5 Vietnam

5.1 A Profile of Economic Development
The Socialist Republic of Vietnam covers and area of 329,556 sq km with the population of 76.32 million (figures is sued by Vietnamese Statistic Bureau in April 1999). Vietnam is one of the countries with undeveloped economy. Its economy relies mainly on agriculture. In recent years, Vietnamese economy has been developing steadily with relatively high speed. During the Five-Plan from 1996 to 2000, the average annual growth rate of GDP was 6.7%. The average annual growth rate of primary, secondary and tertiary industries was 5%, 12.2% and 6.4% respectively. During the five years, Vietnam drew direct foreign capitals altogether US$ 24.7 billion. Vietnam is a traditional agricultural country with peasant population about 80% o the total. The areas of cultivated land and forestland are 60% of the total. In 2000, Vietnam's industry and construction business completed the output value of more than US$ 11 billion, an increase of 10.1% over the preceding year. The industrial output value increased by 15.7%. The output value of the tertiary industry increased by 5.6% in 2000, which was 42.1% of the GDP. The GDP in 2000 increased by 6.7%, among which, agriculture 4.9%; industry 15.7%; export 24% (the planned increase was 11~12%); imports 30.8%; as well as slight increase in foreign exchange reserve. In Vietnam, the GDP is about US$ 1 billion with the growth rate of 6.7%; the per capita GDP is about US$ 400; the inflation rate is -0.6%; and the unemployment rate is 7.4%. There are more than 150 countries and regions in the world having established trade relations with Vietnam, and more than 60 countries having invested in Vietnam. In 2000, the total volume of Vietnamese import and export trade was US$ 29.5 billion, among which, export volume was US$ 14.3 billion (US$ 180 per capita), and increase of 24% over the preceding year; import volume was US$ 15.2 billion, an increase of 30.8% over the preceding year. The foreign trade deficit was US$ 0.9 billion.

5.2 Current Development Status and Tendency of Communication Industry
5.2.1 A Profile of communication development
With the total population of less than 80 million, Vietnam possesses 4 million telephones in total, among which more than 1 million are mobile phones. At present, Vietnam has two national mobile phone carriers, both of them adopt GSM standard developed by Europe. In the aspect of releasing the control on telecommunication market, Vietnam always lags behind most of the other ASEAN countries. In Vietnam, the Internet gateway is controlled by a national enterprise, and has some relationship with only 5 ISPs, 2 GSM mobile phone carriers, as well as Vietnam Posts and Telecommunications Corp. The charging standard for international call in Vietnam is also the highest among the ASEAN countries.
(1) Interned development status
Vietnam Posts and Telecommunications Corp., which is operate by the Vietnamese government, has already loosened the control for accessing to the Internet. Vietnamese now can register for the Internet access service, but the Internet surfing is only limited to the Vietnam domestic net stations. There's accounts provided to users, but no E-mail address. If not browsing abroad websites, the accessed users do not have to register in the government; otherwise must register.
In July 2000, Vietnamese government invested US$ 1.8 million, and built up a building with 25 floors -called Saigon Software Park. In December 2000, Government issued a series of preferential polices for software development, including tax preference, E-Commerce introduction, WAP agreement, etc. In January this year, Government again pushed out the project of "Ho Chi Minh Road in the 21 century". The objective of this projects is to make 1.6 million of Vietnamese accessed to the Internet by 2005. As per the statistics made by Vietnam General Post Bureau, currently the number of person possessing PC in Vietnam is less than one million, among which, only 0.113 million access to the Internet.
(2) IP Telephone Services in Vietnam
In 2001, Vietnam pushed out IP telephone services within the country for the first time, which indicated the long-term monopoly position of Vietnam Posts and Telecommunications Corp. in its domestic telecomm market, began to be impacted.
Vietnam Electronic and Telecommunication Corp. pushed out IP telephone service for connecting Hanoi and Ho Chi Minh cities, with the charge standard of D 2000 (equal to US$ 0.14) per minute, which is about half of the charging standard for normal long-distance call charged by Vietnam Posts and Telecommunications Corp. The push-out of IP telephone services indicates that the priced monopolization of Vietnamese telephone services met with challenge for the first time.
Vietnam Electronic and Telecommunication Corp. will expand this IP telephone network to the whole Vietnam, and will open up competition with Vietnam Posts and Telecommunications Corp. in the international call market from next year. However, since Vietnam Electronic and Telecommunication Corp. is a joint-stock enterprise subjected to Vietnam Military, any action of its price reduction should be approved previously by the Vietnam Central Government.
(3) Status of Telecommunication Infrastructures in Vietnam

5.2.2 Status of telecommunication market competition and investment in Vietnam
The telecommunication industry in Vietnam was not started until the end of the 1980s, which resulted in the very high cost of Vietnamese telecommunication services. At present, the investment of foreign companies in Vietnam can only adopt the mode of business cooperation contract (BCC), which makes foreign investors have no right in market decision-making and thus in rejected by foreign investors. To change this situation, the only way is to modify the relative laws, prohibiting foreign companies to invest directly in telecommunication basic industries.
Recently, Vietnam accelerates the paces for telecommunication opening. Last year, a British company invested US$ 207 million in Vietnam through the mode of BCC, and laid 250 thousands of telephone lines in Hanoi. Recently, Telstra Corporation of Australia also invested US$ 500 million through BCC mode, and cooperated with VAPT to develop a communication network system in Vietnamese business center. French Telecommunication, Japanese Telegraph and Telephone Corp, Korean Telecommunication, Swedish Comvik AB Corp. also entered into Vietnamese telecommunication market through BCC mode recently.
5.2.3 Prospects of telecommunication development in Vietnam
The targets of Vietnamese telecommunication industry is to make the telephone quantity reach to 10~12 per hundred person, and the sales amount reach to US$ 2~3 billion before 2010. This industry develops with the annual growth rate of 35% (four times of GDP average growth rate). Up to now, it has become a strong to promote Vietnamese economy.
Vietnam General Post Service Administration expressed that by the end of 2000, the network promisors within Vietnam reached to 121 thousand, 3.7 times of that in last year, among which, 63% were the users of Vietnamese Telecommunications. All ISPs are state-operate. Some relevant persons declared that the growth rate of promisors this year would be at the same level with last year.
Vietnam post authorities declared that in his country, the people having fixed telephones already reached to 3.5 million (the total population is about 76 million), while it expected to reach 4 million by the end of this year. In Hanoi and Ho Chi Minh, about 15~20% of citizens posses telephone. The authorities hope that the decrease of call fee in July can promote the utilization of telephone, mobile phone, and other telecommunication services. The two largest mobile phone corporations in Vietnam, i.e. Vinaphone and MobiFone have altogether 880 thousand users. It is predicted that the sales amount in post field will reach to US$ one billion this year.
To realize the networked communication in the whole country, the Prime Minister of Vietnam decided to conduct the development and construction of National Information Infrastructure (NII) project before 2010. It is predicted that the investment in this project world be US$ 400~600 million between 2001 and 2010, and US$ 16~18 between 2010 and 2020.
5.2.4 Status of telecommunication market competition
Vietnam will reduce gradually its control on telecommunication market. However, this change should be made step by step; and the effects of opening telecommunication market on country safety also be taken into account. Vietnamese Government recently approved a plan on telecommunication development, which permits new companies to carry out free competition with the existing state-owned monopoly operating firms. By 2005, some new companies will gain 25% to 30% market shares from Vietnam Posts and Telecommunications Corp, and the shares will be increased to 40%~50% by 2010. Vietnamese Government will also permit these new companies to invest US$ 4~6 billion in this field within 10 years. As for this plan, Vietnam also intends to reduce the national telecommunication expense to the average level of the region. In the past years, Vietnam already reduced the telecommunication expense for 8 times, but it is still one of countries with the highest ratio on telecommunication expenditure in the world.
Affected by the globalization, to improve the telecommunication operating firms, benefited directly from the advanced global telecommunication technologies, while utilizing the existing information communication devices, GDPT has already issued several license plates for telecommunication services since last year:
(1) The entering of new public telecommunication carriers
The Electronic Telecommunication Corp (ETC), has already got the license plates for the following telecommunication services; TP domestic long-distance call tone services, IP domestic long-distance call tone services, and leasehold line services.
(2) New Mobile Phone Operation
DGPTA has already issued the business license for mobile phone operation to SPT Corp. After obtaining license, SPT reached a service cooperation contract with its Korean cooperative partner SLD Telecommunication to provide CDMA mobile phone services. BCC contract was already submitted to and approved by the Government. The business service will start at the beginning of next year.
(3) IP Telephone Service
Along with the maturation of VOIP technology, IP services is broadly applied on world telecommunication market. The charge of IP telephone service is 60~65% less than that of traditional line switching service. The licenses for international and national IP telephone service have been issued to VIETEL, VNPT, SPT, ETC, etc.
5.2.5 Status of telecommunication control in Vietnam
The agency for telecommunication policy formulation and control in Vietnam is the General Post Bureau. Between 1996 and 1997, Vietnam had formulated 4 main legal documents to control and standardize telecommunication service. The detailed jurisdiction is shown in the following Table.
Vietnamese telecommunication control also implements the mechanism of issuing license. The telecommunication service in Vietnam needs not only to obtain the license, but also to pay certain amount of license fee. The telecommunication business license is not valid forever, and needs to be reapplied and checked every certain years. The effective period of ordinary license is 3 years of 5 years. For example, the effective period of license for data service is years, while that of license for telex service is 5 years. The responsible agency for issuing license is Vietnam General Post Bureau. Please refer to the following Table.

5.2.6 International cooperation of Vietnamese telecommunications
Vietnam is underdeveloped in communications, but Vietnam is active in the international telecommunication cooperation. Firstly it joined in the agreement of Development Frame for E-Asia; secondly it participated in the MRA of Asian telecommunication equipment, which can promote the export of Vietnamese telecommunication equipment, as well as provide inspection for those foreign manufactures who have not entered into the telecommunication equipment markets of AASEAN and APEC. At the same time, the agreed commitments as per Trade Agreement between Vietnam and the USA will open gradually the telecommunication product market, permit the entering of joint-venture enterprises, which can provide telecommunication value added service after 2 years of agreement execution; provide Internet service after 3 year; and provide basic telecommunication services after 4 years.
5.3 Market Analysis for Vietnamese Electronic Products
As per the analysis of CCID, the share for Vietnamese electronic product market from 1999 to 2001 was US$ 1208 million, 1 US$ 333 million and US$ 1454 million respectively, and expected to be US$ 1.591 billion in 2002. The output value of Vietnamese electronic products in 1998 and 1999 was US$ 891 million and US$ 1044 million respectively.
5.3.1 Markets for electronic element and consumption electronic product
Vietnamese electronic element market is small, being less than 1% of Japanese electronic element market. However, Vietnamese electronic element market is increasing with a rapid speed. From 1999 to 2001, the share for Vietnamese electronic element market was US$ 353 million, 3 US$ 94 million and US$ 430 million respectively, with the average annual growth rate of about 10%. It is expected to continually increase more than 10% in 2002 and reach to US$ 470 million.
As an emerging market, Vietnamese consumption electronic product market occupies very little shares in the whole Asia market. It occupies about 1/300 of Asian market. From 1999 to 2001, the market value for Vietnamese consumption electronic products was US$ 310 million, US$ 324 million and US$ 338 million respectively, with the average annual growth rate of about 5%. It is expected to reach US$ 353 million in 2002.
5.3.2 Market for household electric appliance
Recently, the greatest characteristic of household electric appliance market in Vietnam is exceeding supply demand. As per the report of United Network, the purchasing power of household electric appliances on Vietnamese market is decreasing obviously. For various sorts of household electric appliances, the supply far exceeds the demand.
According to the official statistics, at present, the total demand for television at Vietnamese market is 700 thousand sets annually, among which about 1/4 are smuggled in. However, up to now there are already 8 joint ventures for television production in Vietnam, with the design production capacity of more than 2 million sets. For Vietnamese TV market, supply and demand are not balanced, and the supply is far more than the actual demand.
All household electric appliance manufacturers in Vietnam are facing difficulty currently in product selling. The TV sold by manufacturers in 1997 was only 54% of sales volume in 1996. The sales for other household electric appliances are also not good. The sales volume of audio-visual equipment in last year was only 64% of the year before last; and the radio set is only 385.
The parties concerned in Vietnam asked the joint ventures to speed up their product export, but produced little effect. The foreigners, who make investment and build up factories in Vietnam are just aiming at occupying Vietnam market. If the products were exported, they lack of competitiveness no matter in quality, model or price. The parties concerned in Vietnam appealed to the Government to take protective measures more firmly, and prohibit the legal and illegal import of household electric appliances.
5.3.3 Vietnamese PC market
It is indicated by the information of International Data Group that in Vietnam, the PCs sold in 1999 was about 15 thousand sets, 17% higher than that in 1998; while the PC market in 2000 increased sharply with a growth rate of 20%~23% and reached to 135 thousand sets. Based on the development trend of current Vietnamese PC consumer demand with the annual growth rate of 30%~40%, it is estimated that sales volume of PC in Vietnam by 2004 will reach 400 thousand sets, among which, about 65% is the products assemble in Vietnam, the remaining 35% needs to be imported.
5.3.4 Vietnamese software product market
In recent two years, the selling impetus of Vietnamese computer software market was still not great demand. In 1998, the business income of computer hardware units is about US$ 180 million, among which the income of computer software products only accounts for about 20%.
It is indicated in the data of Computer Information Technology Association of Ho Chi Minh City, among the 168 local computer companies, there are only 34 can be classified barely as computer software company, and mostly are just selling computer programs or providing computer software consulting services.
At the beginning of the 1990s, computer industry became an emerging industry in Vietnam. PC is becoming increasingly demanded with the annual growth rate of 20~30%. Apart from importing foreign brand computers to sell, Vietnamese businessmen also actively develop their national computer assembly industry, so as to lay a foundation for future self-created brand computers. Following that, Vietnamese computer software industry just stared at the time. However, up to now, the people who really invested for research and development is very few, thus has no capability to develop service target in large scale. It only achievers certain success in producing enterprise management software program entrusted by Vietnamese enterprises
5.3.5 TV Market
As reported in Vietnam's Investment Newspaper: according to the statistics provided by Ministry of Industry, Vietnam, in the first 7 months of 2001, Vietnam produced altogether 628 thousand sets of various kinds of TV, an increase of 69% over the same period of the preceding year. Among those, the outputs of various kinds of TV in July 2001 was 131.4 thousand sets, which was 2.3 times of that in the same period of the preceding years.
The TV output of local enterprises was increased most, with the output in the first 7 month of 2001 being near 2.5 times of that in the same period of the preceding year. The TV output of foreign-invested enterprises increased 77% compared with the same period of the preceding year; and that of national enterprises increased 18.45. On the Vietnamese domestic market, in the first 7 months of 2001, the sales amount of TV produced by foreign-invested enterprises reached to 514.4 thousand sets, accounting for 81% of total Vietnamese domestic TV outputs.

5.4 Status of Information Industry Development and Information Technology Application in Vietnam
5.4.1 Vietnamese electronic information industry
Up to now, the foreign investment in Vietnamese electronic industry is still distinctly too little, even less investment from Euramerican countries. This indicates that although the electronic information industry in Vietnam enjoys great potentials of investment development, it still lacks attractability for foreign investors especially Euramerican investors. The specialists concerned in Vietnam appealed to Government for adopting measures to speed up the development of electronic industry.
As per the statistics of Ministry of Plan and Investment of Vietnam, up to now there are only 22 foreign invested projects in Vietnamese electronic information industry, accounting for 9% of total foreign invested projects in Vietnam. The total investment of foreign contracts in electronic industry is US$ 615 million, which is 1.9% of that of all foreign contracts. Among the above-mentioned 22 projects, there are 14 affiliated projects and 8 projects with 100% foreign capital. As per the prediction of Vietnamese economic specialists, the projects with 100% foreign capital may be increased gradually, since foreign investors wish to increase the independence and right of self-determination in enterprise commanding and dispatching.
The foreign invested projects in Vietnamese electronic information industry mostly are invested by Japan, emerging industrial countries and ASEAN countries, which occupy about 93.76% of total foreign investments in this industry. Only few projects are invested by Euramerican countries.
As reported by Vietnam's Economic Time, the relevant Vietnamese specialists believed that to attract the foreign investment in electronic industrial sector, in addition to the general measures like improving the legal investment environment and constructing physical infrastructure, special attention should be paid to the improvement of labor quality in this industry in future. Electronic industry is a field with very high technique and also this is the times with the technology developed rapidly, so the cheap labor is not the most attractive condition for the foreign investors in this industry.
In addition, the Vietnamese Government also deemed that it should formulate a systematic strategy for developing electronic industry, while adopting necessary systematic supporting measures. Especially from now to 2010, Vietnam must set up the base for the integration of electronic industry and computer industry, adhere to the orientation of export and join in the world market actively, to build the electronic industry into the main production sector in Vietnam .28
5.4.2 Vietnamese e-Commerce and e-Government
E-Commerce:
Along with the signature of e-ASEAN prospectus, Ministry of Commerce of Vietnam published 10 key projects for promoting e-Commerce. Among them, the most important is The Construction of Telecommunication Infrastructure. The other 9 projects are as follows: the training of talents relevant to e-Commerce, electronic account settlement, legal enactment, construction of standardized base relevant to industry and trade, protection of intellectual property and consumers, perfection of finance and taxation system, as well as the establishment of national managerial system. To realize the above matters, Vietnam Posts and Telecommunications Office requires all relevant departments to make efforts in reducing the cost for Internet access and perfecting infrastructure.
From the current situation we can see that Vietnamese e-Commerce is developing at a low speed, the reasons include: 1. The population using e-Commerce is too small. From the opening of network by the Vietnamese Government in 1997 up to now, these are only 30 thousand consumers in this country. 2. The network access fee is too high. At present, the network access fee in Vietnam is D 290 (about US$ 0.02 per minute, and D 200 per minute even during the cut-price period, which is much higher than the network access fee of other regions in the world. 3. Vietnamese laws and regulations are short of the management for e-Commerce. 4. Vietnamese business circles lack the knowledge about e-Commerce transaction. 5. The funds put into e-Commerce transaction system are too few. 6. Vietnamese consumers still prefer the traditional transaction mode. 7. The PC population rate in Vietnam is still very low.
Heretofore, the Vietnamese Government already issued laws and decrees, and instructed Ministry of Commerce and Ministry of Telecommunication to set up an e-Commerce Committee, to plan in detail and promote the development of e-Commerce in Vietnam. In addition, Information Science and Technology Association also held forum for several times, to spread e-Commerce knowledge among business circles, to enhance their understanding about this market. However, due to all kinds of subjective and objective factors under the above-mentioned big environment, it is estimated that it is still difficult for Vietnamese e-Commerce market to have a great increase in a short time.
E-Government:
On the forum on e-Government co-sponsored by the Vietnamese Business Conference Institute and Government together, the issues like the global information society and the guarantee of democracy are fully discussed. To realize e-Government, the relevant laws, as the infrastructure, would be formulated gradually between 2001 and 2005.