The digital economy: slow progress among Vietnam’s businesses

Created 23 November 2018
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The government has taken serious steps to help the national economy catch up with the 4.0 industry revolution. However, the digitalization of Vietnam’s enterprises is going slowly.
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The digitalization of Vietnam's enterprises is going slowly

What is IaaS?

IaaS, or Infrastructure as a service, is used as an instrument that measures the digitalization capability of enterprises in one country. 

In order to digitalize business processes on internet, enterprises need infrastructure items such as hosts and transmission lines. IaaS firms will come forward to make investment in these and then sell services to enterprises.

After many years of quiet, Vietnam’s IaaS market is becoming busier after the government showed its determination to catch up with the 4.0 industry revolution.

In order to digitalize business processes on internet, enterprises need infrastructure items such as hosts and transmission lines. IaaS firms will come forward to make investment in these and then sell services to enterprises.

“Vietnam is a market with a lot of potential,” said Chawapol Jariyawiroj, Country Director of Amazon Web Services (AWS) Thailand and Vietnam, when asked about AWS’ joining  the Vietnamese market.

Prior to that, Vietnam welcomed many domestic and foreign firms, including Microsoft Azure, FPT Hi Gio and VCCloud. Sources said Aliyun, a subsidiary of Aliababa, is also preparing to join the Vietnam’s market.

However, despite the presence of many IaaS firms, the digitalization of Vietnamese enterprises still has been going very slowly. According to IDC, the revenue from IaaS infrastructure services in Vietnam was $31.2 million in 2017 and is expected to reach $100 million by 2020. 

Thailand, which has many enterprises doing business in Vietnam, had revenue of $100 million in 2017. It is expected that Thai IaaS market will be valued at $270 million by 2020. In Southeast Asia, Vietnam ranks above Laos and Cambodia.

Still not ready

According to IDC, in some certain business fields, Vietnam enterprises’ investments in IaaS are high and have gained initial achievements. However, these do not reflect the common situation.

Chawapol Jariyawiroj also commented that the group of companies making heavy investments to shift business models includes Vietjet Air, Massan and Dien Quang. The others include startups which are dynamic, but have limited investment capability.

“They don’t know where to start from,” he said.

The conclusion is the same as results of a survey by the Ministry of Industry and Trade.

The majority of enterprises budget VND1 billion, or less than $50,000, in the last two years and the next five years for investment to renovate technologies. 

The level of applying new technologies (3D printing, big data, AI, etc) and developing smart products and services is 2-3 percent only.

A survey by the ministry conducted in late 2017 found that most industrial enterprises were still at the starting point and 61 percent were outsiders. The report released at the 2018 World Economic Forum showed that Vietnam is among the countries not ready for the 4.0 revolution.


Source: Thanh Lich - Bridge

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