international economic integration, the
by geopolitical fluctuations, such as war or manufacturing sector must be thriving in the
special requirements related to religion. Because near future.

Source: Data of General Department of Vietnam Customs

Unit: billion USD

Export Import

700,00
600,00
500,00 300,27
261,31
400,00 236,87 253,44
213,22
300,00
147,84 165,78 174,98
200,00 132,03
106,75 113,78 243,70 264,61 281,44 301,73
84,84
100,00 150,22 162,02 176,58 215,12
72,24 96,91 114,53 132,03
0,00

Figure 1. Import and Export turnover (2010 - 2021).

 N. M. Trang / VNU Journal of Science: Policy and Management Studies, Vol. 39, No. 2 (2023) 34-45 41

2.1.2. Contribution to GDP Growth A total of 1,400 Vietnamese firms are generating
Vietnam currently maintains great strength revenue from exporting digital technology
for transformation, which is reflected in digital products covering all fields [6]. Digital
infrastructure indicators with more than 61.37 transformation can completely help Vietnam
million people, equivalent to 64% of people achieve the growth target since businesses can
using smartphones. In addition, according to save costs, improve performance, increase
statistics from the Vietnam Digital report competitive advantages and help managers have
(January 2021), the number of Internet users in a broader view of their companies. At the same
Vietnam is 68.72 million, accounting for 70.3% time, thanks to the application of smarter and
of the population [2]. These are very more efficient production models into operation,
encouraging rates, showing that the Vietnamese the labor productivity of enterprises has been
people are almost ready to welcome the significantly boosted. Aiming to reach 100,000
advances brought about by digital digital technology enterprises by 2025 and
transformation. achieve an average growth of 10-20%/year in the
export value of Vietnamese digital technology
In 2022, the digital technology industry
enterprises, the manufacturing industry is
represented a key pillar of the Vietnamese
expected to contribute 10-20% to GDP growth.
economy, bringing in an estimated revenue of
Thanks to the application of digital technology,
US$148 billion, marking an increase of more
operations and management are streamlined,
than 10% compared to 2021 and the contribution
helping businesses improve performance,
of the digital economy to national GDP in 2022
thereby contributing to the GDP of the whole
accounted for about 14.26% of the total.
country. This process has been accelerated by
Ministry of Information and Communications
the COVID-19 pandemic as commerce and
has set a target of raising the contribution ratio
services have been digitized in response to social
of digital technology enterprises to GDP to
distancing policies.
between 6% and 6.5% annually from 2023-2025.

Source: Ministry of Information and Communications

Enterprises
120000
100,000
100000

80000
61,909
58,000
60000
45,600
39,284
40000 28,424
24,502
20000

0
2016 2017 2018 2019 2020 7M2021 2025F

Figure 2. Total number of Digital Enterprises in Vietnam.

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2.1.3. Improving Management Capability manufacturers, for different products and to

On the business side, digital transformation different customers. These distribution channels
is a revolution, directly helping leaders improve form a bridge between businesses,
their management efficiency and easily control manufacturers and customers who use products
production lines. This is a profound and services. Among the biggest advantages of
transformation that changes the culture, digital transformation is the presence of
organization and operations of the business by manufacturing enterprises in the digital space
integrating technologies, processes and working despite the difficulties of geographical distance.
methods at all levels of leadership. With the This helps businesses have an additional product
digitization of management processes, distribution channel then diversify outputs. In
administrators can better understand what is fact, products that support online transactions
happening to the business, immediately update such as domestic and international e-commerce
the actual situation, thereby giving close platforms are developing very strongly. More
instructions and appropriate strategy. With lower and more Vietnamese businesses appear on
leadership levels, monitoring and checking international sales platforms such as Alibaba or
employee productivity will be easy, continuous, Amazon. At the Cross-Border E-Commerce
and inexpensive compared to using paper or Matchmaking Conference 2021, Amazon Global
people. For example, in some enterprises, Selling announced data showing that the number
worker productivity is now measured by of products sold by Vietnamese small and
software. Therefore the administrative apparatus medium enterprises on this platform increased
have been issued, helping to reduce the costs and by 34% compared to last year. This number in
time of handling public services. The State 2021 is expected to reach 7.2 million products.
identifies three main pillars of the National It, therefore, can't be denied that digital
Digital Transformation program including transformation helps businesses diversify
Digital Government, Digital Economy and outputs for products, avoiding being dependent
Digital Society. Proper awareness and drastic on one channel to prevent unexpected risks such
actions have shown certain effects, for example, as the Covid-19 pandemic. As a typical example,
the number of public services through the agricultural production is considered as one of
Government's portal has increased tenfold, eight priority areas for digital transformation. Up
greatly reducing costs and efforts, freeing to now, nearly 3.1 million agricultural
businesses from complicated administrative households across the country have been
procedures. This contributes to the increase of supported on the Postmart and Voso exchanges.
private capacity as well as administrative and After more than 3 months of implementation,
financial management capacity. As a typical these e-commerce platforms have supported the
example, tax administration is always a top consumption of nearly 26,000 tons of
priority because it is the main source of revenue agricultural products, of which 2,200 tons come
for the State budget. Ensuring this revenue from southern provinces and cities. In particular,
source will help the State perform its functions, nearly 3.1 million agricultural households across
indirectly affecting the investment and business the country were supported on the e-commerce
environment. Effective public administration and floor [3].
finance management will create a favorable
2.2. Negative Impacts
investment environment, promote production, and
increase the economy's resilience to the pandemic. 2.2.1. Asymmetric Structure
2.1.4. Market Diversification Digital transformation is a process that,
On the market, there are countless although can bring great benefits, requires a high
distribution channels from different level of gray matter and initial investment rate.
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Therefore, for small and medium enterprises, In addition, for manufacturing businesses,
which do not have enough capital, it is easy to be the digital transformation that comes with
"out of breath" in this race. During the 4th wave automation will lead to a huge reliance on online
of the COVID-19 epidemic, 87% of businesses systems to keep the line running. Therefore, a
were estimated to be affected [2]. Many small mistake can also greatly affect the chain.
businesses have sought digital transformation to These are ideal targets for hackers to attack.
streamline business administration and sales. According to a report made by VirusTotal and
However, they face a lot of challenges such as Google, the number of ransomwares in Vietnam
lack of information technology background, lack in the first 7 months of 2021 has increased by
of digital skills, mindset, working culture, and 20% compared to 2020. In particular, the most
especially difficulty in having human resources prominent is the method of attacking industrial
to meet the needs of transformation. control systems. This attack method takes
The majority of businesses promoting digital control of the factory, disturbs the chain, and can
transformation are large corporations or foreign- cause great damage to manufacturing and
invested enterprises, accounting for 3-4% of the processing enterprises in our country.
total number of enterprises in Vietnam. For the State, the consequences of cyber-
Specifically, according to information from attacks are much greater. The National Digital
automation equipment suppliers Autotech Transformation Program consists of three main
Vietnam, most of their customers are FDI pillars: Digital Government, Digital Economy
enterprises. Meanwhile, according to the and Digital Society. This also means that citizen
economic survey results of GSO, small, medium information, internal news, public
and micro enterprises - accounting for nearly administration and other sensitive information
96% - have not taken advantage of digital will be stored on the National Digital System.
transformation, therefore, suffer huge losses due Network security still has many limitations
to the pandemic and social distancing orders. despite containing these sensitive, important and
This not only causes a development gap and influential data. Cases of attacks to get national
asymmetry in the industry structure in general data have been discovered, many security holes
but also causes disadvantages for Vietnamese have caused billions of VND in damage to the
enterprises in particular. State. Even, the information can be changed or
2.2.2. Network Security Risks from manipulated to make it difficult for the
Electronic Devices management of the government apparatus, break
the link between enterprises and the State,
More and more information and work indirectly reduce business efficiency. This
processes will appear in cyberspace since digital outstanding issue poses an urgent need to
transformation will change production and improve security and ensure information safety
business activities. The COVID-19 pandemic so that enterprises and their boards of directors
has accelerated this progress, shifting many can rest assured to cooperate in production and
activities to the online platform. While this can business.
increase operational efficiency, it also makes
businesses more vulnerable to cyberattacks. In
2020, 23 malwares related to Covid-19 were 3. Solutions to Improve Digital
detected in Vietnam (FPT, 2020). This software, Transformation in Manufacture
when activated, will give hackers control,
leading to risks such as unauthorized access to 3.1. For the State
online meetings, data and business secrets
The first important key for Vietnam's
disclosure, directly affecting the viability of the
manufacturing sectors to improve their digital
enterprise. transformation is to improve the quality of
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institutions and state policies. In order not to promote the effectiveness of public-private
miss this opportunity, the Government must self- cooperation in the fields of production. At the
renovate and transform to become a Government same time, it is necessary to organize training on
of the 4.0 era, with sufficient capacity to manage the exploitation and use of information systems
national development and especially the and online services for businesses and have a
management of industrial fields in the digital mechanism to attract talents to participate in the
age. Some possible solutions are as follows: construction and development of domestic
First of all, speeding up the building and manufacturing industries. Above all, the human
perfecting of institutions, creating a full and factor must play a decisive role. People need to
comprehensive legal basis for the be placed at the center of the digital
implementation, construction and development transformation process because they are the
of e-Government. According to the experience basic, solid foundation of all activities in the
of developed countries on e-Government, the business. The overarching digital transformation
institutional foundation must go first, while our is that no one is left offline, all need to be
country still lacks many regulations and policies. digitally connected.
Therefore, it is necessary to soon issue decrees
on information risk management, data sharing 3.2. For the Business
and protection within enterprises, electronic Digital transformation for businesses plays a
authentication, product data protection, items huge role, it can be said to be the most important
and guarantee of origin information, the component of the digital economy.
reporting regime between enterprises and state
administrative agencies. Each business owner himself needs to have a
sense of improving his education level,
Secondly, establishing data systems to serve specialized knowledge, cultural, economic, legal
the Government's management and
and social knowledge,... Currently, small and
administration process. Accordingly, the
micro enterprises account for the largest
Government Office and ministries, branches and
proportion in our country, most of which go to
localities need to be active in building the
individual business households or come from the
National Service Portal and deploying an
electronic information system connecting ideas of individual business owners. They may
businesses together and with state agencies. This have many business ideas, have sufficient
is an important system to demonstrate the conditions to conduct production activities, but
Government's spirit. The national public service lack a realistic model, knowledge of financial,
portal needs to be consistent, complete and user- accounting management, legal risks of
friendly. enterprises, or even face the “barriers” right from
administrative procedures.
Last but not least, reviewing, rearranging
and mobilizing all resources, both financial and It does not come from the perception of
human. Over the years, the Government has administrators only but also from a business
made certain investments in the application of perspective in general. In order to improve
information technology. However, investment competitiveness, enterprises need to improve
projects are still scattered and have not yet made their organizational and management skills,
fundamental changes to build e-Government. In human resource quality, product quality and
the coming time, in order to improve investment standards to meet market demands. Enterprises
efficiency, it is necessary to review, rearrange also need to have appropriate strategies to take
and mobilize resources to implement the priority advantage of production and export
tasks of e-Government development, adjust the opportunities in the current period of economic
specific investment mechanism for information integration, such as: i) Applying information
technology, strengthen the socialization to technology software to business management; ii)
 N. M. Trang / VNU Journal of Science: Policy and Management Studies, Vol. 39, No. 2 (2023) 34-45 45

Focusing on improving the quality of inputs, comprehensive system of policies to promote the
including capital, input materials, human positive aspects of the manufacturing sector, and
resources, science and technology level; and iii) at the same time limit its negative impacts on the
Launching a strategy of “brand positioning” economy, the potential for the Vietnamese
through building product standards: improving manufacturing sector to rise in the international
product quality, stable product prices, sales and arena will be very bright.
after-sales policies.
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