Vietnam - Vietnam ICT hasn’t grown up, but getting old

VietNamNet Bridge – The products and solutions displayed at the 2012 information technology and communication (ICT) expo have astonished the public, because they have been too familiar and uninspiring to people.

More than 40 years ago, Gordon Moore, the co-founder of Intel, said he believed that the capacity of microprocessor would be double once in every 1.5 years. This is also the nature of the ICT industry: products and solutions have been improved every day.

Therefore, the familiar old hat products and solutions displayed at the trade fair prove to be enigmatic for people. The familiarities could be seen also at the workshop on the sideline of the trade fair, discussing the policies and giving predictions about the Vietnam’s ICT development.

The same experts, management agency representatives and businessmen were invited to the workshop, while the same way of taking stocks was applied.

While Vietnam still keeps its viewpoint unchanged over the last many years, its circumstances and conditions have become quite different from that of 10 years ago.

A lot of changes have happened in the world over the last 10 years. No one could imagine before that a young company run by a young person – Facebook - could have the market value of tens of billions of dollars in the IPO. Meanwhile, in Vietnam, there has been no big change in the ranking in the ICT industry.

Trade or technology?

FPT, which has been always leading the Vietnam’s ICT industry, was once classified by the HCM City Stock Exchange as a distributor. This was because in the eyes of clients and investors, Vietnamese IT firms simply acted as the sales agents which distributed foreign made products and solutions.

Customers keep complaining that it’s nearly impossible to find any IT products made in Vietnam and invented by Vietnamese people. IT firms just have been doing the outsourcing for foreign partners to earn money, while they do not spend money and time on developing their own technologies.

Chu Tien Dung, Chair of the HCM City Computing Association, which conducted a survey on 256 IT firms, accounting for 85 percent of the total revenue and use 75 percent of the labor force in the IT industry in the city, said domestic IT firms’ operation has been on the decrease.

The survey found out that the total turnover of the enterprises in 2011 increased by 17.6 percent over 2010 to 80,347 billion dong, of which hardware and electronics had the turnover of 34,844 billion dong.

However, the problem is that the growth was mostly seen in foreign invested enterprises which saw the turnover rising from 4066 billion dong to 13,415 billion dong. As such, of the 11,447 billion dong worth of the revenue increase, 9349 billion dong came from foreign invested enterprises.

Meanwhile, domestic firms have not obtained such satisfactory results, and if noting that the turnover increase could be partially attributed to the inflation, one would see that domestic firms’ business results have been on the decrease.

Dung also gave warning about the low ratio of the profit on revenue of IT firms, just three percent. Only 20 percent of hardware companies could really make profits. The figures gave warning about the bad prospect of the enterprises in the future, while no solution to the problem has been discussed.

Thirty three medals were granted to the best enterprises in eight groups to recognize their achievements. The second group, comprising of the leading Vietnamese computer brands, and the eighth group, comprising of the leading enterprises in ICT training) both have seen sharp falls in turnover.

The second group of enterprises includes the familiar names - FPT Elead, Robo, CMS, Wiscom, SingPC. The turnover of the enterprises in the group dropped dramatically by 21 percent to 851 billion dong from that of 2010. Meanwhile, the turnover of the enterprises in 2010 was 25 percent lower than that of 2009.

The noteworthy thing is that while domestic hardware and computer assembling companies have been taking loss continuously, the sales of foreign products have been increasing sharply in the domestic market.

Dinh Minh

Business & Investment Opportunities 
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