A vital field that Vietnam has committed to open post World Trade Organisation (WTO) access, is telecoms and related services. Existing operators will have to cope with challenges and identify opportunities.
Big playground, few players
On the day Vietnam and the US signed the agreement to end bilateral negotiations for Vietnam’s WTO membership, the Asia – Pacific consulting council of AT&T held a caucus. In a press release issued in Hanoi, AT&T revealed that the meeting was to “orient its regional investment strategy”.
At the same time, the group had another meeting with the Ministry of Post and Telematics to discuss requirements for market access.
During his visit to Vietnam at this point of time, Chairman of the International Data Group (IDG), Patrick McGovern, also told the media that IDG is increasing activities in two significant fields – publishing and distribution of information and communication technology (ICT).
“IDG will offer more IT products in Vietnam, which are to be combined with new technology industries once Vietnam joins the WTO,” said Mr McGovern.
Though investors concede that the ICT market in Vietnam is becoming more competitive, they still require a higher level of access, particularly for American companies.
After Prime Minister Phan Van Khai visited the US, and Intel’s announcement of its investment project in Vietnam – the signals showing the Vietnamese government’s efforts in investment attraction – American investors are paying more attention to Vietnam, even though their IT products have been selling in this market for some time.
Meanwhile, other foreign groups like Siemens, Comvik, Alcatel, and SK Telecom are waiting for more favourable conditions to change their legal entity status within Vietnam. At present they are only allowed to be involved in business cooperation contracts (BCC) in the ICT field in Vietnam.
The S-Fone mobile network project by SK Telecom was a WTO membership negotiation point between Vietnam and the Republic of Korea. “We have had great difficulties in managing this project, so we expect to turn the project into a joint venture after Vietnam joins the WTO,” said In Se Hwang, SK Telecom’s global public relations manager.
A specialist commented that it is wrong to say that foreign investors are slow to exploit the Vietnamese ICT market. The local industry grows by between 30-50% per year, but the value that it creates is low. Last year total revenue of the ICT industry was estimated at around US$2bil, mainly from post and telecom services, in a market of more than 80mil people.
According to the Ministry of Planning and Investment’s Foreign Investment Department, total foreign capital to develop telecom infrastructure facilities via BCCs is only $2bil. This sum of money is very useful for the development of the ICT industry. However, investment is only in infrastructure and basic services, while interactive services between telecom, Internet and IT are more important for the development of the ICT sector. The IT market in Vietnam is still open wide for new investors.
Requirements for competition
The main requirement of foreign investors in the ICT field is increased equality in competition and management.
In the telecom sector, experts said that the Vietnam Post and Telecommunications Group (VNPT) has huge advantage after holding a monopoly in the national telecom infrastructure for years. This is certain to cause problems for foreign operators when they connect their networks to that of VNPT.

But Vu Hoang Lien, Director of the Vietnam Data Communications Company (VDC), a subsidiary of VNPT, said that the Internet service provision market will not change, even after foreign investors join the market because local competition in this field is already fierce, and the law is quite open.
Minister of Post and Telematics Do Trung Ta, in a talk with the Saigon Times in mid-May 2006 said that the capability of domestic service providers has been enhanced. However, they will have to operate in a real competitive market, where weak companies will be rejected.
So far, local service providers have done little more than develop infrastructure and transmission means, meaning value added services and customer support are poor at best.
There is a long way after WTO for domestic service providers improve their capability. However, long-term challenge, according to Vietnamese WTO negotiators, is not only the effective exploitation of the infrastructure but also national security for wireless services.

Source: VNECONOMY