Various industries in Vietnam have already embraced the revolutionary technology of AI, which holds immense potential for optimizing operations and workflows. Nonetheless, foreign companies aiming to take advantage of this growing trend should be aware of specific challenges that need to be addressed.

With a vibrant economy, a youthful population, and a strong appetite for innovation, Vietnam offers an appealing environment for AI implementation. However, there are certain challenges that need to be addressed, such as regulatory frameworks and skill gaps, which foreign companies may encounter when entering the Vietnamese market. This article explores the current state of AI adoption in Vietnam and provides insights into how the country can navigate its journey toward becoming an AI-powered nation. It also highlights the opportunities and challenges that foreign firms face in the field of AI in Vietnam, along with key sectors that have already embraced this promising technology.

AI Development and Opportunities in Vietnam

The ICT industry in Vietnam has experienced significant growth, with revenues reaching VND 3,893,595 billion in 2022. Vietnam’s progress in AI readiness is also evident, as it climbed seven places to rank 55 out of 181 countries in the Government AI Readiness Index. However, Vietnam faces a labor shortage in the field of AI. Despite having around 400,000 IT engineers and over 50,000 IT graduates annually, they only fulfill 25% of the country’s demand for IT workers.

Nonetheless, Vietnam holds great potential for AI development. The country boasts a thriving startup ecosystem, a young population eager to embrace new technologies, and government policies that support AI advancement.

Government initiatives and support

The government has approved a National Digital Transformation Program aimed at transitioning governance, the economy, and society towards digitalization by 2025 and beyond. The program sets goals for Vietnam to become a leading country in information technology, improve its E-Government Development Index ranking, and feature among the top countries in the Global Innovation Index.

Vietnam’s commitment to digital transformation emphasizes the crucial role that artificial intelligence will play in achieving these objectives. This creates ample opportunities for AI development and investment in Vietnam’s evolving technological landscape.

Startup ecosystem

Vietnam’s startup ecosystem is thriving, with a growing number of unicorns (startups valued at over $1 billion), doubling even during the Covid-19 pandemic. This is attributed to a government-designed ecosystem that attracts investment in Vietnamese technology and startups, along with a young and motivated workforce.

A tech-savvy, golden population

One advantage Vietnam possesses is its “golden population” structure, with nearly 69 percent of the population being of working age. The country’s flexible and tech-savvy human resources adapt quickly to new technologies, as seen by the high smartphone penetration rate.

Overall, Vietnam presents significant opportunities for AI development, driven by its startup ecosystem, a young and adaptable workforce, and supportive government initiatives.

Challenges for AI Development in Vietnam

While Vietnam holds many opportunities and potential for AI applications, there are several challenges that companies face when entering this sector.

One key challenge is the lack of regulatory frameworks. Although there are already AI solutions available, Vietnam’s legal system has yet to catch up with the necessary regulations to ensure smooth development and operation. Ethical considerations regarding the application of AI solutions also need more attention. The National Strategy on Research, Development, and Application of Artificial Intelligence until 2030 provides a broad outline for the development of AI technology in Vietnam. However, further supporting documents are needed to establish a clear path forward.

Another major challenge is the shortage of a skilled workforce in AI. Despite having a young population, Hoai Xuan Nguyen, Director of the Vietnam Institute of Artificial Intelligence, has noted the country’s lack of specialized AI expertise and abilities. This poses difficulties for foreign companies in finding qualified personnel to lead their AI projects. The rapid evolution of AI technology further complicates the task of finding individuals with comprehensive AI skills. Reports indicate that there is expected to be a continued shortage of programmers and engineers in Vietnam, despite rising compensation and bonuses in the profession, according to the Vietnam IT Market Report by TopDev.

Overcoming these challenges will require concerted efforts to develop appropriate regulatory frameworks and invest in AI education and training programs to build a skilled AI workforce in Vietnam.

Sectors applying AI

The banking sector in Vietnam, led by VPBank and Vietcombank, has been at the forefront of AI applications. VPBank utilizes AI for foreign currency transactions, personal credit, and digital banking, while Vietcombank developed a customer care chatbot platform called VCB Digibot.

The traffic and transport sector also heavily applies AI, particularly through Intelligent Transport Systems (ITS). This technology is used for public security monitoring, traffic jam warnings, and traffic violation detection in cities like Hanoi, Ho Chi Minh City, Binh Duong, and Quang Ninh.

In the healthcare sector, AI is gradually being adopted for clinical decision-making, electronic health records, and diagnostics. VinBrain’s DrAidTM assists in diagnosing heart and lung disorders, while robot calls utilize AI to check on patients’ health and update medical information. However, the use of AI in healthcare is still in its early stages, with challenges including the lack of specific regulations and high costs for deploying new technology products.

Conclusion

Despite these challenges, Vietnam offers lucrative opportunities for foreign firms seeking to invest in AI. The dynamic economy and young population make it an attractive destination. Collaboration with local educational institutions, providing training programs, and actively participating in AI infrastructure development can help address limitations and unlock the full potential of AI in Vietnam.

By seizing these opportunities, foreign firms can not only benefit from Vietnam’s growing market but also contribute to the development of a strong AI ecosystem in the country.