VIETNAM

MIS648 - Country IT Profile and AnalysisGeoff Duff

Todd HermanJoe Hench

Christina Scantland

Vietnam: Demographics Population 83.5M Health 70 yrs. Literacy 90.3%

VIETNAM POPULATION

0

10000000

20000000

30000000

40000000

50000000

60000000

0-14 15-64 65+

AGE (YEARS)

PO

PU

LA

TIO

N (

PE

OP

LE

)

Female

Male28%

66%

6%

Avg. Age:25.5

Vietnam: Socio-Culture Language

Vietnamese (official) English (increasingly favored as a second language),

Ethnicity Kinh (Viet) 86.2%,

Religion NONE 80.8% Buddhist 9.3%, Catholic 6.7%, Hoa Hao, Cao Dai,

Protestant, Muslim

Vietnam: Socio-Culture

Education High Respect for Learning

Politics Communist legal theory French civil law system

Government IT Commitment

Vietnam: Economics

GDP $227.2 billion, 7% annual increase Gini 36.1 Primary Industries

Agriculture 21.8% Industry 40.1% Services 38.1%

Labor Force 43 million Unemployment 1.9% 1 USD = ~15,000 Vietnam Dong (VND)

Vietnam: Economics

Trade EXPORTS $23.7 billion

US 19.8%, Japan 13.7%, China 8.4%

IMPORTS $26.3 billion China 13.6%, Japan 11.5%, US 4.1%

Debt 66% of GDP

Vietnam: Physical Geography

Vietnam: Physical Geography

Vietnam: Physical Geography

Vietnam: Physical Weather

4-10’ annual rainfall

Topography 40% mountains 40% hills 75% forests

Transportation Highways, Railways,

Waterways

Natural Resources phosphates, coal,

manganese, bauxite, chromate, offshore oil and gas deposits, forests, hydropower

Vietnam IT Industry

9 phones per 100 people 15-18 phones per 100 people by 2010

Focus on mobile phone technologies

3.5 million (4.3% of population) internet users 200% annual growth in internet users

IT revenues = US$685 million in 2004 33% increase compared to global increase of 5% Education and Training spend: $45.8 million 02-05’

GLOBAL INTERNET STATISTICS, DECEMBER OF 2003

Country Population Internet usersPercentage

%

ASEAN

Singapore 4,225,000 2,100,000 49.70%

Malaysia 24,000,000  8,629,000 35.95%

Thailand 63,300,000 6,031,000 9.53%

Vietnam 81,000,000 3,500,000 4.32%

Indonesia 231,340,000 8,000,000 3.46%

ASEAN 555,772,000 31,868,000 5.73%

Other countries

China 1,287,000,000 79,500,000 6.18%

US 292,300,000 200,500,000 68.59%

Continents and the World

Asia  3,808,790,000 243,406,000 6.39%

World 6,315,820,000 715,350,400 11.33%

Vietnam IT IndustryStrengths Weaknesses

Opportunities Threats

• Export Software, $60m 2004

• Japan Partnership, 40% of exports

• Global skills, language capabilities

• Government IT Blueprint (ASEAN, VPTC, Education)

• Government regulation changes enable foreign (Private) investment

• IT centers, software parks (Saigon Software Park)

• Rural population and IT affordability

• Asia-Pac region competition (China, Singapore, Malaysia)

Vietnam vs. China

Regional similarities Long-Term orientation

and Masculinity differ Rigorous foreign

investment in China Behind China in

embracing capitalism

Vietnam IT Industry

Ministry of Post and Telecommunications (VPTC) oversees IT strategy Blueprint to invest US$4 billion from 2002-2010 Telecom infrastructure, HR, IT access and usage Forecast IT revenues of US$6-7 billion by 2010 www.mpt.gov.vn

Association of Southeast Asian Nations e-ASEAN: regional initiative to promote electronic

government

Vietnam IT Industry

6 State owned Telecom providers Government initiative to open 40-50% to non-state

ownership by 2010 Drives international investment, competition and

growth Result of 2001, Bilateral Trade Agreement (USA)

Vietnam IT Industry

Local IT resource limitations 72 percent are inexperienced 46 percent lack knowledge of the IT industry 42 percent are unable to work in groups and are

bad at foreign languages 41 percent have limited skills and are bad at

presentations 28 percent are unconfident in their work.

Government focus on Education, Training, HR

Vietnam Economy & IT

IT industry producer characteristics Of the US$685 million in 2004, hardware

expanded 32.9 percent, and software increased 33.3 percent, the highest since 2001.

Software Prior to 2004, Singapore led importers of

Vietnamese IT products. In 2004, Japan purchased 40% of total and became a strategic IT development partner in Vietnam.

IT software companies lack skilled and foreign language-speaking workers.

Vietnam Economy & IT

PC manufacturing Viettronics Tan Binh Electronics Corporation (VTB)

a member of Vietnam Electronics and Information Technology Corporation (VIEC), Hanel and Vietronic Thu duc

As of 2003, 20 companies assembling Vietnamese brand computers; 25-30% of market of 350,000 units.

612 Domestic companies and 117 Foreign-invested firm engaging in computer assembling and production.

As of 2003, domestic market share was 75-80% of market.

Vietnam Economy & IT

Internet Service Providers (ISPs) Currently 12 ISPs with 3 Internet exchange

providers (IXPs) Vietnam Data Communications Company

(VDC), Saigon Postel, Vietel, ETC, and Hanoi Telecom. www.saigonpostel.com.vn/

Tariffs on Internet and telecom services have been gradually decreasing in will continue.

Vietnam Economy & IT

IT industry consumer characteristics Retail Computer Sales

Previous years only 40% of sales targets were met within first 6 months. In 2005, 60% sales targets were met within same time frame, approximately 260,000 desktops sold.

Vietnam Economy & IT

Business Climate of Vietnam 1986, Central planned to Market based economy. Total number of fixed and mobile subscribers in 2005 is

approximately 13.5 million. In 2002, 150 of 5600 remaining state owned

enterprises (SOEs) were reformed. The government plans to reduce the number of SOEs to about 2000 by 2005.

Non-state Telecom sector increase market share 25-30% by 2005. 40-50% by 2010.

Corporate monopoly is expected to be removed by 2006 due to Bi-Lateral Trade Agreement between Vietnam and USA.

Vietnam Economy & IT

Key factors to emerging IT market Investment in IT development by Ministry of

Post and Telecommunications. Government is concentrating on upgrading IT

networks in government and private sectors. Government is committed to opening the

Internet sector to private sector. Government gives strong support by building

up numerous hi-tech and software parks. Saigon Software Park www.ssp.com.vn

Vietnam Economy & IT

Main deterrents to trade and investment are: the lack of a comprehensive and transparent legal

system restricted land usage rights complex foreign investment laws continued corruption in infrastructure projects the poor state of the financial system

Current Free Trade Trends

U.S.-Vietnam Bilateral Trade Agreement (BTA)

ASEAN Free Trade Area (AFTA)

WTO Negotiations & Compliance Plan

“Doi Moi” Policy-1986

Creating a New Market Environment

External Factors

Decree 55 – Internet Policy 2001

Internal Factors

Trade/Investment Risks

• Heavy State Control in Business– Minimal Privatization (though improving)– State Control of Telecommunications (DGPT)

• Intellectual Property Rights

• Access & Understanding of Vietnamese Law

• Lower Quantity and Skill Level of IT Personnel

Investment Opportunities

Outsourcing of Software & Hardware – Low Risk

Currently Japan & Singapore are Heavy Importers of IT Products

Japan has become a Development Partner Low Level of IT Skilled People in Vietnam –

Means Lower Level of Complexity in Product

Investment Opportunities

Telecommunications Infrastructure – High Risk Government Control is Loosening

Initiatives/Goals are in Place to Increase Access

Consumer Demand is High & Growing Risk of Government Interference and Corruption are

Still High

Project management & IT Education – Low Risk• Local Teams Lack Professional Skills to Implement

Significant IT Systems• Application Opportunities and Training Initiatives

Investment Opportunities

Logistics & Import / Export Services – Medium Risk

• High Volume of Import and Exports…growing• Good Opportunity for IT Enabled Logistics for

Improved Efficiency

Call Centers – Medium Risk Inexpensive Business Venture Number of Literate English Speaking Employees

Increasing Call Center Ad - Link

Recommendations

While investment opportunities do exist it is recommended to selectively choose a specific area where the risk is minimal.

1. In Terms of Supply & Value Chain, Biggest Market is

Currently Simple Software and Basic Electronic Components

2. Vietnam’s Commitment to IT Diffusion will also Create High Demand for Project Management and Education.

3. In Short Term would be Cautious of Heavy Investment into Infrastructure or Facilities in Vietnam Due to Government Control

Website Examples

Vietnamese Websites

• http://www.vietnamstamp.com.vn/

• http://www.petrolimex.com.vn/

• http://vietnamnet.vn/

• http://english.vietnamnet.vn/ - English.