Opportunities for foreign investors in growing Vietnamese ICT market

ICT has always been an important driver of the Southeast Asian economy. A market study by International Data Corporation (IDC) on Vietnam, Indonesia, Thailand, Myanmar, Cambodia, and Philippines, forecasted the Southeast Asia’s ICT industry to be worth US$48 billion by 2019 and will be the key enabler of economic development. Vice President of MDEC (Malaysia Digital Economy Corporation), Norhizam Abdul Kadir, said, “As ASEAN continue to develop and move towards becoming knowledge economies, the ICT sector plays a key role in enhancing market competitiveness and economic growth.” This view is echoed by Manager of World Economic Forum (WEF), Elena Kvochko as she identified 5 common economic effects of ICT as: Direct job creation, contribution to GDP growth, emergence of new services and industries, workforce transformation and business innovation.

Among the Southeast Asian countries, how has Vietnam fared in its efforts to improve ICT sector?

Although still classified as a developing country, Vietnam has realized the importance of this sector and spending in hardware and software are predicted to reach US$ 5.9 billion and US$ 403.84 million respectively by 2019, showing a 11% CAGR. Since 2000, the country has also improved its internet speed from 50 Megabits per second (Mbps) to 640,000 Mbps in 2013. 50% of the citizens are well equipped with internet and more than a third of its population are smartphone users.

The country is also beginning to open up, attracting and welcoming foreign investors to work together in pursuit of its ICT development. The Silicon City project, a 11,000 sqm development center located in Saigon Hi-Tech Park at Ho Chi Minh City (HCMC), is an ambitious project by Vietnam that aims to turn HCMC into a major tech hub to attract foreign investment. The US$ 1.5 billion project is still in progress, and it has already been occupied by 46 technology businesses including Intel and Samsung.

Besides the Silicon City project, Vietnam’s is also trying to develop the ICT industry through partnership with other countries. One of the strongest partnerships is between Vietnam and South Korea – Vietnam’s Minister of Information and Communications, Nguyen Bac Son signed an agreement in 2015 with the South Korean Minister of Government Administrative and Home Affairs, Chong Jong-sup, during his visit to South Korea. The main objective of the agreement is to boost business investment and to encourage ICT companies in Vietnam and South Korea to search for business opportunities and it had paid off. South Korea is Vietnam’s largest foreign investor in the first quarter of 2017, with $3.74 billion investment, or 48.6% of total investment.

When both ministers partook in Korea-Vietnam ICT Partnership event, Minister Son mentioned that ICT sector was in a strong development and integration process, and this was the perfect opportunity for foreign firms to enter Vietnam and contribute to make Vietnam a strong ICT nation.

Will Korea continue to be the largest contributor to Vietnam’s ICT development? Or will Singapore, China, Japan and Taiwan take center stage as Vietnam progresses in their ICT journey?

Find out more about the enterprise ICT development in Vietnam at 19th edition of Asia IoT Business Platform in Ho Chi Minh City, Vietnam on November 29-30. If you’re interested to access the opportunities in Vietnam, do drop me a note to [email protected].

Valencia Elvina Wijaya

August 22, 2017

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