Future Vietnamese Digital Economy (Part 4)

4. What is the digital economy?

All businesses and services that have a business model based primarily on selling or servicing digital goods and services or their supporting equipment and infrastructure. (G20 and Oxford Dictionary)

The digital economy includes emerging phenomena such as blockchain-based networks, digital platforms and social media, e-businesses (e.g. e-commerce, parts of traditional sectors which use digital-enabled technologies in Industry 4.0 or precision agriculture); businesses involved in the development of software, apps and other content and media creation, and associated training and services; and businesses engaged in creating and manufacturing ICT equipment.

5. Vietnam Policies supporting the digital economy

The Vietnam Government views digital transformation across the broader economy as critical to continued growth and prosperity. Its commitment is seen in the number of policies, master plans and directives published over the last 30 years that have stressed the need to invest in critical infrastructure, build the ICT industry, promote e-commerce, and adopt technology as a means of lifting productivity.

These directives and decisions address the need to dramatically expand Vietnam’s national information infrastructure, strengthen its human resource base (especially IT professionals), and liberalize its legal and regulatory environment to encourage greater foreign investment and in the ICT sector.

The Vietnam Government has also linked increased innovation (including the development of the digital economy) as a driver of economic growth, with increasing creativity and experimentation, and a culture of openness and freedom.

6. Supportive telecommunications infrastructure

6.1 Expanding digital infrastructure and coverage

Reliable telecommunications infrastructure is critical to the development and expansion of the digital economy in Vietnam. Existing infrastructure has so far accommodated the voracious demand for bandwidth, but issues are arising with dropouts from undersea cables, local congestion on the network, and mobile phone connectivity and coverage.

6.2 Backbone infrastructure

The backbone Internet network in Vietnam is built on fibre optic technology using dense wavelength division multiplexing and synchronous digital hierarchies. One overland and six submarine cables connect Vietnam to the rest of the world. The submarine cables include the Asia America Gateway (AAG) cable, which runs via Hawaii to the USA; the Intra Asia cable; the SMW3 cable (Southeast Asia, Middle East, Western Europe); and TVH cable (Thailand, Vietnam, Hong Kong). Most of the country’s connectivity relies on the AAG cable. Unfortunately, it seems to be the least reliable connection, and has already suffered serious outages.

The Vietnam National Internet Exchange (VNIX) was launched in 2003. It transfers domestic Internet traffic between service providers across three regions: the North (Hanoi), the South (Ho Chi Minh City) and the Middle (DaNang). In January 2018, the VNIX bandwidth was 211 Gbps with total network traffic reaching nearly 40 million gigabytes.

In 2008 Vietnam successfully launched its third satellite service, the Vinasat I satellite, to supplement terrestrial Internet connections and reach areas that are too expensive to connect via overland cables. However, while Vinasat I has high capacity and can transmit Internet services to all regions of the country, satellite signals tend to be weaker and less reliable in a range of weather conditions.

6.3 Mobile phone coverage and spectrum use

Terrestrial 3G mobile wireless services were launched in Vietnam in 2009 and 4G services were licensed in early 2016. In October 2016 four telecommunications companies were granted licenses to install 4G LTE networks, with a view to supporting Internet of Things applications and Smart City infrastructure. These networks are currently being rolled out.

In early 2018 the mobile network covered all 63 provinces of Vietnam: 43,000 4G stations have been deployed nationwide, covering 95% of the country’s population. Vietnam also has plans to introduce 5G networks by 2020. Viettel, VNPT and Mobifone are the dominant companies in the telecommunications market, together holding more than 90% of total market share.

Despite the improved Internet coverage, a substantial gap remains in access to mobile broadband services between remote rural or mountainous areas and urban areas.

6.4 Connection speeds and network security improving

With average download speeds of 9.5 Mbps, Vietnam is ranked ninth in the Asia Pacific region and 58th in the world in terms of average connection speed, above China, Malaysia, Indonesia and the Philippines.

Vietnam has a growing number of secure Internet servers. These are critical to e-commerce as they encrypt online transactions, helping customers to trust and engage with online retail. However, at 19 secure Internet servers per 1 million people  Vietnam still has significantly less secure servers per capita than the world average (215), South Korea (2201) and Thailand (33). It is close to the number in China (21), and greater than Indonesia (10).

6.5 Spectrum use and allocation

Spectrum allocated for use by the mobile phone and broadband sector in Vietnam sits in the 630 MHz range. Economic returns are higher than for spectrum allocated for other purposes, such as radio and television. Some US$5021 million economic benefit was generated by the mobile network spectrum in 2015. This is expected to reach US$8211 million in 2020. The efficiency of the mobile spectrum has increased over time.

There is increasing demand for more spectrum to be allocated for mobile broadband use. Mobile subscriptions have grown by 2 million per year since 2012, and millions of new services are predicted to come online over the next decade. It is highly likely that most people connected to the Internet in the future in Vietnam will be connected through mobile devices alone. The expanding Internet of Things will create further traffic and congestion on the existing spectrum allocated for mobile use. It is estimated that around 75% of connections in 2020 will be to machine-to-machine devices via short-range wireless services.

Source: Vienam Today – Data61 - 2018

About TMA: TMA Solutions was established in 1997 to provide quality software outsourcing services to leading companies worldwide. We are one of the largest software outsourcing companies in Vietnam with 2,500 engineers.
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Future Vietnamese Digital Economy (Part 3)

3. ICT – the booming base of Vietnam’s digital economy

Information and communications technology (ICT) is one of the fastest-growing industry sectors in Vietnam. In 2016 total revenues from the ICT industry were US$67.7 billion, nearly ten times the figure in 2010 (US$7.6 billion). The hardware industry is the largest subsector of Vietnam’s ICT industry, contributing around 85% of total revenue.

ICT equipment accounted for around 25% of total exports from Vietnam in 2016, up from less than 10% as recently as five years ago. It is now the country’s largest export sector, with telephone and broadcasting equipment particularly important. Leading Vietnam-located manufacturers such as Samsung, Intel, Dell and LG are expanding their businesses and increasing investments in the country. Vietnam assembles electrical and electronic products, and increasingly exports sophisticated computing devices: half of Samsung’s high-end S8 and S8 Plus phones and more than 80% of Intel’s personal computer central processing units are produced in Vietnam. Over the last decade, Vietnam has surpassed most regional neighbours in terms of high-tech exports as a percentage of total manufactured exports.

Local companies in the ICT sector are experiencing remarkable growth, with share prices increasing more than three-fold since 2012.

The software industry is also growing steadily and starting to attract global attention as a significant regional hub. Local businesses account for the majority of the market, supplying low-cost software products.

In 2016, a total of 7,433 businesses in Vietnam created digital software for sectors such as finance, telecoms, smart agriculture and government. IT outsourcing services generated around US$3 billion. Vietnam become the Japan’s second-largest software outsourcing destination.

Source: Vienam Today – Data61 - 2018

About TMA: TMA Solutions was established in 1997 to provide quality software outsourcing services to leading companies worldwide. We are one of the largest software outsourcing companies in Vietnam with 2,500 engineers.

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The power of Vietnam’s software industry

(Mic.gov.vn) - Vietnam’s software industry has high capability, great development potential, and a bright future, experts say.

Vietnam’s software industry has high capability, great development potential, and a bright future

A deputy chair of Vinasa (Vietnam Software Association), reported that the total turnover of Vietnam’s software industry was $8.8 billion in 2017. About 600,000 workers are serving in the ITindustry. 

The latest survey of Hakathon, the world’s software development competition, showed that Vietnam ranks 23rd in the world in coders’ capability. India and the US had more members participating the competition, but their results were more modest than Vietnam.

  

Meanwhile, a consultant of a management consulting company in Australia said Vietnam’s applied software market gains estimated revenue of $500 million.

He cited important figures: 7 percent of app developers in Asia were from Vietnam in 2014 and the number of smartphones in Vietnam would be $38 million by 2020

A director of the IT Department under the Ministry of Information and Communication, commented that software is the ‘backbone’ of the IT industry in Vietnam. 

While the revenue from hardware comes from foreign invested manufacturers, Vietnamese software firms have become well known in the world.

Source: https://english.mic.gov.vn/Pages/TinTuc/137234/The-power-of-Vietnam-s-software-industry.html

About TMA: TMA Solutions was established in 1997 to provide quality software outsourcing services to leading companies worldwide. We are one of the largest software outsourcing companies in Vietnam with 2,500 engineers

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Vietnam digital economy could reach US$43 billion by 2025

Vietnam’s digital economy is projected to reach US$12 billion in 2019 and US$43 billion by 2025, according to E-Conomy Southeast Asia 2019 Report jointly released Thursday by Temasek, Google and Bain & Company.

Vietnam is one of the two fastest-growingdigital economies in Southeast Asia, with the average growth rates in excess of 40% since 2015, in which e-commerce is a key driver behind the impressive numbers.

These dynamics are unlocking opportunities for entrepreneurial Vietnamese SMBs, which have jumped onboard the Internet economy to do business, says the Report

Investor confidence in Vietnam is on the rise. Over the last four years, Viet Nam’s Internet economy has attracted almost US$1 billion in funding, with 2019 in line to be a record year.

Vietnam has set goal to increase the GDP share of digital economy to 20% by 2025, according to the Resolution No. 52-NQ/TW of the Politburo on guidelines for participation in the 4th Industrial Revolution.

The 2019 report covers five key sectors of the Internet economy: Online Travel, Online Media, Ride Hailing, e-Commerce, and DigitalFinancial Services across Southeast Asian countries.

Just over a decade ago, four in five Southeast Asians had no Internet connectivity and limited access to the Internet. Today, Southeast Asians are the most engaged mobile Internet users in the world. There are 360 million Internet users in the region and 90% of them connect to the Internet primarily through their mobile phones.

Southeast Asian people communicate with their families, friends and colleagues, entertain themselves, learn new skills and become more productive. Increasingly, they also buy products, plan trips and order food online. All of this takes place millions of times every day across the region. A vision that was almost impossible to imagine is now daily routine.

Powered by these fundamental changes in consumer behavior, the Internet economy continues to grow at an unprecedented pace, soaring to US$100 billion for the first time in 2019, more than tripling in size over the last four years.

Source: http://dtinews.vn/en/news/018/64457/vietnam-s-digital-economy-forecasted-to-reach-us-43-billion-by-2025.html

About TMA: TMA Solutions was established in 1997 to provide quality software outsourcing services to leading companies worldwide. We are one of the largest software outsourcing companies in Vietnam with 2,500 engineers

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Vietnam boasts great ICT development potentials

Vietnam has a population of near 100 million and there are over 70 million handset and Internet users, providing a good foundation for stable development of the country's information and communications technology (ICT) industry, according to a deputy minister of Vietnam's Ministry of Information and Communications (MIC).

MIC statistics show that Vietnam's aggregate ICT industry production value amounted to US$91.59 billion in 2017, shooting up 35.3% from US$67.69 billion in 2016, with the growth numbers indicating a booming development of the country's electronics industry. Samsung Electronics' handset production base in Vietnam has been the major source of Vietnam's ICT exports, but the company has just unveiled its plant in India and is also likely to face growing competition. This has prompted Vietnam to show much interest in diversifying industrial production and cultivating tech startups.

Vietnam customs statistics also indicate that the country's exports of diverse electronics hardware devices including handsets came to US$81.60 billion in 2017, representing a sharp annual increase of 38%, much higher than the corresponding growth of 11% registered in 2016. Of the total exports, handsets commanded US$45.27 billion, up 13.2% on year; and exports of computers and peripherals soared 36.8% on year to US$26 billion. These electronics products alone had contributed a trade surplus of over US$20 billion in 2017.

More investments in IC design, 5G

The minister is well aware that Vietnam can hardly develop a solid footing in the market should its technologies fail to catch up with international standards. At the moment, Vietnam's electronics industry highly relies on export trade and contribution by Samsung. And therefore the MIC hopes for more investments in the development of IC design and 5G technologies to enhance industry diversity, and also shows great concerns about whether smart city applications can bring more opportunities for local industries.

On another front, MIC estimates the total annual production value of Vietnam's software industry at US$3.8 billion for 2017, up 24% from 2016. In terms of ICT applications, 60% of elementary schools and 80% of middle schools have provided computer and online teaching programs; all commercial banks have offered electronic payment services, and 96% of financial transactions can be done online, and mobile banking penetration rate stands at 34.5% while up to 99% of enterprises can pay taxes via electronic channels.

Vietnam's information service industry had managed to maintain a high annual export growth of 30-40% during 2013-2017 while also keen to provide business process outsourcing (BPO) services for software programs, with Japan being the largest export outlet and service recipient. Vietnam is now Japan's second-largest supplier of information services and also a favorite partner for Japanese enterprises. In recent years, Vietnam has been active in developing digital content and gaming industries, with the 2017 production value of the former rising 8% on year to US$800 million and the latter surging 27% to US$370 million.

Talent grooming

Talent is fundamental to ICT development. Vietnam now has a total of 250 universities and colleges, able to foster over 50,000 ICT personnel per year. The country's ICT sector now has around 900,000 employees, with the number increasing at an annual rate of 7-10%. Statistics show that the starting monthly pay for ICT employees in Vietnam now averages US$288, and their annual incomes average US$7,000.

Now in Vietnam, young people command a high portion of its population, and more young people are moving to urban areas, providing a major advantage for ICT development in the country. Vietnam will not rule out ICT talent exchanges with foreign countries, to allow its new generation to experience the latest tech and industry developments.

The minister pointed out that along with stable economic development in Vietnam, many business sectors have produced many successful private enterprises. However, this is not the case with the ICT sector, which has not seen many successful private firms. Vietnam holds Taiwan's ICT industry in high regard and is willing to learn from Taiwan about how to inspire the private sector to foray into the ICT industry.

Source: Digitimes

About us: TMA Solutions was established in 1997 to provide quality software outsourcing services to leading companies worldwide. We are one of the largest software outsourcing companies in Vietnam with 2,600 engineers.

Visit us at https://www.tmasolutions.com/

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