With a population of 85 million and annual GDP growth of 8.5 percent- among the highest in the world- Vietnam has become a promising destination for business development opportunities for U.S. exports in the Information and Communications Technologies (ICT) industry, including all IT, telecommunications and broadcasting sectors. Vietnam’s telecommunications industry is among the world’s fastest growing markets. In 2007, Vietnam’s ICT growth rate was double that of the average in the Asia region and triple that of the world average. Also in the year 2007, the cell phone and Internet broadband subsectors have a rocket market growth rate of up to 200%. The Government of Vietnam (GoV) has articulated its commitment to boosting the development of the ICT industry, particularly in telecommunications and Internet infrastructure development, software production, IT education promotion, and other forms of human capital development.
With the world’s 12th largest population at 85 million, 65 percent of which are under 15 years of age, Vietnam represents a significant growth market for U.S. exporters of telecommunications and broadcasting goods and services. Coming off of two years of year-on-year GDP growth above 8 percent, Vietnam’s economy is expected to reach 8.5 percent growth in 2007, its highest growth rate to date. Although per capita annual GDP currently stands at $835, unofficial estimates put per capita GDP in Hanoi and Ho Chi Minh City (HCMC) as high as $2,500, hinting at disposable income levels of a well establish middle-income market and a market on the verge of significant demand growth. To meet the increasing market demand and the tough competition after Vietnam’s accession to WTO, Vietnamese telecom operators understand they need to enhance their competitiveness by adopting new technologies and enhancing their human resource capabilities. They are seeking considerable transfer of technology and knowhow via foreign involvement in the telecom sector, although the market is likely to open at a gradual pace in line with Vietnam’s WTO commitments.
Industry analysts predict that by 2010 Vietnam’s ICT industries will have a growth rate of 20-30% with annual revenue of US$6-7 billion. Teledensity is expected to reach 40-42 lines (including 14-16 fixed telephone lines)/100 inhabitants, while Internet subscribers is to reach at 8-12/100 inhabitants (of which 30% is broadband subscribers) with 25-35% of the population using the Internet. New market entrants are expected to account for 40-50% of total market share.
In 1988, just after the “doi moi” (renovation/opened door) policies carried out by the Government of Vietnam (GoV), Vietnam had less than 200,000 subscribers with a teledensity of 0.18 lines/100 inhabitants. In 2000, Vietnam grew to approximately 2.6 million fixed-line subscribers and 640,000 mobile subscribers. In 2006, new phone subscribers in Vietnam reach more than doubled the total number of subscribers added in the 25-year period of 1975-2000, and the number of 18.5 million new telephone subscribers in the year 2007 tripled that of the period of the previous 3 years. According to Vietnam’s Ministry of Information and Communications (MIC), as of June 2007, Vietnam has approximately 38.31 million telephone subscribers, with a teledensity of 45.27 lines/100 inhabitants. Below is the chart of growth of number of telephone subscribers in the period of 2000-2006.
The major technologies used in Vietnam include cable, satellite, and wireless cable. Major broadband networks are deployed via ADSL, VDSL, and leased lines. WiFi is no longer a luxurious terminology, and local ISPs are seriously contemplating WiMax as a platform to popularize the Internet nationwide. So far 4 Vietnamese companies- VNPT, FPT, VTC and Viettel- are licensed to provide WiMax services and all have WiMax projects in the pilot stage. In terms of network convergence, voice/data networks are available nation-wide, while “triple play” networks (voice/data/video) and broadband services have been growing in the big cities. VoIP services are also expanding. Telecom companies own the Internet infrastructure and provide VoIP services. There are also several privately owned VoIP providers, all of which lease lines from major telecom carriers. Such new technologies as 3G, even 4G, WiMax, mobile TV, and NGN have begun to be promoted in Vietnam and will become major trends in the development of Vietnam’s telecom industry.
An important factor for exporting to Vietnam’s market as this country becomes an official member of WTO is that along with the full integration in ITA agreement in tax cut for ICT products and services, in which groups of 5% tax will decrease evenly to 0% in 2010, 10% down evenly to 0% in 2012 and 20-30% down evenly to 0% in 2014.
By Nguyen Dzung