ICT Sector

An Expert's View about IT and Telecommunications in Vietnam

Posted on: 31 Dec 2011

Vietnam is listed by ITU (International Telecommunication Union) among the countries with the highest telecommunication growth rate worldwide.

ICT Sector in Vietnam Vietnam is listed by ITU (International Telecommunication Union) among the countries with the highest telecommunication growth rate worldwide. Vietnam’s ICT sector grew by 24.9% in year 2010. Vietnam’s ICT market was worth US$16 billion in 2010, making 10% of the country’s GDP. As of December 2010, there are 111,570,201 mobile phone subscribers and 26,784,035 internet users, accounting for 31.95% of the country’s population. (Source: Ministry of Information and Communications) In terms of the software industry, Vietnam is becoming a new centre for software outsourcing. Ho Chi Minh City and Hanoi ranked No.5 and 10 respectively on Tholons Global Services’ 2009 list of emerging outsourcing cities. Today, some international giants such as Samsung, Nokia, Intel have set up their manufacturing sites in Vietnam. Intel invested US$1 billion to build their largest manufacturing site worldwide in Ho Chi Minh City which came into operation in July 2010. ICT is seen by the Vietnam Government as a crucial sector for the country’s economy and therefore, has been given many incentives to promote the sector. Newly passed Telecommunication Laws opens up the market to all economic sectors. Market overview Information and Communications Technologies (ICT) industry in Vietnam is among the fastest growing sector in the country. Over the past decade, Vietnam ICT industry has recorded an average growth rate of 20-25%. ICT revenue amounted to UD$14.7 Information and Communications Technologies (ICT) Industry is currently among the fastest growing sector in Vietnam. Over the past 5 years, Vietnam has sustained an average network growth of over 20%, which is the highest in the region. The International Telecommunications Union (ITU) recently announced the ranking list of the global ICT index during the period of 2002-2007 in which Vietnam ranked among top ten countries with the quickest ICT growth. In June 2006 the National Assembly passed the first law to create a comprehensive legal framework for the development of Information Technology. On 20 April 2009, the draft Telecommunication Law was presented to the National Assembly Steering Committee for discussion. The Telecommunication Law is considered as a must to promote the development of telecom-IT industry when Vietnam joined the WTO. Vietnam’s equitisation process has also led to ICT companies being partly privatised and floated on the stock market. The sector is in a period of change that will facilitate a differentiation in investment financing and possibilities as well as partnerships between Vietnamese and foreign companies. The last two years saw significant development in Vietnam’s ICT sector, with impressive development of both mobile networks and broadband internet. The sector development continues coupled with a gradual but steady price cuts. The Vietnamese Ministry of Information and Communications (MIC) telecom subscriber figures show that Vietnam had a total of 14.4 million fixed line subscribers and 111,570,201 mobile subscribers as of December 2010. (The country has a population of 87 million). The Vietnam’s telecommunications sector grew by 38% in the year 2008 despite the world economic downturn. Looking ahead, a professional market researcher predicts that Vietnam will surpass the 100% penetration threshold in 2011 and will end 2012 with close to 111mn subscribers. On 13 August 2009, four licenses for third-generation (3G) services were officially awarded to Viettel, Mobifone, Vinaphone and the joint venture of EVN Telecom and Hanoi Telecom. By the end of 2010, these mobile operators have introduced 3G services to the market. In their plan, The introduction of 3G in Vietnam is a step forward but does not aim to rule out the presence of 2G. The Internet was officially introduced to Vietnam in late 1997. The sector has developed rapidly in the last 2 years partly because of the availability of affordable broadband/ADSL packages for households (the monthly subscription average rate is as low as US$3). As of December 2010, the country has 26,784,035 internet users and the total number of broad bandwidth subscribers is over 3.6 million. The total capacity of the international link is as much as 134 Gbps. 191,667 Dot vn domain names have been issued. (Source: Vietnam Internet Centre VNNIC) According to the government, turnover in the software and digital content industry reached US$2 billion in 2010, up 40% in the last 10 years. During this period, the software industry workforce has increased by 20 times during this period. In general, the monopoly of state corporations in the ICT sector is gradually giving way to competition. Entry to the World Trade Organisation (WTO) in January 2007 provided the industry with more private competition, which has led to an increase in the number of actors in the market, and made telecommunications and technology services cheaper and more accessible. Despite the world economic turmoil, the telecommunication sector still recorded great achievements. Meanwhile, the software industry seems to be hit hard. However, this is also a chance for software firms to look into new areas like R&D or to spend time on developing new software solutions. Key opportunities ξ The National Strategy on Transforming Vietnam into an advanced ICT country by 2020. In terms of ICT human resources, the strategy aims to increase the total number of people working in ICT industry to one million. In terms of infrastructure, the strategy looks at expanding broadband coverage to the most remote villages and mobile broadband coverage to 95% of the population as well as ensuring 70% of the population to have internet access. In terms of ICT industry development, the strategy targets at forming advanced ICT R&D institutions and bringing Vietnam to the top 10 list of countries providing outsourcing services and digital content services. In view of this national strategy, international co-operation in this field is promoted and there will be more projects on improving ICT infrastructure and usage in the public sector. Digital Content Industry The Vietnam’s digital content industry grew by 60-70% in the last decade. This sub-sector was worth US$690 million in 2010. Although digital content is a new industry in Vietnam, it is expected to be on the list of key industries by end of 2015 with a revenue of US$2 billion. The introduction of 3G in the past 2 years has laid a solid ground for the growth of digital content services, especially mobile content services. Data Centre Services Although data centre has only been introduced to the market in the last couple of years, many major ICT companies have invested in datacentre to meet the increasing demand of the local market. The capital expenditure for commercial datacetre in Vietnam is expected to reach US$244 million by end of 2011. Companies such as FPT, Viettel, CMC, etc. have actively played their parts in this promising sub-sector. Furthermore, there is a chance for Vietnam to become another major destination for data centre services now that the leading data centres in Japan, Australia, Singapore, Hong Kong, etc. struggle to meet the increasing demand. Therefore, giant data centre service providers such as KDDI, NTT Telecommunications, etc. have approached local data centre service providers for business co-operation. Cloud Computing Vietnam has been approaching cloud computing services through some projects from Micrsoft, Intel, etc. This was marked by the signing of an MOU in May 2010 between FPT and Microsoft Asia Pacific for bilateral cooperation to promote cloud computing development in Vietnam. In another development, VNG was sponsored VND 8.5 billion by the US Trade and Development Agency for the implementation of cloud computing at the former’s Vinadata centre. Results of a recent survey by Symantec, cloud computing is more and more popular in Vietnam and 46% of local enterprises and organisations are implementing hybrid cloud. E-commerce With 31.95% of the country’s population using the internet and significant improvements in the banking system in the last few years, Vietnam is considered a potential market for e-commerce. According to the Vietnam 2009 e-commerce report by the Ministry of Industries, e-commerce in Vietnam has proved itself to be a useful tool for enhancing business competitiveness. Of over 2,000 businesses taking part in the survey, 12% of them use e-commerce trading floors. 76% of those who have not used e-commerce trading floors are committed to doing so in the near future. Local e-commerce trading floors are also positive about the prospect of the e-commerce in Vietnam. The total value of Vietnam’s e-commerce was only US$100 million but is expected to grow to US$ 2 billion by end of 2015. ICT applications for Healthcare sector In terms of ICT adoption in the healthcare sector, Vietnam is still at the very low level compared to the averaged world-wide level. However, with the population of 87 million, more than 70% of which lives in the rural areas, Vietnam is committed to intensifying ICT adoption in the healthcare sector. Therefore, Vietnam, in experts’ views, is a potential market for ICT applications used for the healthcare sector. The introduction of 3G is, again, a step forward in preparing the infrastructure. This potential market is considered a playing field for foreign players and the local companies act as partners/ distributors. Companies such as Cisco, IBM or Ericsson have been very active in watching for new developments in this market. Latest export opportunities – ICT Latest export opportunities – Vietnam Getting into the market Good local partner It is important that UK companies can find a good local partner to make use of their local knowledge, especially on local business practice as well as their network of contacts. Long-term commitment Vietnam is not a quick-win market, therefore, UK companies should be patient and make long- term commitment in order to explore and succeed in this market. More about doing business in Vietnam Contacts Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS). To commission research or for general advice about the market, get in touch with our specialists in country - or contact your local international trade team. ξ Le Mai Hoang Giao, British Consulate General, Ho Chi Minh City. Tel: +84 (8) 3825 1380 or email: le.giao@fco.gov.uk ξ Nguyen Duc Vinh, British Embassy Hanoi. Tel: +84 (4) 3936 0500 or email: nguyen.vinh@fco.gov.uk Contact your local international trade team UKTI Events UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows. Latest events – ICT Major Events Vietnam Consumer Digital World Expo www.vcw.com.vn Time: 14-17 July 2012 Vietnam International Communications Summit & Expo www.vietnam-comm.com Time: 14-17 November 2012 Banking Vietnam Conference & Exhibition www.bankingvn.com.vn Time: tba Useful links More about OMIS and other UKTI services for exporters
Posted: 31 December 2011

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