VIETNAM

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VIETNAM

• MIS648 - Country IT Profile and Analysis
• Geoff Duff
• Todd Herman
• Joe Hench
• Christina Scantland

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Vietnam Demographics

• Population 83.5M
• Health 70 yrs.
• Literacy 90.3

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Avg. Age 25.5
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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

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Vietnam Socio-Culture

• Education
• High Respect for Learning
• Politics
• Communist legal theory
• French civil law system
• Government IT Commitment

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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)

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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

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Vietnam Physical

• Geography

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Vietnam Physical

• Geography

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Vietnam Physical

• Geography

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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

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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 US685 million in 2004
• 33 increase compared to global increase of 5
• Education and Training spend 45.8 million 02-05

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Vietnam IT Industry
Strengths
Weaknesses

• Export Software, 60m 2004

• Global skills, language capabilities

• Rural population and IT affordability

• Government IT Blueprint
• (ASEAN, VPTC, Education)

• IT centers, software parks
• (Saigon Software Park)

Opportunities
Threats

• Japan Partnership, 40 of exports

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

• Government regulation changes
• enable foreign (Private) investment

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Vietnam vs. China

• Regional similarities
• Long-Term orientation and Masculinity differ
• Rigorous foreign investment in China
• Behind China in embracing capitalism

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Vietnam IT Industry

• Ministry of Post and Telecommunications (VPTC)
  oversees IT strategy
• Blueprint to invest US4 billion from 2002-2010
• Telecom infrastructure, HR, IT access and usage
• Forecast IT revenues of US6-7 billion by 2010
• www.mpt.gov.vn
• Association of Southeast Asian Nations
• e-ASEAN regional initiative to promote
  electronic government

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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)

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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

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Vietnam Economy IT

• IT industry producer characteristics
• Of the US685 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.

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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.

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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.

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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.

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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.

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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

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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

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Current Free Trade Trends
Internal Factors
External Factors
Doi Moi Policy-1986
U.S.-Vietnam Bilateral Trade Agreement (BTA)
Decree 55 Internet Policy 2001
ASEAN Free Trade Area (AFTA)
WTO Negotiations Compliance Plan
Creating a New Market Environment
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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

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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

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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

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Investment Opportunities

• Logistics Import / Export Services Medium
  Risk
• High Volume of Import and Exportsgrowing
• 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

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Recommendations

• While investment opportunities do exist it is
  recommended to selectively choose a specific area
  where the risk is minimal.
• In Terms of Supply Value Chain, Biggest Market
  is Currently Simple Software and Basic Electronic
  Components
• Vietnams Commitment to IT Diffusion will also
  Create High Demand for Project Management and
  Education.
• In Short Term would be Cautious of Heavy
  Investment into Infrastructure or Facilities in
  Vietnam Due to Government Control

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Website Examples

• Vietnamese Websites
• http//www.vietnamstamp.com.vn/
• http//www.petrolimex.com.vn/
• http//vietnamnet.vn/
• http//english.vietnamnet.vn/ - English.