Vietnam has striven incessantly with the goal of cementing its IT industry by wooing more investments in the sector. The dream of complete digitalization in Vietnam over the next decade is perpetuated by the Vietnamese government’s improvement in its regulations and policies to better accommodate foreign investments in the IT sector. In this article, we talk about how the recent developments in the IT industry in Vietnam act as catalysts for profitable investment returns.
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The Landscape of Vietnam’s Information and Communication Technology (ICT) Sector in 2023
ASEAN countries view digital transformation and digital-based economic development as effective measures to advance their cooperation agenda. Vietnam, which was the ASEAN chair last year, moves ahead with a determined mindset of fully digitalizing the ASEAN nations.
The Australian Trade Commission forecasts that the information and communication technology (ICT) industry in Vietnam will experience an average annual growth rate of approximately 8% from 2022 to 2026. Furthermore, with the ongoing flourishing of the digital economy in Vietnam, it is expected that the country’s aggregate GDP could see an additional increase of US$1 trillion by 2025. Vietnam’s emergence as a production hub for IT hardware and services, including software development outsourcing, is driving the rapid expansion of the ICT sector. Furthermore, success in e-commerce growth also assists Vietnam in quickly achieving its objectives and developing its digital economy.
According to the Vietnam Investment Review Central Institute for Economic Management, Vietnam’s GDP would likely increase by US$28.5 billion to US$62.1 billion by 2030, representing a 7-16% sharp rise.
Opportunities in Vietnam’s ICT Sector
Foreign investors can benefit from the rising privatization of state-owned companies, particularly the telecommunications and banking industries. Vietnamese software industries in banking and finance, oil and gas, aviation, and telecoms, which are the greatest spenders and provide the most potential for both bespoke solutions and off-the-shelf software, present the most lucrative prospects for foreign firms to invest in the country.
Other areas with potential include IT services like customer relationship management (CRM), enterprise risk management (ERP), and human resource management (HRM). Broadband IT, telecommunication, and broadcasting are the fields with huge possibilities for a lucrative return on foreign investments. Digital Content, Cloud Computing, E-security, and Fintech are also in line to be the star investment areas in the IT industry in Vietnam.
Read Related: The Remarkable Rise of the Fintech Industry in Vietnam
Why Invest in Vietnam’s IT Industry?
Vietnam has proven to be a lucrative market for global technological companies looking to expand into a variety of industries. For example, Fujitsu, Japan’s ICT giant, has been implementing its new business strategy in Vietnam. Since it arrived in the country in 1999, Fujitsu has solely sold products to Japanese companies. Furthermore, M-Security Technology Pte Ltd, a subsidiary of M.Tech Singapore, distributes various security solutions in Vietnam for the US-backed IT Blue Coat Group.
Furthermore, Decree No. 108/2006/ND-CP provides a detailed account of the execution of several provisions concerning the Investment Law and the manufacturing of software products and digital content. Within the decision, special incentives to encourage investment are incorporated, which encompass a preferential tax rate of 10% for 15 years, along with a tax exemption for four years and a 50% reduction for the following nine years.
Vietnam has emerged as one of Southeast Asia’s most appealing investment markets. The ICT sector and its digital economy, in particular, appear to be the most competitive. By 2030, the Ministry of Information and Communications (MIC) hopes to make the country a leading digital destination and economy in Southeast Asia, acknowledging the trial of various innovative digital technologies.
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