eCommerceCurrent Situation in Vietnam

Based on

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Seminar in November 99 during VINIT99 in Hanoi

Stefan Probst, Opticom Technologies Ltd.

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

CharacteristicsConventional Digital Production Industry Content

Industry(tangible goods) (intangible services)

Investment usually high mostly lowLabour low to medium highSkills low to medium medium to highTrading Sizemedium to high low to mediumDependencies medium to high

low to medium Procedures rather established quite new

(VERY paper based) (paper less)

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Procedure Problems: General Issues

- Few End Customers in Vietnam Own a Credit Card- No Bank in Vietnam Knows How to Handle

Merchant Accounts for E-Commerce- There are No “Clearing Houses” in Vietnam- Internet is Very Expensive in Vietnam:

WebSpace for SellersBrowsing for Customers

- E-Commerce Servers are Only Inside Approved ICPs- Vietnamese Companies are Inexperienced in

Internet Dealing with Foreign Companies- “Internet Invoices” are Not Legally Recognised in Vietnam

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Legally Valid Invoices:

Vietnam International / Internet- Invoice No. controlled - Invoice No. controlled

by Tax Office by company- only approved forms - form decided by company- needs seal of seller - company has no seal,

stamp not required- needs signature of seller- no signature needed at all

(and possibly of customer)

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Procedure Problems: Domestic Trade

End Customer Business Buys Business Sells

Buys from Business to Business

Digital Content - no contract- no contract

delivery via internet - financial invoicee.g. WebPage Design has to be sent

separately

Tangible Goods - no contract- no contract

conventional deliverye.g. Handicraft Items

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Procedure Problem: Import / Export

End Customer BusinessBusinessImports Imports Exports

Digital Content - possible, - expenses - VAT accounting?delivery via internet but not taxed bookable?

0%VAT, e.g. WebPage Design no contract

VAT deduction no fin. Invoice no exp.

contract no confirmed imp. no conf.

export- not taxed

Tangible Goods - standard, - difficult with - difficult with

conventional delivery taxed by customs customs customs

e.g. Handicraft Items no import contr. no export contr.

no payment conf.

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Conclusions:

Big Opportunities- for individuals (start business, earn money)

- for society (reduce unemployment)

- for national economy (earn foreign exchange)

Severe Obstacles- Training- Legislation & Procedural Problems:

Banking, Taxation/Accounting/Customs

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Internet Publisher / Web Designer

Technology Graphics Content ???

PC basics Art Graphics Advertising basics

Internet basics Typography Cultural Design

Web and HTML Web Graphics User Psychology

Database Techn. Multimedia Feedback & QM

SW Workshops Accessible Design Legal Regulations

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

A Kick-Start Solution:

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

The

Hanoi Cyber Square

a Virtual Buildingto Start e-Commerce in Vietnam

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Hanoi Cyber Square

Goals of this Virtual Pilot Project:

- Provide favourable business environmentfor new e-Commerce businesses

- Provide testing ground for regulatory bodiesto set-up and adjust new rulesin co-operation with the tenants

- Provide clearly defined & limited environmentthat can be well monitoredto enable exceptional and temporary rules

“From Industrial Park to e-Commerce Centre”

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Hanoi Cyber Square

The Foundation:

- Low cost, suitable office space in adequate area- Cheap, high-speed internet connection- State-of -the-Art Telecom (e.g. ISDN)- Backup Power- Favourable Taxes

“Make it Easy to Reach a Critical Mass”

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Hanoi Cyber Square

Ground Floor(s): PC Shopping Mall

- “Normal” PC equipment shops & stores- Easy, fast supply of hardware to other tenants- Cover some of operational costs of the building- Act as a magnet for customers- Examples:

BKK: Pantip PlazaHKG: Golden Shopping CentreSIN: Funan Centre, Sim Lim Square, Sim Lim Tower

low rent & cheap, high-speed internet & favourable taxes

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Hanoi Cyber Square

State Offices:

- Steering Committee with wide ranging power:Telecom/Internet, Finance, Trade, ...

- Tax Office for VAT related issues etc.- Customs Office- Industrial Property Rights / Copy Rights Office

low rent & cheap, high-speed internet & favourable taxes

PC Shopping Mall, Canteen, Bank, Post Office, ...

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Hanoi Cyber Square

Financial Services:

- Bank(s) for Merchant Accounts, e.g. Vietcom Bank- Clearing House(s)

e.g. Rep. Office of Experienced International Comp.

low rent & cheap, high-speed internet & favourable taxes

PC Shopping Mall, Canteen, Bank, Post Office, ...

State Offices: Steering Committee, Tax, Customs, Copy Rights

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Hanoi Cyber Square

Internet Services:

- Domain Name Registration Service(for .vn and international Domains)

- Web Hosting Services

low rent & cheap, high-speed internet & favourable taxes

PC Shopping Mall, Canteen, Bank, Post Office, ...

State Offices: Steering Committee, Tax, Customs, Copy Rights

Financial Services: Bank f. Merchant Accounts, Clearing House

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Hanoi Cyber Square

Content Business:

- Producers, Traders …- Training & Research in Co-operation w. Universities ...

low rent & cheap, high-speed internet & favourable taxes

PC Shopping Mall, Canteen, Bank, Post Office, ...

State Offices: Steering Committee, Tax, Customs, Copy Rights

Financial Services: Bank f. Merchant Accounts, Clearing House

Internet Services: Domain Name Registration, Web Hosting, ...

E-Commerce for Digital Content IndustryOpportunities and Obstacles in Vietnam

Hanoi Cyber Square

Content Business:- Content Producers, Traders …- Training & Research ...

PC Shopping Mall, Canteen, Bank, Post Office, ...

State Offices: Steering Committee, Tax, Customs, Copy Rights

Financial Services: Bank f. Merchant Accounts, Clearing House

Internet Services: Domain Name Registration, Web Hosting, ...

low rent & cheap, high-speed internet & favourable taxes

© Stefan A. Probst, Nov. 99, Sept. 01