Assessment of digital transformation on trade facilitation in Viet Nam

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

MASTER THESIS

ASSESSMENT OF DIGITAL TRANSFORMATION ON
TRADE FACILITATION IN VIET NAM

Specialization: International Trade Policy and Law

FULL NAME: LÊ ĐỨC BÌNH

Hanoi – 2023


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MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

MASTER THESIS

ASSESSMENT OF DIGITAL TRANSFORMATION ON
TRADE FACILITATION IN VIET NAM

Major: International Economics
Specialization: International Trade Policy and Law
Code: 8310106

FULL NAME: LÊ ĐỨC BÌNH
Supervisor: Assoc. Prof. Dr. TRINH Thi Thu Huong

Hanoi – 2023


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STATEMENT OF ORIGINAL AUTHORSHIP
I thus certify that this thesis is my original work, completed with the utmost
commitment, effort, and hard labor during the time allotted, and that no information
was obtained from an unauthorized data source. The research contents on this topic are
fully honest and have not been exploited or publicized in any way.
I guarantee that the master thesis was completed in accordance with the Foreign
Trade University's thesis writing regulation and methodology.

STUDENT: Le Duc Binh


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ACKNOWLEDGEMENT
The process of writing this thesis involves ongoing learning and research, which
results in not only the solutions offered in Chapter 3 of the thesis but also a variety of
experiences and information for the author. The author got recommendations, contributions,
and significant assistance in completing this thesis.
First, it is the author's honor and good fortune to be guided by Assoc. Prof. Dr.
TRINH Thi Thu Huong, my supervisor at Foreign Trade University, has extensive
knowledge and experience in the disciplines of law and conflict resolution, for which I am
grateful. I could not have finished this thesis without her advice and recommendations.
Second, I would like to express my gratitude to the authors of the books and
publications cited in this thesis.

My final thanks go to the Faculty of Graduate Studies at Foreign Trade University
for providing us - the postgraduate students - with useful master courses and assistance
throughout the learning and thesis writing process.
Hanoi, July 7th, 2023
Le Duc Binh


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TABLE OF CONTENTS
STATEMENT OF ORIGINAL AUTHORSHIP.......................................................ii
ACKNOWLEDGEMENT.......................................................................................iii


TABLE OF CONTENTS ....................................................................................

.....iii
................
LIST OF +BBREVI+TIONS................................................................
v
LIST OF TABLES................................................................................................
.. iv
vi
LIST OF FIGURES.............................................................................................
... iv
vi
....
ABSTRACT .........................................................................................................
vii
INTRODUCTION.....................................................................................................1

1.
2.
3.
4.
5.
6.

Importance of the study........................................................................................1
Literature review..................................................................................................2
Research questions and scope...............................................................................6
Objectives.............................................................................................................7
Research methodology..........................................................................................7
Structure of the thesis...........................................................................................8

CHAPTER 1: OVERVIEW OF DIGITAL TRANSFORMATION & TRADE
FACILITATION.......................................................................................................9
1.1. Overview of Digital Transformation.................................................................9
1.1.1. Understanding Digital Transformation...............................................................9
1.1.2. Digital Transformation strategy........................................................................10
1.1.3. Levels of digital transformation adaptation:......................................................12
1.1.4. Digital transformation measures of success.......................................................13
1.1.5. Challenges and success factors of digital transformation...................................16
1.2. Overview of Trade Facilitation.......................................................................17
1.2.1. Understanding Trade Facilitation.....................................................................17
1.2.2. The negotiation process of the WTO Trade Facilitation Agreement (TFA)
18
1.2.3. Structure of WTO Trade Facilitation Agreement...............................................20
1.2.4. Meaning of WTO Trade Facilitation Agreement...............................................23
1.3. Digital transformation in Trade facilitation.....................................................24
1.3.1. The impact of digitalization on trade.................................................................24

1.3.2. Digital Transformation in Facilitating Trade.....................................................25
1.4. Experiences from other countries for digital transformation in
Trade
Facilitation............................................................................................................... 28


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1.4.1. The trend of other countries implementing digital transformation in trade
facilitation……………..
28
1.4.2. Experiences from some Asian countries............................................................30
CHAPTER 2: SITUATION OF DIGITAL TRANSFORMATION ON TRADE
FACILITATION IN VIET NAM............................................................................32
2.1.
2.1.1.
2.1.2.
2.1.3.
2.1.4.
2.2.
2.2.1.
2.2.2.
2.2.3.

An overview of trade facilitation in Viet Nam before digital transformation
32
Relative legal principles of digital transformation in Viet Nam . 36
Viet Nam’s current state of digital transformation..............................................39

Viet Nam’s level of digital transformation adaptation:.......................................43
Vision and Goal of Digital Transformation in 2023...........................................45
The Situation of Digital Transformation in Viet Nam Trade Facilitation.........47
Achievement in digitalizing trade facilitation of Viet Nam..................................47
Advantages of Viet Nam in digital transformation of trade facilitation
61
Limitations......................................................................................................62

CHAPTER 3: RECOMMENDATIONS FOR VIET NAM IN DIGITAL
TRANSFORMATION ON TRADE FACILITATION...........................................64
3.1.
3.2.
3.2.1.
3.2.2.
3.2.3.
3.2.4.

Key tasks for Viet Nam government and Customs sector................................64
Recommendations:.........................................................................................66
About the digital system of Viet Nam Customs...................................................67
About the quality of human resources...............................................................71
Recommend the financial solutions..................................................................74
Recommend the Organizational solutions.........................................................75

CONCLUSION.......................................................................................................76
REFERENCES.......................................................................................................79


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LIST OF +BBREVI+TIONS
TFA

Trade Facilitation Agreements

WTO

World Trade Organization

UNCTAD

United Nations Conference on Trade and Development OECD
Organisation for Economic Co-operation and Development

GATT

General Agreement on Tariffs and Trade

NATF

National Single Window and Trade Facilitation

VCCI

Viet Nam Chamber of Commerce and Industry

WCO

World Customs Organization

VASSCM

Viet

Nam

Automated

System

for

Seaport

Management
VDCA

Viet Nam Digital Communications Association

SDT

Special and Differential Treatment

GVCs

Global Value Chains

LPI

Logistics Performance Index

SMEs

Small and medium-sized enterprises

LDCs

Developing and least-developed countries

IoT

Internet of Things

KPI

Key Performance Indicator

ROI

Return on Investment

Customs


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LIST OF TABLES
Table 1: Comparing TFA content with the GATT principles......................................17
Table 2. Index of international trade performance in 2020..........................................47

LIST OF FIGURES
Figure 1. Trade Facilitation Performance in Viet Nam (2022)........................................24
Figure 2. Trading across Borders in Viet Nam – Time and Cost......................................48
Figure 3. Level of satisfaction of enterprises with methods of finding information about
administrative procedures...........................................................................................56


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ABSTRACT
The thesis research conducted an assessment of the impact of digital transformation
on trade facilitation in Viet Nam, especially about customs operation. The study aimed to
understand the extent to which digital technologies have influenced and improved trade
processes, efficiency, and competitiveness in the country.
The research employed qualitative data collection methods. The data was gathered
through research about trade facilitation with stakeholders including government officials,
industry representatives, and logistics providers.
The findings of the study revealed several significant outcomes. Firstly, it was
evident that digital transformation has had a positive impact on trade facilitation in Viet
Nam. The adoption of digital technologies, such as e-commerce platforms, digital payment
systems, and online documentation processes, has streamlined trade procedures, reduced
administrative burdens, and enhanced the overall efficiency of cross-border transactions.
The research also highlighted the role of digital infrastructure in facilitating trade
facilitation. The development of robust internet connectivity, widespread adoption of mobile
devices, and the expansion of digital platforms have improved access to markets, enhanced
communication, and fostered collaboration among businesses engaged in international trade.
Furthermore, the study identified various challenges and barriers to digital
transformation in trade facilitation. These included inadequate digital skills among
stakeholders, fragmented data systems, cybersecurity concerns, and the need for regulatory
reforms to accommodate the changing digital landscape. Addressing these challenges will be

crucial to ensure the sustained benefits of digital transformation in trade facilitation.


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Based on the research findings, several recommendations were provided. It was
suggested that the Vietnamese government should continue investing

in

digital

infrastructure, promote digital literacy and skills development, and strengthen cybersecurity
measures to foster a secure and enabling environment for digital trade. Collaboration among
government agencies, businesses, and industry associations was also emphasized to ensure
effective implementation and coordination of digital transformation initiatives.
In conclusion, the assessment of digital transformation on trade facilitation, especially
about customs operation in Viet Nam highlighted the positive impact of digital technologies
on streamlining trade processes and enhancing competitiveness. However, challenges and
barriers to digital transformation exist and require attention. By addressing these challenges
and implementing the recommended strategies, Viet Nam can further leverage digital
transformation to boost trade facilitation, contribute to economic growth, and strengthen its
position in the global marketplace.


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INTRODUCTION

1. Importance of the study
Since Vietnam signed the Trade Facilitation Agreement (TFA) in 2015, trade
facilitation has played an essential role in reducing the cost of trade, which has remained
high despite the cost of transportation, the development of telecommunications and
information technology, and countries that have cut many trade barriers. In today's global
interactive economy, efforts to develop cooperation in trade procedures and promote
liberalization of trade policies have promoted global trade and helped countries integrate into
the production system. And in that process, digital transformation offers a solution by
leveraging technology to streamline and modernize trade facilitation.
The traditional method can be called a paper-based process, it is slow, inefficient, and
causes a lot of errors which is the reason that caused the delay of the trade process. By
digitizing documentation, automating processes, and implementing electronic platforms,
trade facilitation can become faster, more transparent, and cost-effective. Digitalization also
enhances collaboration and interoperability among stakeholders, facilitates risk management,
and enables real-time tracking and monitoring of shipments. Additionally, in the modern
world of e-commerce and global value chains, digital transformation is essential to improve
the efficiency of cross-border trade.
Researching the digital transformation of trade facilitation is crucial in today's
globalized and technologically advanced world. As trade facilitation processes evolve and
become increasingly digitalized, understanding the implications, challenges, and
opportunities that arise from this transformation is important. Researching this area helps
identify best practices, innovative solutions, and policy recommendations to optimize the
benefits of digital trade facilitation. It enables governments, businesses, and stakeholders to
stay informed about emerging technologies, such as blockchain, artificial intelligence, and
data analytics, and their potential applications in streamlining and enhancing trade


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processes. Moreover, the research sheds light on the digital divide, ensuring that the benefits

of digital transformation are inclusive and accessible to all, especially for developing
countries and small businesses. By investigating the digital transformation of trade
facilitation, policymakers and practitioners can make informed decisions, devise effective
strategies, and foster an enabling environment for seamless and efficient cross-border trade
in the digital age.
Also, digital transformation can impact the trade facilitate processes in Viet Nam,
with digital technology, the government can harmonize the procedure system. The digital
transformation has reduced the costs of engaging in international trade, facilitated the
coordination of global value chains (GVCs), helped diffuse ideas and technologies, and
connected a greater number of businesses and consumers globally. But even though it has
never been easier to engage in international trade, the adoption of new business models has
given rise to more complex international trade transactions and policy issues.
The thesis aims to figure out the connection between digital transformation and trade
facilitation, especially in customs operation. Comparing the differences

of digital

transformation on trade to other industries. In addition, by learning about the current status of
trade facilitation with the impact of digital technology in our nation, the thesis also makes
some recommendations on making the process more efficient and improving awareness and
application.
2. Literature review
Assessment of Digital transformation on trade facilitation is currently a topic of
great interest to academics as well as the government. WTO members concluded
negotiations at the 2013 Bali Ministerial Conference on the landmark Trade Facilitation
Agreement (TFA), which entered into force on 22 February 2017 following its ratification
by two-thirds of the WTO membership. The TFA contains provisions for expediting the
movement, release and clearance of goods, including goods in transit. It also sets out
measures for effective cooperation between customs and other appropriate authorities on
trade facilitation and

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customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.
The TFA entered into force on 22 February 2017 after two-thirds of the WTO members completed their domestic
ratificationprocess.
In 2015, Prof. Ph.D. Trinh Thi Thu Huong and Dr. Phan Thi Thu Hien shows an overview of the TFA,
the scope and topic of each article. This study gave a clear look at the World Trade Organization Trade Facilitation
Agreement.
Besides that, many authors in Vietnam have also conducted studies to give basic and general views and
analyze the provision of TFA in Vietnam. For instance, in 2014, Lawyer Tran Huu Huynh, Former President of
VIAC released “WTO Facilitation Agreement, What do businesses get? What needs to be done?” on Seminar
Customs - business partnership in implementing the WTO Trade Facilitation Agreement. The article was aimed at
findingtheimpact and whatneedstobeimplementedtofacilitatetradeflow.
In early 2016, Jan Hoffman of UNCTAD published a study on "Trade Facilitation and Development"
which discussed the various relationships between human and institutional development on the one side, and a
country's capacity to implement and benefit from the trade facilitation measures of the WTO Trade Facilitation
Agreement(TFA)ontheother.
Some data of this thesis rely on the results of asurvey by the Economic Institute for ASEAN and East Asia
(ERIA) in 2011 of firms in each of the 10 AMS point to two trade facilitation measures as the top two concerns of
the ASEAN private sector for implementation by 2015: (i) improve import and customs administration efficiency
and integrity; and (ii) streamline and expedite import and customs procedures, documents, etc. (Intal, Narjoko, and
Simorangkir,2011:45-46).


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Also, the Doing Business Annual Report in the last 5 years andother documents by the World Bank bring
acloserlookasprooftoreviewtheimpactoftradefacilitationintradeingeneralandVietnamesetradeinspecific.

The integration of modern digital technology into diverse sectors has emerged as a disruptive force around
the world, influencing economies and industries. Digital transformation is especially important in the context of
international trade because of its potential to redefine trade facilitation systems. This literature study provides a
complete overview of the relevant research on assessing the influence of digital transformation on trade facilitation,
with a particular focus on its implications for Vietnam. The analysis delves into the many facets of digital
transformation,includingitsroleintradefacilitationandthedifficultiesandopportunitiesitbrings.
DigitalTransformationandTradeFacilitation:
Digital transformation includes the strategic application of digital technologies such as artificial intelligence,
big data, blockchain, and the Internet of Things to radically redesign organizational operations. Similarly, trade
facilitation refers to the modernization, simplicity, and harmonization of cross- border trade procedures. Customs
clearance, logistics, regulatory compliance, and information sharing are examples of these. The link between digital
transformation and trade facilitation is found in the use of technology to streamline these operations, decrease costs,
andimproveefficiency.
Trade facilitation benefits greatly from digital change. It increases efficiency by automating labor-intensive,
manual operations, decreasing paperwork, and accelerating cross-border trade. Furthermore, digital technologies
enable real-time data sharing among stakeholders, which improves transparency, lowers the risk of fraudulent
activity, and reduces corruption. The decrease in trade costs, including administrative hurdles, transportation costs,
and trade- relateddelays,isafundamentaleffectofthesedevelopments,ultimately


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contributing

to increased

competitiveness

for

enterprises

participating

in

internationaltrade.
DigitalTransformationInitiativesinVietnam:
Vietnam has actively pursued e-government initiatives aimed at digitizing governmental functions and
enhancing public service delivery. These initiatives, including the implementation of the National Single Window
(NSW)system, have direct implications fortrade facilitation. TheNSW system has streamlined customs processes
by enabling electronic submission of trade-related documents, leading to reduced clearance times and costs for
businessesengagedin internationaltrade.
ChallengesandConsiderations:
While the advantages of digital transformation in trade facilitation are evident, several challenges and
considerations demand attention. The digital divide, characterized by disparities in access to and proficiency with
digital technologies, can exacerbate inequalities, particularly among small and medium- sized enterprises (SMEs) in
Vietnam. Cybersecurity and data privacy concerns must also be addressed as digital trade processes expand,
underscoring the importance of robust protection measures and appropriate regulations. A supportive regulatory
framework is crucial to ensure the secure and effective deployment of digital technologies within trade facilitation
processes.
In the context of Vietnam's evolving trade landscape, the assessment of digital transformation's impact on
trade facilitation is a critical area of research. While some studies have explored this intersection, there remains a
notable research gap that warrants investigation. Specifically, there appears to be a dearth of research focusing on
specific industries or sectors within the country, potentially overlooking key disparities and opportunities.
Additionally, the regulatory and policy frameworks governing digital transformation in the context of trade
facilitationinVietnamhavenotbeenthoroughlyanalyzed.Byaddressing


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these gaps in the literature, this thesis aims to contribute to a more holistic understanding of how digital transformation
isshapingtradefacilitationin Vietnam,withimplicationsforpolicyformulationandindustrystrategies.
At the end of this paper, it is expected to give an overview of the applying status of digital transformation
during TFA and their relationship in the last 7 years since Vietnam signed the Trade Facilitation Agreement. In
addition, the content of the study also presents the situation of applying digital transformation to trade facilitation in
Vietnam: presenting the process and related regulations. In the context of Vietnam joining the generational Free
Trade Agreements (FTAs), our country needs to apply digital methods to enhance the effectiveness of TFA.
Therefore,moreanalysisandevaluationstudiesareneededtomakerecommendationsonthisissue.
3. Researchquestionsandscope
The thesis raises the following questions: How facilitating trade was processed in Vietnam, especiallyabout
customs operations? How digital transformation was applied in facilitating trade? What advantages or
disadvantages does Vietnam have when implementingTFA, andalso whenapplyingdigital transformation in trade
facilitation? What solutions are needed to ensure that Vietnam willimplement these digital technologies in facilitating
tradewell?Toanswertheabovequestions,thetasksofthisstudyareto:
-

Researchtheoreticalissuesontradefacilitation,anddigitaltransformation.

-

Learn about the provision of WTO’s Trade Facilitation Agreement and the provision of Vietnamese
governmentoninternational.

-

Analyzing the current status of digital transformation, trade facilitation on its own, and trade facilitation with
the support of digital technology in general and the Custom operation of Vietnam in particular, including
accessing the compatibility between Vietnam domestic laws and regulations. From that, the thesis
mentionsrecommendationsthathelp

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enhance technology skills and adaptations in the Fourth Industrial Revolution, besides that, raising
awarenessaboutdigitaltransformation.
The scope of the content of this thesis contains the practical issues of trade facilitation and digital
transformation, explains theirrelationship, andhow they impacteachother, especiallyinthe Customs sector (General
DepartmentofVietNamCustoms).Italsoincludestheregulationsrelatedtothistopic.
The thesis's time scope is from when Vietnam signed the Trade Facilitation Agreement in 2015 until now.
The study's recommendation can be applied from now until there is a regulation directly adjusting the process of
digitaltransformationappliedtotradefacilitation.
4. Objectives
The thesis aims to comprehensively evaluate the impact of digital technologies on trade facilitation in the
country. It seeks to analyze how the adoption and integration of digital tools and platforms have influenced trade
processes, efficiency, and competitiveness. The thesis aims to examine the role of digital transformation in enhancing
market access and global connectivity, assessing the cost implications, analyzing the impact on transparency and
trust, and identifying challenges and barriers tosuccessful implementation. By achievingthese objectives, the thesis
aims to provide valuable insights and recommendations for maximizing the benefits ofdigital transformation intrade
facilitation, thus contributing to the overall understanding and advancement of digitalization in the Vietnamese trade
sector.
5. Researchmethodology
During the research process of this thesis, the author has applied the Secondary data analysis method. This
method also known as archival study, is studying and assessing research that already exists, this the thesis will collect
legal documents, and economic information through historical research methods and then classify and systematize
them.


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Utilizing a diverse range of existing data sources, including trade statistics from Vietnam Customs,
government reports, international organization data, and academic research, this approach seeks to explore and
elucidate the multifaceted dynamics of digitalization within the context of trade facilitation. By systematically
defining research questions, retrieving and preparing relevant datasets, applying rigorous analytical techniques, and
validating findings against existing literature and reports, this research aims to provide empirical evidence and
insights into the transformative effects of digital technologies on the trade landscape in Vietnam. Furthermore, ethical
considerations pertaining to data privacy and citation integrity will be meticulously adhered to throughout the
secondary data analysis process. Through this methodological approach, this study aspires to contribute valuable
insights and inform policy recommendations, thereby advancing knowledge in the field of digital transformation
andtradefacilitation.
Besides that, the thesis will observe the real situation of implementing TFA andapplying digitaltechnology
to trade facilitation of the Vietnamese Government and based on particular experiences from Vietnam, give
recommendations for Vietnam by professional solution method. This methodological option provides a unique lens
through which to explore the issue, carefully examining important venues, processes, and parties involved in trade
facilitation,suchascustomsoffices,logisticshubs,andgovernmentagencies.
6. Structureofthethesis
Thethesisincludedthefollowingfourchapters:
Chapter1:OverviewofDigitalTransformation&TradeFacilitation
Chapter2:SituationofapplyingdigitaltransformationtotradefacilitationinVietNam
Chapter3:RecommendationsforVietNaminDigitalTransformationonTradeFacilitation.


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CHAPTER1:OVERVIEWOFDIGITALTRANSFORMATION&TRADEFACILITATION
1.1.
OverviewofDigitalTransformation
1.1.1. UnderstandingDigitalTransformation
Digital Transformation is a wide-known term lately, and it has become a strategic imperative on leadership
agendas.Digitaltransformation istheprocess oftotalandcomprehensivechangeofindividualsandorganizationsin

thewayofliving,workingandproductionmethodsbasedondigitaltechnologies.Itistheprocessthatanorganization
applies to integrate digital technology in all types of areas, fundamentally changing how it delivers value to people;
andmakeculturalandoperationalshiftsthatadaptbettertochangingpeople'sdemands.
According to The International Business Machines Corporation (IBM), digital transformation approaches
all parts of an organization, from its business models to customer experiences to procedures and operations, with a
customer- driven, digital-first mindset. It leverages data to enable intelligent workflows, faster and smarter decisionmaking, and real-time response to market disruptions using AI, automation, hybrid cloud, and other digital
technologies. Finally, it altersclientexpectationsandopensupnewbusinessprospects.
Its goal is to build a technical and operational foundation, to evolve and respond in the best possible way to
unpredictableandever-changingcustomerexpectations,marketconditions,andlocalorglobalevents.
Theframeworkofdigitaltransformation
Anysystem forgeneral and governmentsystemsforspecific goingthrough a digitaltransitionshouldhave
a change management strategy, which is what a digital transformation framework is. A framework is a tool that
supportstransformationatallorganizationallevelsandwithinindividualdepartments.
A framework supports digital transformation by outlining best practices and processes to do the following
(IBM):