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Robust policies and solutions needed to ensure sustainable growth of e-commerce
Ngoc Mai 22:37, 2018/08/17
The growth rate of e-commerce in Vietnam reached over 25% in 2017 and this rate may remain stable in the next three years 2018 - 2020, said Nguyen Thanh Hung, chairman of the Vietnam E-commerce Association (VECOM).
Vietnam needs to have robust policies and solutions to promote the leading role of the two economic centers Hanoi and Ho Chi Minh City in e-commerce, while supporting the development of other provinces, enhancing fast and sustainable growth in the whole nation, stated Hung at a forum on August 17.
 
Overview of the forum. Source: Ngoc Thuy
Overview of the forum. Source: Ngoc Thuy
Although the growth of e-commerce has spread to many regions, the gap in development is still very large. Ho Chi Minh City and Hanoi, the country's two largest cities and economic centers, continue to grow enormously. Other than Da Nang which is the economic center of the central region, provinces with high rankings are close to HCM City and Hanoi, Hung added.

High growth rate of e-commerce

The growth rate of e-commerce in Vietnam in 2017 has reached over 25% and this rate may remain stable in the next three years, Hung predicted. 

According to a VECOM report, the rates of growth in some particular fields are spectacular. In the field of online retail, information from thousands of e-commerce websites shows that the 2017 revenue growth rate has reached 35%. 

Moreover, indirect investigations of several leading delivery businesses reveal that the revenue growth pace of delivery service has picked up from 62% to 200%. 

In the field of payment, the number of online transactions with domestic cards rose by 50% year-on-year in 2017, while the transaction value expanded by up to 75%, according to the National Payment Corporation of Vietnam (NAPAS). 

In terms of tourism, a study of Grant Thornton in 2016 showed that bookings through Online Travel Agencies (OTA) made up 20% of booking revenue. The 2017 VECOM survey shows that this proportion continued to grow robustly and reached a level of over 30%. 

The future is bright for e-commerce, as "technology is at the heart of consumers' lives" according to Nguyen Trong Dat, manager of Nielsen Vietnam. 

As forecast by Nielsen, every 55 out of 100 people in Vietnam will use internet by 2020. From this time onwards, Dat suggested that shopping journey is no longer linear, requiring bands to adopt omni-channel approach, which is to provide customers with a seamless shopping experience, whether they are shopping online or in a brick-and-mortar store. 

"Omni-channel is no longer a novelty or advantage, it is the cost of doing business in the new digital era," said Dat. 

Tax administration to promote e-commerce growth

Nevertheless, the scale of online retailing in Vietnam is still very low, VECOM's report suggested.

Estimated by Vietnam E-commerce and Digital Economy Agency, in 2016 revenue from online retailing was around US$5 billion. The majority of this revenue came from online retail companies. 

Adding up to the matter, Le Hai Binh, vice chairman of VECOM told Hanoitimes that the number of Vietnamese enterprises engaging in e-commerce is still limited.

"As competition is becoming fiercer, enterprises, especially small and medium ones, are now in need of more instruments to compete, for which e-commerce is a viable solution," Binh added. 

"This, however, comes with more challenges. Enterprises must be honest with their customers about product quality through online advertising, which is key to gaining customers' trust and having long-term success in e-commerce," he continued. 

Until now, one of the biggest challenges of Vietnam's e-commerce is the trust of consumers for online shopping. Encouraging any credible sellers to open business online will bring about more customers. 

According to VECOM, another factor contributing to the development of e-commerce would be tax administration. 

Tax administration policies should not be about tax exploitation, but promotion of e-commerce growth to generate more revenue. 

By the end of 2017, the two most notable issues in tax administration for e-commerce were tax collection from cross-border service providers, and households and individuals who sell products on e-marketplaces, especially social networks. 

Vietnam currently has no preferential policy for e-commerce. Therefore, slow implementation of tax collection in this field is an indirect incentive. However, despite this indirect favorable condition, the transaction scale is still small and no strong e-commerce enterprises have been established. 

Tax administration in the field should not impose new barriers that hinder its development. Moreover, tax agencies cannot collect taxes from e-commerce with traditional solutions and tools. The supplemental section in the Law on Tax Administration about e-transaction in taxation, including the requirement of a "center for data processing in e-transactions", is one of the necessary conditions in order to implement tax collection of online business. 

Until this condition has been satisfied, the activity should not be officially enforced nationwide. 
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