The fourth industrial revolution: Issues for Vietnam

At the 2011 Hanover Technology Fair in Germany, the term “fourth industrial revolution,” or “Industry 4.0” was first used. On January 20, 2016, in Davos, Switzerland, the World Economic Forum held a seminar with the theme “Mastering the fourth industrial revolution”.

This revolution is focused on artificial intelligence, digitalization, and the development and amalgamation of technological equipment, as well as its connection and interaction on every large-scale platform. This will allow human beings to control everything from a distance without the limitations of time and space. Therefore, interaction takes place more rapidly, conveniently, and accurately. It will optimize production processes, reduce costs, increase productivity and product quality, and enhance competitiveness in the context of globalization. “Intelligent products” such as artificial intelligence machines, robots, Internet of Things (IoT) platforms, self-driving vehicles, 3D printing technology, virtual reality technology, biological technology, material science, energy and quantum computers are typical of the revolution.

Essentially, the fourth industrial revolution is a new developmental step for the knowledge economy, which attracts the international community’s special interest. The European Commission is deploying Horizon 2020 - a framework program for research and innovation intended to speed up scientific research and technological development, innovation and creativity. The program is expected to cost EUR 80 billion over seven years (2014-2020)⁽¹⁾.

The next step in the approach to Industry 4.0 is to determine both opportunities and challenges to Vietnam, which requires clear understanding in order to create a suitable development strategy.

Vietnam in face of the impacts of the fourth industrial revolution

Impacts on the development of production forces

Vietnam is trying its best to “speed up industrialization and modernization; develop the knowledge economy, and enhance science and technology”⁽²⁾. Within this process, information technology is defined as a key economic and technical sector, and an important driving force behind the development of production forces, increasing national competitiveness, actualizing the “shortened development” strategy, and ensuring rapid and sustainable development.

Vietnam’s economy, however, is still currently following an old model of industrialization that uses out-of-date theory and management methods. This results in slow and unsustainable economic growth, and limited innovation and creativity. In WIPO, Cornell University, and the Insead Business School’s 2016 GII rankings, Vietnam’s innovation and creativity index achieved 35.4/100 points, ranking 59^th out of the 128 countries surveyed, dropping seven places since 2015⁽³⁾. Vietnam’s economic development mainly depends upon elements of capital, natural resources, and low-level laborers (growth by capital accumulation accounts for 52.7%). Therefore, growth quality stays low and national competitive ability does not improve, especially within the economic institutions, infrastructure, and technological innovation.

To speed up the development of the knowledge economy and the approach to Industry 4.0, it is necessary to meet the requirements of infrastructure investment and information technology. Although Vietnam is pushing itself to improve, the IT infrastructure is still insignificant. According to the 2015 World Economic Forum, Vietnam ranked 85^th out of 143 countries on the Network Readiness Index. There was almost no change compared to the statistic from 2013 or 2014.

In order to develop a knowledge economy suited for Industry 4.0 in the near future, Vietnam should invest in developing IT infrastructure, limit imports of outdated technology and equipment, effectively deploy public telecommunication services, and build a modern technological foundation. Regarding state management, it is necessary to instate policies that encourage enterprises to select and receive advanced global technologies.

Industry 4.0 is currently still in its early stages, thus there are many opportunities for Vietnam, especially “shortening” the development process by applying modern technological achievements in a number of potential fields. This can enhance productivity and product quality at a reasonable price, and increase competitiveness on the international market. This should include investing in developing sea tourism and marine carriage services; applying high-tech agricultural production to ensure quality and increase the economic value of products; and encouraging farmers to produce organic agricultural products for the development of sustainably green agriculture to participate in global value chains... These actions contribute to effectively exploiting available resources, enhancing domestic production capacity, and improving export values.

With determination for innovative thinking and an appropriate shortened development policy, the application of Industry 4.0’s achievements will likely offer new opportunities for the rapid and sustainable development of Vietnam. This remains a challenge because the world economy is rapidly transitioning to a new and modern development model. Meanwhile, the old ideas of Industry 2.0 and the early stages of Industry 3.0 are still ruling over Vietnam’s managerial levels and political system.

Challenges developing high-quality human resources and the issues of employees and employment

In order to apply artificial intelligence, network connections, and modern scientific and technological achievements, Industry 4.0 has set urgent requirements for high-quality human resources, especially in the field of information technology and high tech. Research shows that Industry 4.0 will greatly impact the structure of human resources. There will be a drastic change in the labor market. Low-price and low-quality human resources will be replaced by high-quality human resources. Thus, the tradition labor market is in danger of collapse.

The greatest challenge to labor and employment in Vietnam is the severe lack of high-quality human resources. According to the General Statistics Office of Vietnam, 68,819,816 citizens are in working age (above 15), 82.7% of whom have no professional knowledge. The qualified human resources (including 4,527,780 university graduates, 215,343 post graduates, 37,157 doctors, respectively account for 6.58%, 0.31% and 0.05% of the total workforce⁽⁴⁾, 1,745 professors, and 10,577 associate professors⁽⁵⁾) are small in number and fail to meet modern technology’s rapid changes. Obviously, approaching Industry 4.0 with the current situation of human resources will be a great challenge to Vietnam.

Industry 4.0’s labor-employment structure will be considerably different from traditional production techniques. Employment opportunities for laborers are liable to drastically diminish due to the wider and wider application of robot technology in the production process. The World Economic Forum forecasts that between 2015 and 2020, 5.1 million employees in the world will lose their jobs because of fluctuations in the labor market. Recent research from the International Labor Organization shows that in the next two decades, about 56% of employees in five Southeast Asian countries - including Vietnam - will be in danger of losing their jobs to robot technology. This is especially a risk in the textile and garment industry, leather and footwear industry, electronics assembly, seafood processing sector, and in retail services, etc.

Technological innovation and the application of robot technology in production process is indispensable. However, it also poses a great threat to enterprises and employees, and is a reason behind social inequality and the growing gap between the rich and the poor. Therefore, Vietnam must rapidly increase the proportion of qualified human resources to meet the international standards. The Government and the ministries and branches concerned should adjust policies on training, improving skills, and developing human resources that can adapt to technological changes and the new industrial revolution; and build a system of social welfare that supports jobs, income, social insurance, and social assistance.

Innovation, creativity and sustainable development: Urgent requirements and challenges

Innovation and creativity are the main source of energy and the driving force behind the development of Industry 4.0’s knowledge economy. They also decide social advancement and has the power to change organization and management methods. Currently, Vietnam has integrated and participated in more and more global-scale international activities, especially trans-border trade activities, and the import and export of invisible products such as software, digital content, and IT services, etc. Obeying international regulations and managing these activities becomes more complicated. Thus, the State and other management agencies must implement effective managerial methods in order to encourage economic development.

Regarding the environment, applying new technology enables Vietnam to save energy, use eco-friendly materials, and predict natural disasters. The Center for Policy Studies of the European Community is presently focusing on the research of green development policies to effectively implement the “Europe 2020” strategy. The main goal of this strategy is to develop a sustainably green knowledge economy, for example the bio-based economy. Materials and fuels are processed from living mass with biotechnology and nanotechnology, helping to minimize the use of renewable materials. Presently, many countries, especially powerful ones, are summoning up their strength to conquer space and to “define sovereignty in the air” by taking high-tech equipment into space. This builds association among countries, but also causes insecurity, threatening the sustainable life of mankind. Operations on and under the ground, as well as in the air and in space, are closely supervised and followed by numerous forms of digital technology, which contain latent dangers to information safety and security. It is easier to steal or interfere with confidential national information than ever before.

Artificial intelligence and the network economy in Industry 4.0 are used to effectively manage and apply the achievements of science and high technology, and to bring the world economy to a new level with new managerial methods. That context puts countries in the face of many challenges in the increasingly competitive technological race. In general, Industry 4.0’s development process presents both opportunities and challenges, and is currently pushing Vietnam to take initiative and prepare ourselves for integration into the common playground of the world.

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(1) https:llec.europa.eu.

(2) CPV: Document of the 12^th National Congress, National Political Publishing House, Hanoi, 2016, p.77.

(3) http:baoquocte.vn

(4) The statistical table of the above-15 population according to highest attained qualifications, General Statistics Office, 2016.

(5) The opening speech of Prof., Dr. Phung Xuan Nha, Minister of Education and Training at the Announcing and Certificate-giving Ceremony for professors and associate professors in 2016, http:hdcdgsnn.gov.vn

Assoc. Prof., Dr. Bui Thi Ngoc Lan

Institute of Scientific Socialism

Ho Chi Minh National Academy of Politics