ICT to Vietnam
Trends and opportunities
The outlook for Vietnam’s information and communication technology (ICT)
market is strong at an average growth rate of 8 per cent during
2016 to 2020. The ICT industry (especially software and services where there
is huge potential for increased adoption by enterprises and public sector)
is expected to grow tremendously as Vietnam has emerged as a production
center for both IT hardware and services such as software development
The Vietnamese Government has identified ICT as a key sector contributing
to the country’s development and has devised a Master Plan for Information
Technology, which specifies targets for 2020 and aims at turning Vietnam
into an advanced ICT country. The government has pledged to invest
approximately US$ 415 million from the State Budget in the ICT sector by
2020 (Source: BMI
Vietnam Information Technology Report 2016
There are four major ICT focus areas, addressing supply as well as demand:
improving policy environment
developing IT human resources
developing IT enterprises and trademarks, products and markets
attracting investment into build IT zones and open source software.
Companies operating in the Vietnamese ICT market can enjoy support measures
from the government such as tax incentives and simplified administration
procedures. New hi-tech parks are set to be constructed between 2015 and
2030 through a combination of central government direction, local
government funds and private capital. Enterprises located in software or
hi-tech parks are offered further support and incentives. The growth of
hi-tech parks is expected to generate demand for IT products and solutions
directly while contributing to the broader dynamic of economic
Computer hardware sales is projected to reach approximately US$ 1.8 billion
in 2020 (from US$ 1.5 billion in 2016). Computer parts, electronic
components, and mobile phones are the major product categories manufactured
The hardware market is expected to grow at a modest rate over the medium
term as incomes rise due to a very low PC penetration rate and
functionality difference between smartphones and notebooks/ desktops ( Source: BMI
Vietnam Information Technology Report 2016
). Supporting growth factors include rising incomes, declining device
prices, enterprise modernisation and ongoing investments to upgrade
telecoms. The expansion of network infrastructure, including fixed and
wireless broadband, is considered a longer-term supporting trend of IT
hardware market growth.
Telecommunications contributes about a quarter to the total revenue of the
ICT sector and employs 15 per cent of people working in the ICT industry.
Mobile telephony generates close to 90 per cent of the subsector’s revenue
and plays a leading role in the rapid development of the telecom sector.
Vietnam telecom sector continues to boast strong growth potential in the
near and long-term. Prospective privatisation of the leading service
providers such as Mobifone continues to attract interests from key regional
and global operators who are expected to play a role in steering the market
towards faster adoption of advanced technology and higher value services.
The number of mobile users dropped 11.5 per cent to 120.3 million at the
end of 2015 from 2014. The mobile market is highly saturated at 130 per
cent penetration, large adoption of 3G technology and available 4G
technology since its trial launch from 2015. Internet user penetration rate
is expected to approach saturation in major cities, while rural Vietnam
remains comparatively untapped as a result of consumers’ lower purchasing
power. The number of fixed broadband users in 2015 reached 7.7 million in
2015 and is expected to grow at an average rate of 6.3 per cent to reach
10.3 million users in 2020 (Source: BMI
Vietnam Information Technology Report 2016
The software sector is growing at an average rate of 30 per cent per year
with over 1000 companies operating within the sector, employing around
70,000 people. In recent years Vietnam has emerged as a destination for
software outsourcing, competing with India, China and the Philippines. As a
software outsourcing destination, Vietnam ranks 8th according to a
research report from AT Kearney.
The Vietnamese software market is cost-sensitive, with around 75 per cent
of the market served by lower-cost local software providers. Local software
enterprises tend to serve the government and small and medium enterprises,
while larger Vietnamese companies are more likely to rely on the
higher-priced software offered by multinationals. Multinationals have a 25
per cent share of the local software market (Source: BMI
Vietnam Information Technology Report 2016
Areas of opportunities include CRM, business intelligence, ERP, human
resource management, data analytic and database/datacentre software,
especially in the banking and finance sector.
Cloud computing is on an increasing trend thanks to strong economic
development momentum in Vietnam, including rising incomes and the growth of
electronics manufacturing and outsourcing. Vietnamese cloud computing
spending is forecast to grow at an average rate of 20.7 per cent during
2016 to 2020 to approximately US$ 150 million. The key growth driver is the lower
cost of ownership and upfront investment as well as the flexibility that
cloud solutions offer.
The IT services market has strong growth potential driven by demands for
digital infrastructure projects in sectors including banking/financial
services (fintech), telecommunications, energy, smart agriculture and
The fintech sector in Vietnam is still in its infancy, though growing fast,
with fintech companies innovating in a diverse range of areas including
payments, lending, wealth management, account management, data analytics,
blockchain and crowdfunding. There is a lot of interest around fintech in
Vietnam – banks want to capture the growing market and service the clients
better; Vietnam is one of the hotbeds of growth for the new ‘mass-affluent’
class; this emerging class needs better financial services and banks are
now catching up with improved digital services (Source: ‘
Fostering Fintech in Vietnam’ – Startup bootcamp, October 2016
Vietnamese banks view fintech start-ups and companies not as a disruptor,
but as beneficial and necessary partners that can provide them with the
complementary elements to gain a competitive edge in the digital economy.
Selected banks are actively looking for both domestic and international
fintech partners and right partnership models that can provide them with
innovative solutions and help them gain a competitive advantage in the
The fintech sector in Vietnam receives positive support from the
government. The State Bank of Vietnam recognizes that the current
regulatory framework is immature and a new regulatory framework needs to be
developed to achieve both goals of providing adequate management of the
financial services industry and fostering innovation. Areas that require
regulatory framework development include e-KYC, digital banking,
e-payments, blockchain technology, banking and fintech data sharing and a
regulatory sandbox. In March 2017, the State Bank of Vietnam set up the
National Fintech steering committee responsible for developing national
strategies, directions and regulatory frameworks to foster the fintech and
start-up ecosystem in Vietnam. The Vietnam Fintech club was also recently
set up with the support from the Vietnam Banks Association.
According to the White Book on Vietnam’s Information Technology and
Communication, digital content has shown significant growth over the past
10 years. The newly emerging sector continues to grow and mature showing no
signs of slowing down. While computers still account for a significant percentage of internet access in Vietnam, that share is declining as
mobile internet access and mobile social media access is rapidly
increasing. Social interaction is a critically important online activity
for the Vietnamese and Facebook is holding strong as the leading platform
for social media (Source:
Vietnam Digital Assessment 2016
The key areas of this sector include providing content for mobile networks
and for the internet, online games, online entertainment, e-commerce,
e-libraries, digital television and electronic newspapers.
The increasing privatisation of state-owned enterprises, including the
telecommunications and banking sectors, present opportunities for foreign
The biggest opportunities for foreign companies are software segments in
banking and finance, oil and gas, as well as aviation and telecoms, which
are the biggest spenders and present the most potential for both customised
solutions and off-the-shelf software (Source: BMI
Vietnam Information Technology Report 2016
Other areas with potential include customer relationship management (CRM),
enterprise risk management (ERP) and human resource management. While there
is a large market for ERP, the market for CRM software remains limited to
date (only about 10 per cent of Vietnamese businesses use CRM). Data
analytics and database software is likely to emerge as a growing area and
accounts for a larger portion of software budgets.
Broadband IT, telecommunication and broadcasting
Opportunities exist for Australian exporters in providing equipment and
infrastructure and value added services, such as developing wireless and
alternative broadband technologies (including WiMAX4G and fiber optic) and
partnering with established network operators to provide 3G services, Pay
TV infrastructure and media broadcasting services.
As more people use mobile phones to access the internet, marketing
activities tailored to mobile devices become essential for businesses.
E-commerce and e-payment, digital content production, applications,
e-learning and online training systems, animation, mobile games as well as
value-added services for interactive mobile, internet and television are
all areas with opportunities.
Following the global trend for cloud technology, there is growing interest and demand from Vietnamese companies for cloud services.
Expertise in the IT security area, is becoming more essential as local awareness of internet fraud and computer crimes is increasing.
Opportunities for Australian providers within IT services include fintech, IT technical training and IT consulting, management, software/enterprise applications (ERP and CRM system, finance and accounting software), data centres and data storage as well as web services.
Vietnam’s financial services industry is underdeveloped, but holds immense growth potential in the years to come. Vietnam’s regulatory and legal framework and business environment are still below regional standards, but continuous improvement is expected. Vietnam still lags behind its peers in the region in terms of financial technology strengths, risk management and product innovation. However, the industry boasts high growth potential thanks to Vietnam’s rapid economic growth (approximately 6 per cent per annum in the next decade), large and relatively young population and low banking penetration rate (only 20 per cent of the Vietnamese population owns a bank account, Vietnam remains one of the most underbanked countries in the region). This will create strong demand for retail banking, insurance and wealth management products and services, which are areas of fintech innovation opportunities.
Fintech opportunities also lie in Vietnam’s significant potential for adopting digital banking and cash-free payment systems, due to the country’s high internet penetration rate (52 per cent), number of mobile subscriptions (125 million - 131 per cent of the population) and high smartphone ownership rate (72 per cent and 53 per cent in urban and rural areas respectively). The State Bank of Vietnam has greatly supported the development of fintech in the past five years, notably by granting licences to around 25 non-bank organizations to provide e-payment services.
Opportunities for Australian companies exist in the banking and financial services sector (such as software platforms for banking processes and online trading platforms with high security needs), healthcare services (e-Health), government functions (e-Government and e-Tax), oil and gas, and aviation.
Given the massive growth potential of the sector, Vietnam has proved an
attractive destination for foreign investment in the ICT sector. It is
increasingly attracting investment particularly from Japan, South Korea and
Vietnam faces a number of challenges in terms of regulatory framework and
intellectual property protection, quality and availability of labour skills
and ICT education and investment strategy, which are barriers to the
development of the industry. Potential investors should be aware of the
lack of a comprehensive and transparent legal system for businesses
providing IT services
inadequate labour skills for ICT in terms of technology and language
public and private research efforts are limited
Weak enforcement of all forms of intellectual property rights (but is
improving). Copyright issues remain a threat to the sector and Vietnam
maintains its position among the countries with the highest rate of
Multinational brands have seen strong growth in their revenues. Although local manufacturers have a dominant role in the desktop market, foreign vendors dominate the market for notebooks. China, given its low production costs, is a major competitor in hardware products and given the close proximity many Vietnamese brands produce in China, using their designs. Key competitors in the hardware market include suppliers from Japan, Taiwan, China and the United States.
Leading global players such as SAP, Oracle, IBM and Microsoft are present. However, they face competition from lower cost local players such as CMC, MISA, FAST and Exact Software, as well as Chinese rivals. Major players in the software market include suppliers from the United States, Germany, China, Russia and Vietnam.
Vietnam’s fixed line and internet access markets are both largely dominated
by state-controlled operators including Vietnam National Post &
Telecommunications Corp. (VNPT) and Viettel, as well as major international
competitors in this market. Competitive factors include high product
quality, training and after-sales service, as well as recognised brand
Tariffs, regulations and customs
The Ministry of Information and Communication (MIC) devises standards and
recommendations for enterprises to follow and issue licences.
Since joining the World Trade Organisation (WTO), the MIC has granted
licenses for joint ventures between Vietnamese and foreign partners in
communications services (ranging from fixed voice telephony to private
leased circuit services).
All telecommunication equipment imported into Vietnam must be handled by a
company that holds a telecommunication equipment import/export license,
even when the importer is a domestic company. Each shipment also requires
an import permit from the Ministry of Trade in order to clear customs.
Exports of software products and software related services are subject to a
zero per cent value added tax (VAT) and not subject to export duty (Source: The Ministry of Finance,
Tax rates and incentives applicable to newly established software
, 19 December 2014).
There is also an import duty exemption on materials used in software
production that are not domestically produced. The reduced tariff rates are
conditional on Australian exporters having a certificate of origin.
Refer to the Department of Foreign Affairs and Trade’s (DFAT) Free Trade Agreement Portal
for tariff rates on specific IT related products.
Investment and tax guidelines
Decree No. 108/2006/ND-CP details the implementation of a number of articles regarding the Investment
Law and the manufacture of software products and digital contents. The
decision includes special incentives to attract investment, such as a
preferential tax rate of 10 per cent tax rate over 15 years, as well as a
tax exemption for four years and a 50 per cent discount in the following
Telecommunication operator ownership guidelines
Decree No. 25/2011/ND-CP
specifies regulations governing enterprises in the field of
telecommunication. The decree includes guidelines for the execution of
several articles regarding the Telecommunication Law involving ownership
ratios, foreign investment, fees and authorised capital. The ownership
ratio stipulates that an organisation or individual (applicable to both
foreign and local) who owns over 20 per cent of the charter capital or
stake in one telecommunication company will not be allowed to hold more
than 20 per cent of the charter capital or stake in other enterprise
providing the same services. Although full foreign ownership of an operator
in the Vietnamese telecom sector is not allowed, overseas investors can
enter into business cooperation contracts or joint ventures with licensed
Services provided through ICT infrastructure are regulated along with their
physical counterparts, examples of services with separate regulation
include: online gaming, distance learning, banking and e-commerce
transactions, etc. Online gaming services are managed carefully regarding
content and technical conditions to ensure that they are not addictive.
Content that contains potential cultural or other sensitive information
must be assessed by Vietnam’s Ministry of Culture and Information (Source: Office of Technology and Electronic Commerce,
Vietnam: Customs, Taxes and Documentation Requirements for IT
Products and Services Imports
, 16 November 2014)
Marketing your products and services
Bureaucratic difficulties are not uncommon, including when dealing with
customs, requiring patience, persistence and sound business advice.
Establishing contacts and networks often requires introduction through an
existing contact or an official channel such as Austrade as ‘cold calling’
is usually not successful and it is important to invest time in
understanding the Vietnamese working culture and business practices.
Small or medium sized Australian suppliers should look for
sub-contractor opportunities in larger projects, which will be
negotiated directly by larger corporations.
Partner with a local company to provide solutions, including equipment
and services and leverage its connections and clients in Vietnam.
Arrange promotional events (product launch or technical seminars) to
extend to a wider audience.
Australian companies should have a long-term strategy, which requires
developing market intelligence, promoting products and services and
developing business contacts in Vietnam.
Most imported telecom equipment is sold directly to local service providers or their subsidiaries. These state-owned enterprises and local private companies have flat distribution channels, implying that they sell directly to end users. Domestic telecoms operators are evolving as significant distribution channels for notebooks as vendors look for tie-ups.
Hardware and IT manufacturing
Electronics and appliance specialist retailers dominate the distribution of consumer electronics. A low 30 per cent of mobile phones, are sold by network operators with the majority from retailers. Leading players, such as Nguyen Kim Trading JSC, Pico JSC and Mobile World JSC rely heavily on promotions and are moving towards more internet based retailing. They have a strong presence in urban centers, where they are more popular than the alternatives (smaller stores or grocery retailers) due to their wide selection and the available advice from trained sales staff. However, large specialised electronics retailers are nearly absent in rural areas.
Software, Digital Content and IT services
The Vietnamese software market is cost-sensitive with about 75 per cent of
the market dominated by local lower-cost software vendors (Source: BMI Research , Vietnam Information Technology Report, November 2016). Foreign
software providers with corporate clients tend to use local distributors,
such as FTP trading or CMC distribution.
Links and industry contacts
Ministry of Industry and Trade
Ministry of Information and Communications
Ministry of Planning and Investment of Vietnam
Ministry of Science and Technology
Vietnam Software Association
Vietnam Internet Association
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