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


ii

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

v
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


iv

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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


v

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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


viiv

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


vii

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.


vi

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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.


1

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


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 crossborder 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


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 ratification process.
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 finding the impact and what needs to be implemented to facilitate trade flow.
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) on the other.
Some data of this thesis rely on the results of a survey 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).


Also, the Doing Business Annual Report in the last 5 years and other documents by the World Bank

bring a closer look as proof to review the impact of trade facilitation in trade in general and Vietnamese trade in
specific.
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, including its role in trade facilitation and the difficulties and opportunities it
brings.
Digital Transformation and Trade Facilitation:
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, and improve efficiency.
Trade facilitation benefits greatly from digital change. It increases efficiency by automating laborintensive, 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- related delays, is a fundamental effect of these developments, ultimately


contributing

to increased

competitiveness

for

enterprises

participating

in

international trade.
Digital Transformation Initiatives in Vietnam:
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 for trade facilitation. The NSW system has streamlined
customs processes by enabling electronic submission of trade-related documents, leading to reduced clearance
times and costs for businesses engaged in international trade.
Challenges and Considerations:
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 facilitation in Vietnam have not been thoroughly analyzed. By addressing


these gaps in the literature, this thesis aims to contribute to a more holistic understanding of how digital

transformation is shaping trade facilitation in Vietnam, with implications for policy formulation and industry
strategies.
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, more analysis and evaluation studies are needed to make recommendations
on this issue.
3. Research questions and scope
The thesis raises the following questions: How facilitating trade was processed in Vietnam, especially
about customs operations? How digital transformation was applied in facilitating trade? What advantages or
disadvantages does Vietnam have when implementing TFA, and also when applying digital transformation in
trade facilitation? What solutions are needed to ensure that Vietnam will implement these digital technologies in
facilitating trade well? To answer the above questions, the tasks of this study are to:
-

Research theoretical issues on trade facilitation, and digital transformation.

-

Learn about the provision of WTO’s Trade Facilitation Agreement and the provision of Vietnamese
government on international.

-

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 mentions recommendations that help

enhance technology skills and adaptations in the Fourth Industrial Revolution, besides that, raising
awareness about digital transformation.
The scope of the content of this thesis contains the practical issues of trade facilitation and digital
transformation, explains their relationship, and how they impact each other, especially in the Customs sector
(General Department of Viet Nam Customs). It also includes the regulations related to this topic.
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 digital transformation applied to trade facilitation.
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 to successful implementation. By achieving
these objectives, the thesis aims to provide valuable insights and recommendations for maximizing the benefits
of digital transformation in trade facilitation, thus contributing to the overall understanding and advancement of
digitalization in the Vietnamese trade sector.
5. Research methodology
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.


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 and trade facilitation.
Besides that, the thesis will observe the real situation of implementing TFA and applying digital
technology 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, such as customs offices, logistics hubs, and government agencies.
6. Structure of the thesis
The thesis included the following four chapters:
Chapter 1: Overview of Digital Transformation & Trade Facilitation
Chapter 2: Situation of applying digital transformation to trade facilitation in Viet Nam
Chapter 3: Recommendations for Viet Nam in Digital Transformation on Trade Facilitation.


CHAPTER 1: OVERVIEW OF DIGITAL TRANSFORMATION & TRADE FACILITATION
1.1.
Overview of Digital Transformation
1.1.1.

Understanding Digital Transformation
Digital Transformation is a wide-known term lately, and it has become a strategic imperative on

leadership agendas. Digital transformation is the process of total and comprehensive change of individuals
and organizations in the way of living, working and production methods based on digital technologies. It is the
process that an organization applies to integrate digital technology in all types of areas, fundamentally changing
how it delivers value to people; and make cultural and operational shifts that adapt better to changing people's

demands.
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 decision-making, and real-time response to market disruptions using AI, automation, hybrid cloud,
and other digital technologies. Finally, it alters client expectations and opens up new business prospects.
Its goal is to build a technical and operational foundation, to evolve and respond in the best possible
way to unpredictable and ever-changing customer expectations, market conditions, and local or global events.
The framework of digital transformation
Any system for general and government systems for specific going through a digital transition should
have a change management strategy, which is what a digital transformation framework is. A framework is a
tool that supports transformation at all organizational levels and within individual departments.
A framework supports digital transformation by outlining best practices and processes to do the
following (IBM):


 Analyze the impact of change across all areas of the organizations
 Manage the change effectively and efficiently
 Plan the steps to implement the transformation
 Identify metrics to measure the benefits the change brings
 Clarify ways to progress along your digital transformation journey
1.1.2.

Digital Transformation strategy
According to Amazon Web Services, which is the world's most comprehensive and broadly adopted

cloud, they offer over 200 fully featured services from data centers globally, AWS offers many different tools
and solutions for enterprises and software developers that can be used in data centers in up to 190 countries for
government agencies, education institutions, non-profits and private organizations, digital transformation
strategy is a comprehensive plan for accomplishing both short- and long-term digital transformation in any

organization. It takes the following factors into account:
•

Leaders who initiate and drive the transformation

•

Investment and financial planning

•

Key performance indicators (KPIs) to measure the return on investment (ROI)

•

Tools and processes that will support the transformation

•

External resources and third-party experts

•

The impact of transformation on people
The four steps to building successful digital transformation plans are outlined below: