Computer Hardware and Software Services
Vietnam
Overview
IT Market in Total
2004 2005 2006 (estimated)
Total Market Size 685 828 1,002
Computer Hardware
2004 2005 2006 (estimated)
Total Market Size 545 630 722
Total Local Production 98 115 134
Total Exports 15 18 19
Total Imports 462 533 607
Imports from the U.S. 45 55 74
Computer Software & Services
2004 2005 2006 (estimated)
Total Market Size 140 198 280
Total Local Production N/A N/A N/A
Total Exports N/A N/A N/A
Total Imports N/A N/A N/A
Imports from the U.S. 19 23 31
* The above statistics are in $ millions and are unofficial estimates
The information technology industry represents one of Vietnam’s fastest growing sectors. A recently published market study by a major private-sector research organization suggested that during the period 2004-2008, Vietnam’s spending on this sector will rank among the top ten in the world. The Government of Vietnam has articulated its commitment to boosting the development of the Information and Communications Technology (ICT) industry, particularly in software production, Internet infrastructure, IT education promotion, and other forms of human capital development.
Vietnam's Information Technology (IT) industry recorded sales of $828 million in 2005, and is expected to reach $1,002 million in 2006 with rapid growth continuing through 2007 and beyond. Surveys conducted by international firms and local industry associations show Vietnam's IT sector growing from 20 to 25 percent annually in the coming years.
Sales in Vietnam’s ICT sector have been dominated by hardware, which have accounted for approximately 80 percent of total IT spending during the past five years. This focus on hardware reflects, in large part, the widespread piracy of software and lack of effective protection of intellectual property in Vietnam. Estimates of the rate of pirated software in use in Vietnam range from 94 - 99 percent.
Vietnam’s imports of computer hardware and peripherals totaled $533 million in 2005, out of total market sales worth $630 million. In 2006, sales of computers and peripherals are expected to reach $722 million, of which about $607 million will be imported. Vietnam’s IT market is still concentrated in two major cities: Ho Chi Minh City (HCMC) and surrounding provinces and cities, which accounts for approximately 60 percent of all sales, and Hanoi, which accounts for about 30 percent of the market.
Internet related service providers represent another fast-growing industry sector for IT equipment, software, and service suppliers. To date, six Internet exchange access service providers (IXP), 17 Internet service providers (ISPs), and 15 On-line service providers (OSPs) have been licensed. As of September 2006, Vietnam had 3,860,264 Internet subscribers with 14,006,747 Internet users, equating to 16.85 percent of the country’s population. Vietnam currently has total international bandwidth of 5,795 Mbps. These figures will increase rapidly, as there are significant efforts to broaden the availability of the Internet for public use.
Best Prospects/Services
U.S. exporters will find Vietnam an attractive market for many IT hardware products, such as networking equipment and Internet related equipment. Software and services are also among best prospects for U.S. exporters of information technology, especially enterprise applications such as Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) as Vietnam’s new membership in the World Trade Organization (WTO) furthers its integration into the global economy.
Opportunities
American IT companies will find growing opportunities for doing business in Vietnam, particularly in sectors associated with Internet development. Once Vietnam implements an anticipated “e-transaction” law, e-commerce and other value-added applications and services over the Internet will drive the demand for the equipment and services needed to develop and grow the Internet infrastructure and subscriptions. These applications and services are prioritized into major areas such as e-Government, e-commerce, e-training, and e-healthcare to ensure that the entire population will have ready access to community information and services such as fire and rescue, health emergency, public order, and natural disaster response.
The IT industry offers opportunities for training service providers as well. The Government of Vietnam has drawn up an ambitious plan for the domestic industry that aims at reaching annual sales of $3 billion by 2020. The plan consists of three major programs: the development of IT human resources; the development of a software export sector; and the development of a hardware-manufacturing base. Currently, Vietnam does not have the capability to execute the Government's plan in any of these areas. In order to do so, significant investment in training and technology transfer must occur – a need that could offer significant export opportunities for American IT hardware and service suppliers.
Many leading American PC manufacturers have marketing operations in Vietnam with Dell and Hewlett-Packard leading the market. Vietnam will continue to import a significant number of PCs and peripherals. The primary customers for imported equipment are multi-national corporations, large state-owned-enterprises and the Government.
The computer services market has evolved into a two-tier market, whereby foreign computer firms serve foreign businesses operating in Vietnam and local firms cater largely to Vietnamese clients. For the most part, foreign companies seeking computer services use foreign invested service providers, while Vietnamese companies rely on local computer retailers who offer a limited package of services.
Resources
For more information, please contact the following addresses or visit the following websites:
· Nguyen Dzung, Commercial Specialist
U.S. Commercial Service
U.S. Embassy in Hanoi
E-mail: nguyen.dzung@mail.doc.gov
· Nguyen Hoa, Commercial Specialist
U.S. Commercial Service
U.S. Consulate General in Ho Chi Minh City
E-mail: nguyen.hoa@mail.doc.gov
Vietnam’s National Steering Committee on ICT (NCICT)
http://www.ictcommittee.gov.vn
Ministry of Posts and Telematics (MPT)
Ministry of Science and Technology (MOST)
Ministry of Planning and Investment (MPI)
Ministry of Trade (MOT)
Vietnam Posts and Telecommunications Corp. (VNPT)
Vietnam Internet Network Information Center (VNNIC)
HCMC Computer Association