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Vietnam Information Technology Report Q3 2010
Business Monitor International, July 2010, Pages: 46
Vietnam Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's information technology industry.
The Vietnamese IT market is estimated to grow at a compound annual growth rate (CAGR) of 9% over the 2010-2014 period. Consumer retail spending recorded growth in 2009 despite the economic slowdown, in part due to tariff reductions and aggressive price cutting. Government and business IT spending took a hit, but is expected to pick up in 2010.
The overall Vietnam IT market outlook for 2010 is one of a broad recovery that gathers pace in the second half of the year. PC sales were slower than expected during the Lunar New Year peak shopping season in Q110, partly because steep price discounting in 2009 had weakened the attraction to consumers of traditional seasonal discounts.
The addressable domestic market for IT products and services is projected by to reach US$2.9bn by 2014. An ambitious IT plan for 2010-2020 should shape many segments of the Vietnamese IT market, while Vietnam’s improving information and communication technology (ICT) infrastructure will also drive growth. Vietnam’s gradual integration into global trade networks such as the Association of Southeast Asian Nations (ASEAN) and the WTO has helped to bring down prices and increase opportunities for importers.
The government’s Strategy for IT Development covers the 2010-2020 period and focuses on four major areas: enhancing IT application, developing the local IT industry, developing ICT infrastructure and developing IT human resources. A number of specific IT plans have been developed including one to modernise IT in government agencies, which was approved in March 2009. In an April 2010 cabinet meeting, Prime Minister Nguyen Tan Dung ordered all members of his cabinet to use computers while working.
In January 2010, the Vietnam Post and Telecoms Group (VNPT) in Ho Chi Minh City launched a local version of the Computers for Education programme, which will provide teachers and students in the city with low-priced laptops and DSL broadband connections. The discounts will be available through VNPT’s 30 retail outlets and 200 agents in the city. In August 2009, the Ministry of Education and Training launched a national programme to supply 1mn affordable computers to Vietnamese schools by 2011.
Import taxes on electronic products and components were lowered from January 2009, in accordance with the government’s commitments under the ASEAN free trade area (AFTA), which Vietnam entered in 2006. As of January 2009, duty on complete build unit electronic products from ASEAN countries was reduced to 0-5%. Eligible products must have an ASEAN content of at least 40%. Meanwhile, the ChinaVietnam ASEAN free trade agreement offers both opportunities and challenges to vendors, especially given the growing presence of low-cost Chinese vendors in the Vietnamese market.
Multinational brands dominate the Vietnamese PC market, with HP the top-selling PC brand in 2009, ahead of Acer. HP’s sales have been boosted by government and education sector projects, as well as by its strategy to target the consumer segment. Other multinational PC vendors including Dell, Toshiba and Asus have enjoyed strong recent growth in the booming market.
Vietnamese software producers have a greater presence in their domestic market. Local products accounted for around 75% of market value in 2008 while foreign vendors have around 25%. Local companies have a particularly strong position in the government and small and medium-sized enterprise (SME) segments, while larger Vietnamese corporations are more likely to consider more expensive software from multinationals.
Vietnam has around 10,000 firms currently licensed to provide IT services, but only one-third are actually operating. The Ministry of Information and Communications is currently developing a draft decree to map out policies to help the IT industry grow and this is due by the end of the year. The decree will stipulate procedures and operational requirements for firms providing IT services.
BMI projects that sales in Vietnam’s computer hardware market will be worth around US$1.3bn in 2010, up from an estimated US$1.2bn in 2009. The main growth driver will be affordable notebooks, with various models of the smaller form factor netbooks selling well in 2009.
PC penetration in Vietnam was around 9.6% in 2007, according to World Bank figures, and in 2010 is estimated by BMI at around 15%. Notebooks are owned by an estimated 7% of the Vietnamese population. This points to significant growth potential for the local PC market, with the most potential being in rural areas. Currently Hanoi and Ho Chi Minh City are thought to account for in the region of 85% of notebook sales.
In 2010, Vietnamese software sales are projected by BMI to grow to US$178mn, despite the uncertain economic conditions, and software CAGR for 2010-2014 should be in the region of 12%. Software spending comprises around 10% of total Vietnamese IT spending.
The market is expected to reach a value of around US$312mn by 2014, with steady growth in demand for licensed software from government, enterprise and household segments. However, some vendors and distributors saw a slowdown in 2009 due to global economic headwinds. Vietnam’s software market is developing, despite the problem of software piracy, which still accounts for around 85% of software, compared with 76% in neighbor Thailand.
Vietnamese IT services spending is forecast to reach around US$343mn in 2010, up from US$297mn in 2009. The economic crisis had an impact in 2009, with projects being put on hold. However, sectoral CAGR is projected at 11% over the forecast period, as the market approaches US$588mn by 2014. IT services now accounts for around 18% of total Vietnam IT spending. Over the past few years, the size of IT services deals has increased in key IT spending verticals. Growing demand for digital infrastructure projects in segments such as banking, telecoms, energy and government has attracted global IT services providers to invest more in Vietnam.
E-Readiness Vietnam’s fixed-line infrastructure is unreliable and offers poor coverage. However, Vietnam has an exceptionally high penetration rate in the mobile market, reaching 126% at the end of 2009, and registering around 110.8mn subscribers. This has been aided by mobile network operators reducing tariffs to encourage growth of their respective subscriber bases, as well as increased investment in the expansion of infrastructure to areas outside major towns and cities. Demand for mobile broadband has also been accelerated by the changing lifestyles of consumers, who use the service for accessing the internet for work and leisure.
Vietnam IT Sector SWOT
Vietnam Telecoms SWOT
Vietnam Political SWOT
Vietnam Economic SWOT
Vietnam Business Environment SWOT
Vietnam Market Overview
Industry Forecast Scenario
Table: Vietnam IT Sector (US$mn Unless Otherwise Stated)
Table: Telecoms Sector – Internet – Historical Data And Forecasts
Table: Vietnam – Economic Activity
Country Snapshot: Vietnam Demographic Data
Section 1: Population:
Table: Demographic Indicators
Table: Rural/Urban Breakdown
Section 2: Education & Healthcare
Table: Healthcare: Vital Statistics
Section 3: Labour Market And Spending Power
Table: Employment Indicators
Table: Consumer Expenditure
How We Generate Our Industry Forecasts
IT Ratings – Methodology
Table: IT Business Environment Indicators
Table: Weighting Of Components
- FPT Software
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