In this webinar, Juthathip Jongwanich and Nguyen Dinh Chuc shared their views on the state of SME participation in the digital economies of Thailand and Vietnam. They discussed some of the ongoing challenges facing SMEs in adopting digital technologies and offered policy recommendations for the digital transformation of SMEs in the two countries.
ISEAS – ERIA JOINT WEBINAR
Friday, 3 May 2024 – Small and medium-sized enterprises (SMEs) account for more than 90 per cent of the total enterprises in Southeast Asia. Moreover, about 70 per cent of total employment in the region is provided by SMEs. Recognising the importance of SMEs, governments in the region have implemented several policies to enhance the participation of such businesses in the digital economy. To discuss the state of SME participation in the digital economies of Thailand and Vietnam, the Regional Economic Studies Programme of the ISEAS – Yusof Ishak Institute, in collaboration with the Economic Research Institute for ASEAN and East Asia (ERIA), organised a webinar featuring Dr Juthathip Jongwanich, Associate Professor of Economics at Thammasat University, and Dr Nguyen Dinh Chuc, Chief of Staff of the Vietnam Academy of Social Sciences (VASS). The event was moderated by Dr Cassey Lee, Senior Fellow at ISEAS.
Dr Jongwanich began her presentation by explaining how the Thai government has identified the digital technology sector as one of the key engines of growth behind the country’s adoption of Industry 4.0, and in doing so has been gradually supporting SMEs get digitally equipped – especially in terms of information and communication technology (ICT). Thailand’s 20-year National Strategy (2018-2037), in particular, is aimed at assisting SMEs to create and employ innovation throughout supply chains, she added.
Based on her analysis of small businesses involved in manufacturing and services across the country, Dr Jongwanich found that financial support from public organisations – with reasonable interest rate – is crucial to encourage the adoption of IT. The programmes launched so far, however, have not fared well. At the same time, infrastructure development should be prioritised to ensure efficient logistical systems as well as affordable and reliable digital technologies for SMEs.
Dr Jongwanich’s study also shows that human capital needs to be further developed in Thailand. While relevant plans have been in place for some time, policy overlapping and coordination failures across institutions remain key obstacles. In this regard, public-private partnership has also been limited, in her assessment. Finally, promoting the medium- to long-term productive investment of SMEs is crucial. The government should act as an effective facilitator in stimulating such investments. Specifically, unnecessary and cumbersome rules and regulations for SME investments should be eliminated swiftly, Dr Jongwanich concluded.
Dr Nguyen’s presentation began with a detailed overview of Vietnam’s SME landscape, including the current level of adoption of digital technologies. He pointed out that the Vietnamese government has recently approved the national digital transformation programme for 2030, which is aimed at promoting the development of digital economy, digital society, smart manufacturing, new production and business models, sharing economy, e-commerce, as well as implementing digital transformation in all businesses and state agencies.
Additionally, Vietnam’s existing law on support for SMEs includes a number of technology support policies, including the provision of incubators, technical facilities, and co-working areas; supporting information and legal advice; human resource development; supporting innovative start-up SMEs; and joining industry-linked clusters and value chains.
Using the results of a survey comprising MSME manufacturing firms in Vietnam, Dr Nguyen argued that digital economy participation of such enterprises is key not only to improving their productivity but also boosting their global value chain (GVC) integration. Additionally, MSMEs with knowledgeable managers and assembly line operations, and those that receive significant foreign investments are more likely to join GVCs and increase their contribution to the national economy.
The 90-minute webinar was attended by an audience composed of research scholars, students, policymakers, and the general public. The speaker also answered their questions on an array of topics, including the impact of ICT adoption on company profits in Thailand, existing government regulations and incentives, the variation in the impact of digital technologies according to sub-sectors, and the role of home-grown tech firms in Vietnam’s digital transformation.