IT industry purposely promoted in Vietnam

SGGP

Vietnam has for long identified information – telecommunications development as one of its main contributions to the national growth, competitiveness boost, social management so that it can keep up with neighboring nations in the region, especially in the period from 2020-2025.

In HCMC, VNG is one of the leading IT businesses that have received sufficient support from the municipal authorities. (Photo: SGGP)

In HCMC, VNG is one of the leading IT businesses that have received sufficient support from the municipal authorities. (Photo: SGGP)

In the past 5 years, Vietnamese IT industry has witnessed an impressive rise, making it one of the key industries of the country.

In 2019, the revenue from this field reached US$119 billion, a rise of 9.8 percent compared to 2018. IT companies were able to provide jobs for more than 1 million intellectual laborers and contributed over 14 percent to the national GDP.

According to Deputy Director of Ho Chi Minh City (HCMC) Department of Information and Communications Le Quoc Cuong, the number of IT enterprises in the city is now 5,636, an increase of 23 percent compared to 2016. Among nearly 1,300 startups in the city, 900 are in the IT field (accounting for 70 percent).

The industrial manufacturing rate of HCMC went up from 39.11 percent of 2017 to 15.54 percent in the following year. The city now accommodates many leading IT firms thanks to the application of cutting edge technologies in the aspects of electronic board, transistor, or chip transferred from international giants.

Deputy Minister of Information and Communications Phan Tam reported that in the past 5 years, due to successful FDI investment attraction in hardware manufacturing, many areas in Vietnam has experienced significant growth like the provinces of Ha Nam, Vinh Phuc, Phu Tho, and Dong Nai (with an increase of 20.427 percent, 2.892 percent, 713 percent, and 287 percent respectively compared to 2015).

Therefore, besides Hanoi, HCMC, and Da Nang City, five more provinces, namely Bac Ninh, Thai Nguyen, Bac Giang, Vinh Phuc, and Hai Phong City, were able to enter the list of regions with over-1-billion revenues. Particularly, Hanoi, HCMC, and Da Nang City have become software and IT service development centers to answer international needs.

Among domestic IT products, telephone and tablet occupy the first and third positions in the top-10 key IT products of Vietnam in 2019, with trade surplus of around $28 billion. This has turned Vietnam into the second in the world regarding telephone and phone part production.

However, Deputy Minister Phan Tam shared that the IT industry in Vietnam still largely depends on FDI businesses as the income of this sector takes up the vast majority of 98 percent of the total export value. Despite the huge number of domestic IT firms, these companies are mostly small- or even super-small-scaled, and thus a low competitiveness ability. They mostly participate in assembling processes.

Understanding this fact, HCMC has proposed that the Ministry of Information and Communications perfect the legal aspect as soon as possible to suit the development of novel business models at the moment.

Particularly, the Government should prepare controlled piloting policies for new products, services, and business models implementing digital technologies in Vietnam; adjust the preferential policy for domestic manufacturing in order to create higher added value; introduce policies to prioritize purchasing domestic IT products; adopt solutions to establish a domestic market for Vietnamese digital technology businesses in relation with national projects like e-government, digital transformation process, smart city, and smart agriculture.

In addition, there is a need to organize one head office in the capital city as well as branch offices in local areas for the task of providing digital technology businesses with proper consultation and support.

By Ba Tan – Translated by Thanh Tam

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