3:26:18 PM | 7/8/2005
Since 1990, Vietnam's electronic-IT sector has maintained an average growth rate of 30 per cent. Consumer electronic products increased 35 per cent in 1990-1995, and spare parts increased 30-50 per cent in 1996-2000. Meanwhile IT products have increased by 40-50 per cent from 2000 to the present. However, in comparison with the region and the world, Vietnam's IT industry is still weak.
According to various sources, Vietnam has 200 enterprises operating in the IT sector with a total investment capital of US$1.6 billion, with foreign investment accounting for 90 per cent. The investment in the production of electronic appliances is 67 per cent, in spare parts 21.5 per cent and in IT products the figure is only 11.5 per cent. Vietnamese enterprises make up 2/3 of the total number and 60 per cent of the workforce, but only 6 per cent of the investment capital. The main products are civilian electronic equipment (audio-visual), which constitute 90 per cent of the total whereas in many developed countries the figure only stands at 11 per cent. With outdated technology, weak research and development and over reliance on assembly, the added value of the sector is low. Furthermore, all materials and equipment are imported and consequently the industry is dependent on foreign suppliers.
This situation is attributable to the aftermath of development without a national strategy or planning and inadequate investment by the State. Inappropriate policies on taxation and localisation also failed to encourage production and development.
Mr. Bui Quang Do, Director General of Vietnam Electronic-IT Corporation, disclosed that the biggest companies of the Corporation in South Vietnam make up nearly 90 per cent of the total production value. The investment capital and turnover of FDI enterprises in Dong Nai, Binh Duong and Ho Chi Minh City are the biggest in Vietnam, notably the Fujitsu company. In the North, the Canon printer project valued at US$100 million is regarded as a breakthrough. There is great potential for the development of the IT sector thanks to the geographical location, infrastructure, human resources and market of Vietnam, but the situation requires effective planning, investment and management.
Immediate tasks
First of all, the existing constraints must be removed and a national strategy on electronic-IT development must be drafted and approved by the government. The strategy must be based on principles of globalisation and specialisation, and must be developed in line with regional and global trends. The State will play a vital role in investment to assist enterprises in the expansion of production, renovation of technology and diversification of products. Electronic parts and supporting industries will be restored and developed, helped by the fact that 20 years ago Vietnam exported these products. At present, the export value of these products constitutes 90 per cent (US$500-600 million a year), but is mostly made up of FDI projects or are of limited diversity or value.
More funds need to be pumped into research and development to increase the added value of the products. Currently, the assembly of electronic products only provides 10-15 per cent in added value.
To attract the investment of important electronic and IT groups, the policy and investment environment must be further improved, human resources upgraded, formalities simplified and preferential treatment applied. To encourage the development of local enterprises, taxation and customs formalities must be improved, creating fair competition. Measures must be taken against smuggling and fake products that are adversely affecting the domestic market.
Mr. Do added that alongside the improvement of the investment environment, resources must be provided for the training of the workforce. A fund for the development of human resources should be established to combine training at home and abroad meeting the ever-increasing demand of production and high export value of the sector.
Vietnamese
