At 5pm, having successfully delivered her final order of the day, Nguyen Hanh turns off the app and heads home. Working an average of about 6-8 hours a day, she earns an income of 10-15 million VND per month. This is significantly higher than her previous shift-based menial job.
Strong growth in many sectors
Hanh is one of hundreds of thousands of technology-based drivers in Vietnam. The technology-based transport model has helped employ a large workforce with relatively high income compared to the general standard.
In recent years, the ride-hailing market has witnessed a change in people's travel habits. Competition in this market has become increasingly fierce with the participation of companies such as Grab, Xanh SM, Be Group, and FastGo.
After the COVID-19 pandemic period, this market in Vietnam has grown exponentially. This is explained by several factors such as increasing urban population and rising incomes, which boost demand. Working urbanites and young people tend to choose ride-hailing services for convenience. Additionally, improved technological literacy among the population has promoted the use of technology-based ride-hailing services.
According to a study by the Institute for Strategy and Policy Research, the platform service industry in the transport sector has made a significant contribution to Vietnam's economic development (contributing approximately 1.7% of GDP in 2022). Specifically, for Vietnam's two key economic regions — the Red River Delta and the Southeast — platform services in the transport sector contributed a respective 2.7% and 2.3% to these regions' economic outputs.
In addition to the transport sector, the high and rapidly increasing internet usage rate, including the growing demand from young populations who favour using platform services, this has led to a rapid increase in online shopping trends in both volume and speed. E-commerce activities have experienced remarkable growth, becoming a growth pillar for Vietnam's digital economy. According to statistics from the Ministry of Industry and Trade in the Vietnam E-commerce White Book 2023, the size of the retail e-commerce market increased by about 4 billion USD compared to 2022, reaching 20.5 billion USD. The online food delivery market and e-logistics have also witnessed explosive growth.
According to statistical data, in 2022, the total added value of the platform industry contributed 40.5 billion USD, equivalent to 9.92% of Vietnam's GDP. During the 2018-2022 period, with an average income of over 11.3 million VND, workers in the platform industry had incomes 14% higher than the average income of the general economy (nearly 9.9 million VND). Employment in the platform industry has also seen strong growth, reaching 9.4%, significantly higher than the average employment growth rate of the economy (at 3.7%).
The development of platforms through changing business trends and consumption habits has affected and will affect various subjects, including related industries, job opportunities, and social welfare issues. The emergence of new models in the platform industry provides a driving force for traditional businesses to increase competitiveness. It also continuously puts pressure on policymakers to reform institutions to align with development trends and practices.
Future of the platform economy
The digital economy in general and the platform economy in particular are not just trends but also powerful drivers, contributing to reshaping the global economy. Therefore, the Vietnamese Party and State have identified clear, specific goals for developing the digital economy, including the platform economy.
Vietnam is one of the countries with the fastest internet growth rates in the Asia-Pacific region. Google, Temasek, Bain & Company assessed Vietnam as being among the top 10 leading countries in new mobile application downloads for two consecutive years (2022, 2023). Vietnam's population of nearly 100 million, ranking 15th globally, is a large market for digital economy development. Regarding demographic structure, the age groups with the largest proportions are also those who use platform services the most. This will directly impact and promote the trend of using platform services in Vietnam.
A report from the Institute for Policy and Strategy Research shows that 1 billion USD of final products from the platform industry creates an added value to the economy of 1.1918 billion USD. Of this, the added value of the platform industry itself is 0.77 billion USD (accounting for 64.4% of the total impact) and the added value of other industries is 0.42 billion USD (accounting for 35.6% of the total impact).
As such, experts believe that government policies need to anticipate trends, promote platform economy development, thereby creating a ripple effect on the entire digital economy ecosystem and the economy as a whole. The policy and legal system for the digital economy and platform economy should aim to support businesses, reduce administrative procedures, and shorten the licensing time for new technology products and services.
