Internet Market Still Waiting for Foreign Partners

Internet Market Still Waiting for Foreign Partners

No foreign-invested Internet service projects have been submitted to the Ministry of Post & Telecoms (MPT) despite the US-Vietnam Bilateral Trade Agreement (BTA) permitting American investors to join as 50-50 partners effective December 10, 2004.

Under the BTA, US investors are allowed to join as equal partners in joint venture firms to develop Internet services in Vietnam as of December 10, 2004, a move to increase activity in the market.

However, an official from the MPT revealed that, to date, the ministry has received no foreign-invested projects on Internet services, raising the possibility that the Vietnamese telecommunications market will see no big changes in the next few years, the official said.

In the eyes of foreign investors the telecommunications market in Vietnam has potential, with around 7 per cent of the population online. However, low purchasing power and low per capita spending on communications keep enterprises wary.

Vietnam also lacks a legal framework and coordinating body to boost the implementation of the BTA, said Tony Foster, Managing Director of the US’ Freshfields Bruckhaus Deringer Law Company. The current laws only allow foreign firms to invest in the telecommunications industry under business cooperation contracts (BCC).

Le Thang Long, Deputy Director of the telecommunications firm EIS, said this market is an opportunity for both Vietnam and the US, believing it will double next year with a series of new services. OCI, a subsidiary of EIS in Vietnam, has already received a request for cooperation from American partners and is considering establishing a joint venture in Vietnam or in the US.

Vu Hoang Lien, Director of the Vietnam Data-communication Company (VDC), one of the leading Internet service providers in Vietnam, said that the opening of the Internet market will eventually be attractive to US investors. But no big increases in competition will be seen if foreign investors join the market because competition is fierce already.

Vietnam now has 2.2 million Internet subscribers and 6.5 million Internet users. The Vietnam Post & Telecoms Corp. (VNPT) is the largest internet service provider with half of the market share, followed by the Corporation for Financing & Promoting Technology (FPT) with over a quarter of the market share.

By the end of 2004 Vietnam had 25,630 ADSL subscribers. Currently, the demand for broadband Internet service in Vietnam has exceeded the supply. ADSL service has been deployed in 26 cities and provinces nationwide.

VietNamNet