Malaysia and Vietnam Seek Development Through Digital Economy

With aligned aspirations, geographical proximity advantages, and favorable policies, the similarities in their digital economy grow more evident, providing greater potential for cooperation in the digital economy between the two countries. 

Vietnam: a country with the most rapid growth in the digital economy among Southeast Asia economies

As the global digitalization has been booming, the Vietnamese government launched the National Digital Transformation Programme by 2025, with a vision towards 2030 in June 2020, which aims to promote technological innovation, including 5G, artificial intelligence, and big data, and encourage technological innovation and digital development.

Driven by beneficial policies, Vietnam has made significant headway in developing the digital economy. Data from Crunchbase reveal that the total financing of Vietnamese startups reached $1.3 billion in 2022, a 50% increase compared to the previous year, with the emergence of several promising innovative companies in areas such as artificial intelligence, blockchain, and the Internet of Things. 

Many experts reiterate that Vietnam is home to many favorable conditions for its digital economy to continue its strong growth, such as the increasingly advanced telecommunications infrastructure, a young population, and a very high proportion of people using smartphones, the Internet, and social networks. 

By 2023, the number of Internet users in Vietnam has reached 68 million, accounting for more than 70% of the total population. The increase in Internet availability rate has laid a solid foundation for developing the digital economy. According to the data from Statista, the scale of the e-commerce market in Vietnam hit $15 billion in 2023 and is expected to reach $23 billion by 2025. 

The year 2023 marked the start of Vietnam’s National Data Center Project. Under the framework of “the Year of National Digital Data,” their state agencies have put seven national databases into operation. Also, there are currently 13 data center service suppliers and 45 data centers in Vietnam. According to data from the Ministry of Information and Communications of Vietnam, the digital economy in Vietnam grew by 16% in 2023, accounting for 14.6% of the country’s GDP, showing a rapid rise in the digital economy. 

According to the e-Conomy SEA 2023 report jointly released by Google, Temasek, and Bain & Company, Vietnam has maintained its status as the country with the fastest economic growth in Southeast Asia’s digital economy for two consecutive years in 2022 and 2023, with a compound annual growth rate of 19%. The situation is projected to continue in 2025. 

Malaysia: becoming a regional leader in the digital economy

Data from the International Trade Administration shows that 80% of Malaysia’s population, totaling 27.4 million people, were active Internet users in 2021 and the mobile phone penetration rate hit 84.2%, which means most of the people in Malaysia can access the Internet through stable networks. 

A sound environment for digital development provides a prerequisite for Malaysia to fulfill its potential of promoting the development of data centers and the digital economy. In February 2021, the Malaysian government launched the Malaysia Digital Economy Blueprint, which involves multiple aspects including digital infrastructure, digital talent cultivation, e-governance, digital enterprises, and digital society. The blueprint proposes to make Malaysia a regional leader in the digital economy by promoting the development of the digital industry, digital human resources, and the digital ecosystem. It aims to drive Malaysia’s digital transformation to increase the business productivity of all sectors by 30% by 2030 and to make the digital economy account for 22.6% of Malaysia’s GDP. 

In 2023, Malaysia’s Prime Minister Anwar said that digital transformation is a changing and challenging field, so in the cabinet reshuffle conducted at the end of 2023, a new digital ministry was set up to work on this field. This decision shows Malaysia’s determination to utilize the opportunities brought by digital economic development and actively promote innovation to adapt to the digital age.

Currently, Malaysia is also making headway in the digital economy. Data from Statista reveal that Malaysia’s e-commerce market reached $5.2 billion in 2023 and is expected to hit $7 billion by 2025. Meanwhile, 5G networks have been preliminarily covered in major cities such as Kuala Lumpur, Putrajaya, and Cyberjaya in Malaysia by the end of 2023, then are gradually expanding to other regions of the country. 

It is worth noting that Maxis Berhad, a leading integrated telecommunications company in Malaysia, signed a Memorandum of Understanding with Huawei for jointly developing the 5G-Advanced or 5.5G technology on March 20, 2024. The cooperation aims to promote commercial deployment and popularization of 5.5G technology in Malaysia, covering use cases, key technologies, technology evolution, and ecosystems. The ongoing development of 5G is expected to serve as a key for Malaysia to further establish an important presence in the regional and global digital economy. 

By actively cooperating with international organizations and businesses, Malaysia has attracted substantial international investment and technology exchange projects. These achievements have not only delivered advanced technology and management experience to Malaysia but have also facilitated the cultivation of local talent and provided them with an international vision. 

Malaysia and Vietnam seek development in competition and cooperation

In the face of the rapid development of the digital economy, Vietnam and Malaysia have achieved a mutual understanding in pursuing the development of the digital economy. 

In the realm of trade, the bilateral trade volume between Vietnam and Malaysia reached nearly $13 billion in 2022, an increase of 10.5% year-on-year, according to the data from the General Department of Vietnam Customs. Specifically, the total export value of electronic products and computer accessories from Vietnam to Malaysia amounted to $3 billion in 2022, constituting 23% of Vietnam’s total exports to Malaysia. At the same time, the trade volume of high-tech products between Malaysia and Vietnam reached $6.4 billion in 2022, a year-on-year growth of 20%. Among them, semiconductors and electronic components were the major trade products. All that indicates a huge potential for Malaysia and Vietnam to cooperate in the production and trade of high-tech products. 

When it comes to investment, Malaysian enterprises are also increasing their investment in Vietnam. By the end of 2022, Malaysia’s cumulative investment in Vietnam reached $13 billion, mainly concentrating on manufacturing, information technology, and communications, which implies further investment cooperation in high-tech fields between Malaysia and Vietnam. 

The continuous deepening of bilateral trade and investment cooperation in high-tech fields between Malaysia and Vietnam shows strong complementarity between the two countries in terms of scientific and technological innovation. With the opportunities brought by trade agreements such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the two countries can further deepen their cooperation in the digital economy based on favorable conditions. 

The Trade Counselor at the Vietnamese Embassy in Malaysia, Mr. Le Phu Cuong, stated at the National Economic Forum 2024 held in Kuala Lumpur on May 9 that Vietnam and Malaysia have great potential for cooperation in emerging fields such as digital transformation, semiconductor manufacturing, artificial intelligence technology, and electric vehicles. Vietnam boasts a high-quality and skilled workforce, while Malaysia has advantages in electronic and electrical products and semiconductor manufacturing but lacks labor due to a limited population structure. Through cooperation, the two countries share the opportunities to open larger markets and attract foreign investment. 

What must be highlighted is that the geographical proximity provides a unique advantage for cooperation between the two sides in the process of digitization. For example, Malaysia has well-developed ports and infrastructure, while Vietnam boasts a strong manufacturing base. If the two countries could further optimize their cooperation in the production and distribution of technological products, more development potential would be unleashed.

来源：《中国东盟商界》杂志

文：黄利霞 

翻译：刘丽娟​        

审定：黎 敏