Current Status of Vietnamese E-commerce

Transcription

1 Current Status of Vietnamese E-commerce By Hoang Minh Cuong According to many e-business researchers all around the world, with a population of 80 million, Viet Nam is one of Asia sleeping giants in terms of e-commerce. With an estimate figure, it shows that there are about 30,000 businesses in Viet Nam and overseas Internet portals have been eyeing ventures with domestic partners to tap this market of 80 million people. Abstract E-commerce is a rapidly expanding sector all over the world, and of course Viet Nam is no exception. According to many e-business researchers all around the world, with a population of 80 million, Viet Nam is one of Asia sleeping giants in terms of e-commerce. With an estimate figure, it shows that there are about 30,000 businesses in Viet Nam and overseas Internet portals have been eyeing ventures with domestic partners to tap this market of 80 million people. This presentation introduces information, facts and figures of electronic commerce development in Vietnam, some considerations and issues are also discussed. Current status For the first 6 months of the year of 2001, in general, the growth rate of Vietnam's economy has been seemed to be quite optimistic. Vietnam's GDP growth rate is about 7.2 percent, and this figure is estimated to be 7.4 percent in the second quarter of the year (reported by the General Statistics Department (GSD)). In the period, the country's annual trade turnover increase was 15.1 percent compared with an average 6.9 percent GDP growth rate. And a trade growth rate of 16.6 percent must be obtained to ensure the yearly national economic growth rate of 7.5 percent set for the period. However, in the field of Internet and electronic commerce, the picture is not so good, with little of innovation in comparison with the last few years. The enhancement of e-commerce is a major issue and rather difficult to harness broadly, partly due to the low percentage of Internet users: there are only 4 million of telephones over 80 million people (5%). The Internet usage is much lower: there are only users (~0.2%) and most of them are low speed dial-up users, and the unpopular online transactions. Yet, Vietnam is a big market, consequently, e-commerce is an indispensable trend. At present, Vietnam has built several symbolic systems, say, Vietnam Cybermall, Real Estate Exchange, Electronics and mechanical appliances supermarket, computer supermarket, Blue sky, Book Store, E-business etc., they ve been showing the first tries made by Vietnamese in doing e-commerce. To fully integrate into the region and the world in the coming decade, Vietnam

2 should immediately create basics for the development of e-commerce, firstly, IT infrastructure. Vietnam's IT industry is quite young and enterprises have not managed to build up an appropriate network to execute resources. Interests by domestic enterprises with IT research illustrate our weakness in this area. Getting contacts with real but virtual information in the Internet while the legal framework is not complete enough to protect beneficiaries is an obstacle that enterprises have to face with. Another significant issue in addition to information technology is the E-commerce Law. The absence of a legal framework in e-business and e-commerce makes overseas enterprises ponder when trading with Vietnamese firms. As a result, a legal framework for e-commerce is urgently needed. To say in brief, there are a number of issues existed, including the followings: - There are only few end users in Vietnam have used credit card in their lives. - Vietnamese people used to do merchant in face-to-face fashion, most of the transactions are paid directly by cash. - The Internet usage is still not widespread, not popular in general. - Internet and telecom charge are still very high, especially in comparison with the salary of common labor. - The living standard is still low. According to a recent research, GDP per person of Vietnamese is about US $1755 (data of 1999). - There is no clearing-house in Vietnam, and banks in Vietnam still not get interest in doing e-commerce or Internet merchant. - Information and business transaction over the Internet are still ruled by government policies. - During the 1990s, government s policies only concentrated on improving technical infrastructures. Building legal framework and policies, regulations didn t get much attention. We didn t have a main responsible entity for e-commerce develop. - There are still lacks of supporting laws or regulations, i.e. the framework of legal. Vietnamese is still inexperienced in Internet dealing with foreign companies. - The financial system needs to be changed to support Internet buying and selling, with or without traditional invoices. (Traditionally, business invoices are issued and controlled centrally by the government, with unified forms). - Digital content is still not considered as special goods. Imports and exports are still required contracts to be signed by both entities. - Security for e-transactions remains an alien notion to many enterprises. The Government has been urged to set up a body to deal with e-commerce in the country s management. What we are doing Government Vietnamese government has seen the picture quite early, and has showed determinations to speedup the development of IT and e-commerce in Vietnam. There are quite many decisions, resolutions, directives, instructions released to guide and to

3 support the developments and promotion of IT. - The Government issued Resolution No 49/CP dated August 4, 1993 on Information Technology development in the 1990s. - On July 4, 1995, the Government released Approval letter on the overall plan of Vietnam Information Technology development to the year 2000; - Decision No 212/TTg dated May 6, 1994 and Decision No 154/TTg dated March 11, 1995 on the establishment of the National Programe Steering Committee on Information Technology. The steering committee operated from 1996 to On May 11, 1999, the Government promulgated Decision No 123/1999/QD-TTg on the establishment of eco-technical Programe Steering Committee on Information Technology (the Government published Decision No 192/1999/QD-TTg dated September 20, 1999 to disband the National Programe Steering Committee on Information Technology). - On June 5, 2000, the Government issued Resolution No 07/2000/NQ-CP on software industry construction and development for the period of During the 4th ASEAN summit in Singapore (Nov 22nd to 25th 2000), Vietnam has signed the e-asean Framework Agreement, with commitments in the development of an ASEAN information infrastructure; facilitation of e-commerce. - In the mean time, during the ASEAN +3 summit in Singapore, Vietnam Prime Minister Tran Van Khai also enquired Aseans to actively join with Vietnam in developing the Asean IT centre (supposed to be located at Hoa Lac industrial park in Vietnam), which already got a lot of actively attentions from the other members. Recently, Vietnamese Political Bureau released a Politburo s Directive No. CT58BCT on Oct 17th 2000, followed by the Government s decision No 81/2001/QDTTG state the program of action on stepping up the application and development of information technologies in the cause of industrialization and modernization, with the following principal contents: Objectives of the application and development of information technologies (IT) in our country in the and periods : 1. The objective towards the year of 2010: Vietnam's information technologies shall reach the advanced level in the region, be extensively applied in all domains: the information technology industry shall become a spearhead economic branch having a high growth rate and ever-increasing contributions to the GDP growth. The national information network shall cover the whole country with a large information volume, with high quality and speed at a cheap price. The percentage of Internet users shall reach the world's average level. 2. The objective towards the year of 2005: Vietnam's information technologies shall reach the region's average level with 1.5% of the population being subscribers using the Internet. The information technology industry shall achieve the average annual growth rate of 20-25%, the value of software output shall reach around US

4 $500 million/year. To train over 50,000 IT specialists at different levels, of whom 25,000 are high-level ones and professional programmers, who are fluent in a foreign language(s) in service of ITs-, to step by step universalize the use of computers and Internet at the general secondary education level. Ministries, industries, central and local associations in collaboration with multi-national corporations and domestic leading informatics companies have opened interchange to promote e-commerce and specific projects to stimulate e-commerce development. (See references) Implementation of key programs: - The Program on "Building and upgrading the telecommunications and Internet infrastructures, under the prime responsibility of the General Department of Post and Telecommunications, aiming to build modern telecommunications and Internet infrastructures which meet the demands for bandwidth and transmission line speed in the IT application and development and reach the level of the regional countries in terms of quality, prices and use facilities. - The Program on "Development of the IT manpower resource", under the prime responsibility of the Ministry of Education and Training, aiming to train high-quality specialists, experts and programmers at all levels, who are able to meet the requirements of IT application and development, and serve the domestic demand and the labor export demand. - The Program on "Building and developing the software industry", under the prime responsibility of the Ministry of Science, Technology and Environment, aiming to build the software industry into a spearhead economic branch. - The Program on "Building and developing the hardware industry", under the prime responsibility of the Ministry of Industry, aiming to build and develop this industry to meet the increasing demands of the domestic and export markets, raise the quality of domestically-assembled or manufactured IT machinery and equipment up to international standards. Steering Committee of e-commerce development A national project called Electronic commerce technique has finished partially during the time this report has been made, and will soon be approved and applied by the government. The steering committee being established consists of The Ministry of Trade, Ministry of Science, Technologies and Environments, Department General of Posts and Telecommunications, Department General of Customs. According to a research of the project, e-commerce development in Vietnam is

5 still very slow and unsynchronized in comparison with the world: We are still lack of master plan or guidelines for e-com development and application. Our policies in the past were all focused on developing technical infrastructures, equipments, but not on developing legal frameworks or guidelines. We still don t have national agency to manage, control and assist the government in policy and decision-making. Program to develop e-commerce in Vietnam , which can be considered the first few steps of Vietnam to deploy the spirit of e-asean agreement, plans that there are 10 most important issues that must be concerned: - Building an IT and telecommunication infrastructure - Improving awareness and developing human resources for e-commerce - Electronic payment system - Building legal framework to support e-commerce - Encryption and security in e-commerce - Building system of industrial and commercial standardization. - Protections of Intellectual properties and usages. - Financial and tax issues. - Experimental in e-commerce. - Establishing a national agency of e-commerce management. Banking One of the top challenges of Vietnam regarding to developing e-commerce is to build online payment methods for e-commerce transactions. The state bank has been using an EDI system, and will soon deploy an inter-bank payment system in the scope of a project of WB. Some banks have been testing ATM systems. Talking about international transactions, many banks has been using SWIFT system, some are doing business with international card issuer like Visa, MasterCard etc. Generally speaking, payment without using cash is now becoming a new popular method inside bank system. A project of modernizing banks and payment systems by WB is now being involved by the state bank and 4 state-owned banks, 2 share holding banks. Gradual transition from physical transactions to machine-to-machine transactions allows banking and finance industry open more services. Comfort in financial transaction is the best favorable environment for e-commerce. E-commerce application project in banking and finance industry have step by step been applied in Vietnam and harvested satisfactory results. Websites of BaoViet (or Vietnam Insurance Corporation), Vietnam Commercial Bank, in trade of State Treasury and so on shall be leap forwards in the year to come. Yet, in comparison with regional countries, Vietnam is still in the first phase of e-commerce. Business sector For small and medium-sized enterprises, e-commerce is really a major challenges due to their missing understanding of e-commerce, the cost for e-commerce infrastructure is not so small, let alone equipment, expenses of Internet connection in Vietnam. The State, ministries and industries should propose solutions

6 to help small and medium-sized enterprises in the field of e-business and e-commerce. But as already showed before, there are some earliest businesses joining in the e-commerce marketplace. According to our recent research, as about 600 e-commerce sites built in Vietnam, the most important businesses are: - Advertising - Computer sell or distribution (both hardware and software) - Consultancies and human resource outsourcing. - Job ads or search - Online cyber mall Most of the e-commerce sites found are B2C model. There seem to be very few B2B models at this time. They are concentrating to some of the simple businesses like: to provide information based solutions, to establish business forums, or to advertising national products to foreigners. Serious e-transactions between businesses are rarely seen, and of course B2B is still not an important portion inside e-commerce. Conclusion Vietnam has step by step followed the world trend of liberalizing commerce by joining the ASEAN Free Trade Area and the Asian-Pacific Economic Cooperation forum. To meet the demand of the country for international integration, the commercial service, with e-commerce is one of the important part, must develop comprehensively. Although the country is on the very first step of developing in the field of e-commerce, the innovative trend proved by Vietnamese efforts brings a lot of opportunities for people to join in and going with Vietnamese towards the goal. One of the most important objective of Vietnamese is to promote modernisation and industrialisation to make Vietnam an industrialised country by If Vietnam misses the opportunity to improve its internal force, ideology and practice and appropriate the latest global technology while linking its economic growth to information and high technology, the country will lag behind other countries for decades. That s why we have to try our best to develop e-commerce with any cost. In our vision, the future will be brighter and better. Source: 01/23/2003