The boom of Vietnam’s information technology (IT)-communication industry, especially the strong development of the telecommunication sector, has attracted the attention of many of the world’s big investors. The industry is expected to become a new power in Vietnam’s economy in the time to come.

The booming development

Two telecom enterprises, MobiFone and Viettel, unexpectedly top the 2010 list of 1000 biggest corporate income tax payers which has been released several days ago (http://vietnamtop1000.vn/). The surprise is that the telecom companies have surpassed the “big guys” in very important fields of the national economy, banking, real estate and oil and gas, to lead the biggest tax payers.

The ranking was made based on the total sum of corporate income tax companies paid in the last three consecutive years. Therefore, in order to be able to put atop the list, companies need to have high tax payments in the three consecutive years, from 2007 to 2009.

In recent years, the booming development of the telecom sector in Vietnam has been reflected in the high growth rates of three biggest telecom networks, MobiFone, VinaPhone and Viettel.

In 2005, MobiFone gained the turnover of seven trillion dong, while the figure rapidly rose to 14,500 billion dong in 2007, an increase of 40 percent over 2006. The figure continuously increased to 31 trillion dong in 2009, an increase of 82 percent in 2008.

Similarly, Viettel has also witnessed very impressive growth rates, always at 3-digit level. In 2005, the turnover of the telecom company was modest at 3.1 billion dong. However, the figure rose sharply to 7 trillion dong in 2006 (increasing by 125 percent), to 16.3 trillion dong in 2007 (+132 percent), to 33 trillion dong in 2008 (+102 percent), and then to 60.2 trillion dong in 2009 (+ 94 percent). Noteworthy was that the company still obtained a high growth rate of 94 percent in 2009, despite the big impacts of the global financial crisis and economic downturn.

Market opening helps develop the market

The Ministry of Information and Communication formerly the Ministry of Post and Telematics, has been recognized as deserving credit for developing the market. It was the policy on opening the market and allowing different economic sectors to provide telecom services that has helped eliminate the monopoly, create a healthy competition, and thus help reduce charges and stimulate the demand.

The demand for telecom services by Vietnamese enterprises and individuals has been increasing steadily thanks to competitive service fees which make it affordable for the majority of Vietnamese people. The total number of mobile phone subscribers reached 111.4 million subscribers by the end of 2009. The number is even higher than Vietnam’s population of 80 million people.

As telecom services are accessible to the majority of people, other services have also been developing because investors can update information regularly. Though expenses on mobile phones and Internet have been increasing, subscribers are ready to pay money for the services because the services help them increase their income.

Mobile phones can help an office worker earn several million dong more a month, though he has to pay several hundreds of thousand dong more for telephone bill. At present, an worker will call it a “big trouble” if he forgets mobile phones at home, because he would miss tons of business opportunities.

Telecom growth will have direct impacts on GDP

In April 2009, at the workshop to discuss the prospect of 3G services in Vietnam, Deputy Minister of Information and Communication, Le Nam Thang, gave an example to show the link between the telecom development and the economic growth rate. Surveys have pointed out that once the number of people using broadband Internet connection increases by another 10 percent, this will generate a GDP growth rate of 0.6 percent.

The Prime Minister’s IT envoy, Dr Do Trung Ta also said in an open online dialogue recently: “3G is a broadband system that allows services to stably develop around it, thus creating indirect impacts on the economic growth. The GDP with growth by 11 percent for every 10 percent growth rate in 3G use”.

Which way for Vietnam’s economy?

It is undeniable that the boom of IT and telecom in Vietnam has paved the way for Vietnam’s economy to enter a new phase of development.

Vietnamese companies now not only focus on development the domestic market, but they also think of making outward investments. Viettel, for example, has recently invested in Laos, Cambodia, Haiti and Mozambique.

Now is the time for Vietnam to forget distant targets, such as the target of obtaining one billion dollars worth of software export per annum. One billion dollars is now just equal to half of the annual turnover of a mobile network. The strong development of telecom services, IT and Internet applications in production and business in Vietnam show much bigger potentials for development of the national economy.

Singapore, Hong Kong and Taiwan are not the most powerful countries in software outsourcing, but IT, telecom and Internet applications have always been playing a very important role in their economies. These are examples for a new trend, a new way that can help Vietnam’s economy to grow to an international scale.

Huy Phong