From growing e-commerce, online gaming, travel booking, and offline-to-online platforms such as ride-hailing and food delivery, Vietnam’s digital economy continues to thrive.
Positive outlook created by the Vietnamese Government’s strategic plans on developing a digital economy is boosting foreign investors’ appetite for the country’s IT industry.
Among the investors, South Korea’s Samsung SDS - systems development subsidiary of Samsung Electronics - is typical with an acquisition of an additional 5% stake of Vietnam’s second largest IT services provider CMC Corporation recently, raising its ownership in the Vietnamese firm to 30%.
Earlier in late July, Samsung SDS bought a 25% stake in CMC through a private placement, which it hoped would accelerate its foray into Vietnam's fledgling clouding market and other markets in Southeast Asia.
CMC said that most of the investment capital, which is estimated worth more than US$40 million, will be used for developing Internet of things (IoT) and artificial intelligence (AI) technologies.
CMC Chairman and CEO Nguyen Trung Chinh told the media that this commitment from Samsung would propel CMC into the global league in the next five years and double its overseas sales to more than 30% of total sales by 2023.
CMC also aims to integrate its IT systems with Samsung SDS’s and use IoT and AI to automate production lines, a model that would be implemented first in Vietnam before being exported to other markets, Chinh said.
Chinh also pointed to the potential he saw in Vietnam's IT sector. The National Assembly passed a cyber-security law that came into effect in January requiring the personal data of domestic internet users be kept in the country. Chinh said that demand for security-related products and services will grow further, adding that the start of fifth-generation (5G) wireless communication services will also help the technology sector.
A thriving destination
According to experts, the Vietnamese plans on digital economy, Fourth Industrial Revolution, smart cities, startups, and the National Innovation Network Program, are clearly helping the country’s IT industry continue to record strong revenue growth, which helps lure foreign capital.
Jeff Paine, managing director at the Asia Internet Coalition, said that Vietnam has grown to become one of the most attractive investment markets in the region across several sectors, but the IT industry and its digital economy stand as the most promising.
From growing e-commerce, online gaming, travel booking, and offline-to-online platforms such as ride-hailing and food delivery, Vietnam’s digital economy continues to thrive, with its gross merchandise value being 4% of the country’s GDP, higher than any other country in Southeast Asia, Jeff noted, adding the IT sector will continue to be a driving force for growth and transformation in the Vietnamese economy, especially in delivering Industry 4.0 ambitions, as this will secure the country’s strong competitive regional position in the coming decades.
“Today we are beginning to see an expansion from investments of leading global technology companies in Vietnam focused on manufacturing hardware to developing software and more application-based services. These foreign funds are critical to Vietnam, especially for the transfer of knowledge and bringing in global best practices that are crucial for the development of a local yet world-class ICT industry,” Jeff said.
A Vietnam Report survey on the 500 most profitable companies in the country last year also showed that most business insiders expect technology to remain the leader in attracting investment. Accordingly, technology was the most common answer among enterprises with 51.4% of respondents. It is also understandable as digital companies often gain high profits. In the Profit500 Ranking of the survey, the companies with the highest average pre-tax profits were in ICT. Hanoitimes
More than 1 million people are working in the IT industry in Vietnam, but 80 percent of them are doing outsourcing.