VietNamNet Bridge – Vietnam’s IT-telecom sector needs a breakthrough in the time to
come to take off. The sector has been developing rapidly, but the development is
unsustainable. Vietnam still does not have competitive products in both software
and hardware.

Telecom
and Internet have become important economic sectors, making up seven percent of
GDP.

Vietnam’s telecom can now keep pace with the world

The report
by the Ministry of Information and Communication (MIC) shows that in 2010, the
information technology and telecom sector has continued obtaining high growth
rate. The total revenue of the sector is expected to reach 200 trillion dong,
including 140 trillion dong from the telecom sector.

The
Vietnam Post and Telecommunication Group (VNPT) expects to obtain 101,569
billion dong, an increase of 22 percent over 2009. Meanwhile, the military
telecom company Viettel expects a profit of 91,134 billion dong.

In 2010,
the total number of registered and operational telephones reaches 162.88
million, of which 91.2 percent are mobile phones.

Many
experts keep optimistic about the strong development of Vietnamese telecom
companies, saying that in the telecom sector, Vietnamese companies are so strong
that foreign enterprises cannot squeeze into the Vietnam’s market. Vietnamese
networks have defeated foreign invested networks, including SK Telecom (a
partner of S-Fone), Hutchison (Vietnammobile) and Vimpelcom (Beeline).

The
experts have their reasons to make such a comment, because three Vietnamese
telecom companies, namely VinaPhone, MobiFone and Viettel are still holding 90
percent of the market share. However, the experts have also warned that the
international cooperation and telecom market opening is inevitable, and that if
Vietnam does not strive toward asustainable development, it will lag behind.
MIC’s Deputy Minister Le Nam Thang admitted that Vietnam’s telecom market has
been developing rapidly, but the development is unsustainable, which is
reflected in the decreasing ARPU (average revenue per user).

Vietnam still does not have competitive IT products

MIC said
that the IT sector has the total revenue of $7.4 billion in 2010, witnessing the
growth rate of 20 percent.

However,
Vietnam’s electronics and computer products still do not have a strong brands.
Since 2000, enterprises have shifted to assembling IT products, producing
electronic parts and computers for export. However, the production of parts and
accessories for export has still been undertaken by 100 percent foreign invested
enterprises. Therefore, the locally made content ratio remains low.

According
to the Vietnam Electronic Enterprises’ Association, in the last 10 years, the
industry’s export revenue has increased 20 times, from $94 million in 1996 to
$1.7 billion in 2006. However, most of the export revenue (90 percent) has been
brought by foreign invested enterprises. Similarly, foreign invested enterprises
have also been holding 80 percent of the domestic market share.

Meanwhile,
Vietnamese brands such as FPT Elead and CMS just account for a limited market
share. Therefore, IT experts worry that Vietnam will not be able to become a
powerful IT country if it does not have powerful products.

Hoang Anh
Xuan, General Director of Viettel said that his corporation will design and
manufacturer electronic and IT parts. However, he admitted that it is very
difficult to “overtake” China and that the company would only try to conquer
niche markets.

Breakthrough needed

Enterprises have voiced the same concern the lack of suitable policies to
support the industry. MIC Minister Le Doan Hop also said that the strategy
development plan is devised for the next 10 years, but it will require the great
efforts to implement it.

The
minister has also admitted that the preferential policies for the industry
development have not been clear and not reasonable enough to create big
enterprises.

Currently,
the budget for IT development remains modest at one percent, which is very low
if compared with other countries in the region. Thailand and Indonesia, for
example, spend 4 percent of the state budget for IT development.

Ha
Phuong