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