IT AND E-GOVERNMENT STATUS IN VIETNAM

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1 IT AND E-GOVERNMENT STATUS IN VIETNAM ABSTRACT Vietnam is a developing country and among the poorest countries in the world; as a result, Vietnam ICT industry has not developed until very late. In reality, until 1997 Vietnam started to connect to the Internet. Vietnam information technology (IT) industry is not yet 10 years old. Despite of this fact, Vietnam has built up modern telecommunications infrastructure with high speed fiber optic cable system, VOIP network all over the country, IP infrastructure and other modern applications based on NGN (Next Generation Networks). The fast development of broadband access technology, such as ADSL, WLAN and Wimax, and strong development of Internet, E-commerce, IP Television have helped Vietnam to have higher rank on the world IT map. Vietnam IT market had the turn-over of 1.15 billion USD, increasing by 22.6% - more than 3 times of the international average growth rate, in which that of hardware increased by 15.8% whereas that of software/services increased by 43.9%. The application of IT in state agencies has shown positive changes, contributing to the renovation of working methods and the reformation of administration procedures, which plays as a ground for the development of E-government. 1. IT Outlook Revenue in information technology of Vietnam in 2006 reached one billion and 15 million USD, increasing by 22.6%, over three times higher than the average growth rate of the world; of which that of hardware increased by 15.8% whereas that of software/service increased by 43.9%. There is not a big increase in expenses for hardware because of a rapid decrease in hardware price while software growth rate is still high, which is brought about by digital content services. These above numbers are really impressive growth rate, higher than GDP growth rate and exceeds average growth rate of Asia and the world. IDC forecast shows that in the coming years, 1

2 growing numbers of Vietnam are only about 13-15% (excluding digital content services). To reach growing rate of 35-40% per year, hardware and software industry are paying attention to export Vietnam IT market Year Software/Service Hardware Total Growth (%) Market market (Mil. USD) % Thanks to the contribution of digital content industry and software offshore service for foreign countries, the service and software industry growth rate reaches 32% and is still higher than that of hardware industry. Vietnam software/service industry had the turn-over of 360 million USD in 2006 in which 255 USD million came from domestic market (equivalent to 70.1 %) and 105 million USD gained from software offshore export (equivalent to 29.9 %), accounting to an increase of 44% over the previous year. Export software offshore grew by 50% while domestic service and software market went up by 41.6%. It is estimated that the software industry revenue will exceeds 500 million USD in 2007 if a stable growth rate is maintained. In the software/service sector, there is some 15 million USD obtained from the training service income. The digital content industry gains about 65 million USD of which 13 million USD comes from online game service; 42 million USD from mobile value added services, 7 million USD from online advertisement and the rest comes from other services. 2

3 With regards to digital content industry, Multimedia Corporation (VTC) has left Software and Media Company (VASC) behind and now ranks first thanks to the advantages of having its digital television channels. The successful deployment of Terrestrial Digital and Mobile Television of VTC has made Vietnam become one of the first countries in the region having DVB-T services and the third country in the world having DVB-H services. In contrast of a current boom and a huge potential and prediction of the online game service when it first appeared, the market does not sound like it will have a bright future. Perhaps, the biggest impression about online games is VTC launch of the Audition with a new color and rhythms as well. The Audition marks a twinkle star in the current dim game picture. The hardware industry reached 1.38 billion USD and mainly served export with a total turnover of billion USD and 147 million USD for the domestic market. There is a significant contribution from the 100% foreign invested companies whose production in Vietnam serves the export purpose. The year of 2006 is remarkable in terms of the investment flow from multinational hardware companies, namely the Intel project with an investment of over 1 billion USD in Hochiminh City, the expansion of Nidec, etc. At present, the number of Internet users reaches over 17 million. Vietnam Internet user ratio over its population increased 20% which is 4% higher than that of the previous year. Within the same period, the world Internet users only increased 1.5%. With a number of over 17 million Internet users, Vietnam currently ranks 17 in the world and 6 in Asia (behind China, India, Japan, South Korea and Indonesia) in terms of the number of Internet users. However, the rate of Internet user in Vietnam is still be in a rather low position as only ranking 9 in Asia and 93 in the world. In 2005, the number of ADSL users reached some 227,000, an increase of nearly 300% over In 2006, the number of ADSL users went up to 577,000, accounting for an increase of 250% over As of May 2007, the number grew to 753,000 users. After 12 months, the number of ADSL users makes it double the one of 310,000 in

4 In 2006, VTC replaced VASC and became the biggest content service provider. Canon also replaced Fujitsu to become the biggest hardware producer in Vietnam. Top positions in the information technology industry in 2006 belong to: - VDC, the Internet service provider - Canon, the hardware producer - FPT, the software service provider - VinaGame, the online game service provider - VTC, the mobile commercial service provider In the Global Information Technology Report on the analysis and nation raking of Networked Readiness Index (NRI) issued in mid-2007, Vietnam ranked 82 among 122 countries with the score of 3.40 (the maximum score is 7). According to Economist Intelligence Unit (EIU) ranking report issued in July 2007, Vietnam was put behind in terms of competition index in information technology industry and only ranked 61 among 64 countries and higher than Iran, Nigeria and Azerbaijan. 2. E-Government Currently, there are various definitions of e-government, the most accepted of which is Government applies IT to operate more effectively and transparently to better serve the citizens, bringing into full play the owner right of citizens. The system of legal normative writing documents on IT has basically been completed with IT Law, e-transaction Law, guiding Decrees. The model of e-government adopted by many countries in the world includes 4 steps: 1. Posting information on website. 2. Extend the accession ability to online information for citizens, the ability to contact with governmental agencies via s and other e-transaction means; 3. Two-way exchange and online transaction 24h/day and 7days/week through automatic application system; 4

5 4. Online services are integrated into one service portal, maximizing the effectiveness of onedoor mechanism, making the transactions between Government, Business and citizens more effective. Vietnamese e-government presently is on the first step of posting information on e-news. Almost the ministries, industries, cities and provinces have websites, most of which are in the period of providing information about the organizations, agencies. Some of them provide information about administrative services, forms for citizens to download, print and fill in. Almost of provincial agencies have LAN, more than 80% of them have software for serving their operation (accounting, document management, personnel management, etc) and around 50% officers using computer regularly. More than 90% of provincial agencies have access to the Internet, of which 78.5% is broadband. An effective information system has been deployed in a number of agencies such as Ministry of Finance, State Bank, Ministry of Trade, Dong Nai Province, etc. Dong Nai province has had wide range of applications in IT leading to practical efficiency in science & technology state management. It is making dramatic contribution towards building and developing Dong Nai province in particular and the whole country in general. Generally, awareness of Vietnam high level official and civil servants of the application of IT to the operation of State agencies has been raised. There are training courses for a lot of officers to improve their computer skills. The IT infrastructure and website for the management and guidance of the ministries and industries have initially been built up. The IT infrastructure to serve the operation of state agencies will be accomplished by the end of 2007: providing high speed portals (10/100/1000 Mbps) from the Central government to provinces, cities and districts, enabling the connection of LANs to Intranet. However, at present Vietnam has to face many challenges for e- Government. The building up of broadband internet system to rural and isolated areas is difficult to conduct. The slow process 5

6 of administrative reformation with intransparent and irrational procedures does not create favourable conditions for applying IT... Database is in the initial period of formation. At present, human resource still lacks IT experts with experience in working for big projects; in some provinces, there are not enough officials in charge of IT and officials specilised in IT. 3. IT policy - The premise for development The fact that the Prime Minister shall be Head of National Steering Committee for information technology is a significant motive power. It is expected that this shall bring about a breakthrough in the development and application of Vietnam information technology industry in the coming time. Many IT legal documents related to plan and many other regulations have recently approved, which is necessary to mention: - Decree No. 57/2006/ND-CP of June 9, 2006 on e-commerce; - IT law officially approved by Vietnam National Assembly on June 22 nd 2006, coming into force as of January 01 st 2007; - Decree No. 26/2007/ND-CP dated 15/02/2007 of the Government providing in detail the implementation of the Law on electronic transaction on digital signature and service of digital signature certification; - Decision No. 51/2007/QD-TTg of April 12, 2007, approving the up-to-2010 program on development of Vietnam s software industry; - Decree No. 64/2007/ND-CP of April 10, 2007, on information technology application in state agencies operations The important point is that decree No. 64 points out very specific and feasible targets in the long term about e-government with clear responsibility assignation. In this decree, the Ministry of Information and Communications (MIC) builds up and issues the standard system for the national information system. The Ministry s role is to build up and provide guidelines for the realization of 6

7 the system of legal normative documents, provide guidelines on technical frame to encourage the sense of initiative and creativeness of industries and localities without failing to ensure the connection of the information system of state offices. This means that ministries and provinces can develop any software or invest in developing computer networks in any manner they consider is the most suitable to their work needs, as long as they meet some very general standards regulated by the Decree. The move actually turns the direction of computerising administrative management efforts from a top-down style to a bottom-up style. Another significant event is the fact that Vietnam has become a full member of WTO. As a member of the WTO, Vietnam signed up to the Information Technology Agreement (ITA), in which a subgroup of WTO members has agreed to allow information technology products to be imported duty-free. Accordingly, products imposed with import tax of 5% shall be evenly decreased in 3 years to 0% in 2010; those at 10% import tax shall be evenly reduced in 5 years to 0% in 2012; whereas those at 20-30% import tax shall be evenly reduced in 7 years to 0% in International Cooperation Vietnam has been in cooperation with some countries to deploy a number of big IT projects such as construction of Korea-Vietnam Friendship IT College; Public Internet (Japan)... Particularly, Vietnam has recently emerged as a provider of software offshore service. Vietnam shares a lot of common features with Asia countries such as Korea, Japan and China; for example the culture is based on the agriculture society and Confucianism. The biggest advantage is the competitive price of labor. The average salary of programming engineers in Vietnam is one half of that in China, onethird of that in India and one-thirteenth of that in the US; and labors are of high stability. The annual salary can fluctuate from USD 2,500 to USD 8,400, depending on labors experience. This is a simple comparison, which is not to mention technical level; yet the salary is still too low as compared to the other countries. The disadvantage is that Vietnam IT industry is not yet 10 years 7

8 old, thus facing such problems as the lack of experienced IT engineers and project managers. However, such problem shall gradually be solved as time goes by. Going in line with the integration trend, Korea Government has carried out a lot of programs for popularizing Korea language and culture such as free provision of television programs for Vietnam. As a result, Korean country and people are widely known to Vietnamese people. Japan also has great international influence in youth culture such as picture stories, etc. It can be said that investment flow into Vietnam has boomed since 2004 and Korea is heading in the number of projects and total investment capital. 5. Conclusion Despite being evaluated internationally as a country with rapid growth, the IT development scope of Vietnam can not be compared with that of many developing countries in the region. Therefore, IT is given priority by the Government to enhance the application of ICT to socioeconomic development. Vietnam Government is active in developing IT industry, which is mainly based on human resource. The purpose of the e-government program improves business processes in the government administration resulting in improved services to the citizens and better utilization of the resources manpower as well as financial resources. Vietnam wishes to cooperate on the exchange of technical expertise and experience in relation to the implementation of information system in Government Administration. 8

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