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How the Vietnamese IT sector is growing

The Deputy Minister of Information and Communications (MIC), Phan Tam, said the information technology (IT), electronics, and telecommunications sector has seen rapid development with extremely important achievements in the past five years.

According to a press release, Vietnam’s revenue from these sectors in 2019 reached US $112.5 billion, double that of 2015. The sector’s growth rate in the 2015-19 period was more than 26%, four times higher than GDP, contributing VND 53 trillion (about US $2.1 billion) to the state budget last year.

It creates jobs for more than one million people.

IT products, especially mobile phones and computers, took the first and third places among the top ten key export staples of Vietnam in 2019, with a trade surplus of US $28 billion.

The Deputy Minister noted that in 2009-19, the average revenue growth rate of the software industry reached 17.7% a year. In 2019, the software revenue was US $5 billion.

However, the sector has also seen shortcomings as it has depended on FDI firms. Revenue of FDI companies in the IT sector accounted for up to 98% of the total export revenue.

Despite a large number of domestic enterprises, 99% are small and micro-enterprises. Their competitiveness and ability to participate in the global value chain are still very limited, mainly entrusted with services and assembly work.

Domestic enterprises only contribute about 10% of the industry’s total revenue, he added.

The government’s strategy for future development

By 2025, Vietnam targets to have ten localities with revenue of more than US$1 billion each from IT.

The target was set at a conference to review the IT development programme in 2015-20 in the southern region held in Tien Giang Province, early this week.

MIC has been rushing to build a draft decision to approve the IT development programme by 2025 with a vision to 2030.

The Deputy Head of the Ministry’s Information and Technology Department, Nguyen Thanh Tuyen, said the IT development programme aimed to make the country’s IT industry contribute significantly to the economy, with a rapid and sustainable growth rate based on achievements of the fourth industrial revolution.

The sector would provide momentum for the country’s digitalisation and the digital economy.

Accordingly, the revenue growth of the sector would be double the country’s GDP growth, taking the lead among industries with high export value.

Under the programme, the country would have 50,000 IT and telecom firms. Of which, ten big businesses will function as leaders with revenue scale of over US $1 billion and have the ability to compete internationally.

Local businesses must master the software and IT services, providing 90% of products and solutions for e-government construction, digital transformation, transport, and smart agriculture.

In the hardware sector, domestic IT firms should produce equipment for 5G networks while the foreign direct investment companies must have a localisation rate of 30%.

The programme also plans to have 60% of Vietnamese people using social networks developed by local providers by 2025, gradually reducing the dependency on foreign ones.

Meanwhile, 40% of Vietnamese people would use domestically-made search tools.

Vietnam now has three big IT areas in HCM City, Ha Noi, and Da Nang. Another software park is under construction in Ha Noi’s Long Bien District.

The draft programme is expected to be submitted to the Prime Minister in the second half of the year.

The Vice-Chairman of Tien Giang Province People’s Committee, Tran Van Dung, said they are planning to build the Mekong software park. It is expected to attract human resource for the IT sector of the province, in particular, and the Cuu Long (Mekong) Delta region in general.

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