Vietnam’s Data Market: Overview, Regulations, and Current Competition
Vietnam’s data market is becoming increasingly important as the country looks toward performing a digital transformation of its economy. Here’s the current state of the market, where it’s headed, and what’s driving growth.
Vietnam’s data market was valued at US$858 million in 2020 and is projected to reach US$1.82 billion in 2023. Compound annual growth rate (CAGR) for the market is expected to be 5.32 percent CAGR for 2023-2027. This is in line with a comprehensive digital transformation that Vietnam is determined to undertake as part of a ‘fourth industrial revolution’.
Vietnam is a rather new entrant in the digital transformation race. It lags somewhat behind in the field of big data, but holds immense growth potential making the market prospects rather attractive.
It should be noted that the data market in Vietnam is mainly dominated by foreign players, which have an estimated 70-80 percent market share. Vietnam’s major domestic players like Viettel, VNPT, and FPT, and a handful of other small and medium enterprises take up the remaining 20 percent.
Cloud computing and AI, in particular, are two main sub sectors with a high level of competition. For the past several years, AI and Big Data have been applied extensively in the fields of banking and finance, e-commerce, and telecommunications.
Vietnam’s data market revenue 2018 to 2024
Data market regulations and initiatives in Vietnam
Vietnam’s government recently issued Decision No. 127 on the National Strategy for Research, Development, and Application of Artificial Intelligence until 2030. The strategy is a big step forward and aims to promote AI as an important field for development in Vietnam. The goal is for the country to place in the top four countries in ASEAN in AI applications by 2030.
The strategy outlines the following objectives:
- To develop a system of legislation and legal framework relating to AI.
- To develop data infrastructure and make calculations serving AI R&D.
- To develop an AI ecosystem.
- To increase the number of enterprises utilizing and developing AI to satisfy domestic demand.
- To promote available software and solutions and applications for AI.
- To promote cooperation with foreign firms regarding AI.
- To develop highly skilled AI personnel in the country.
The government is committed to prioritizing the application of AI across industries and is determined to make Vietnam a powerful hub for AI research and development. This bodes well for foreign AI companies entering this emerging market.
Further policy promoting growth in the information communication technology (ICT) sector is contained in Decision No. 677. This Decision outlines a scheme for developing Vietnamese digital knowledge systems. The decision highlights the importance of foreign companies with knowledge and capacity in ICT to contribute to the sharing of information. This scheme mainly aims at growing human resources skills in ICT.
Of note is the government’s prioritization of creating incentives for hi-tech sectors. Decision No. 2117, for example, states that the government shall provide incentives for the following digital technologies upon market entry:
- Artificial Intelligence (AI)
- Internet of Things (IoT)
- Big Data Analytics
- Cloud computing, Grid computing, Edge computing
- Quantum computing
- Next-generation network infrastructure (5G, 6G, NG-PON, SDN/NFV, SD-RAN, SD-WAN Network Slicing, LPWAN, IO-Link Wireless)
- Virtual reality, Augmented reality, Mixed reality
- Intelligent, Remediating and Adaptive cybersecurity
- Digital Twin
- Plant simulation
- Precision agriculture
Companies operating in the above-mentioned digital technology areas are normally eligible for a 10 percent corporate income tax (CIT) rate over 15 years, land rent reduction or exemption, a five percent value added tax (VAT) rate, and tariff exemption for parts/components/materials for production input over a period of five years.
Key players in Vietnam’s data market
Competition in Vietnam’s data market is fragmented. There is no dominant company but rather a cluster of smaller firms. In this light, foreign firms may find it easier to carve out a share of the market.
In terms of the server and storage system sub-sector, Hewlett Packard Enterprise (HPE) currently takes up over 40 percent of the server market and 64 percent of the blade server market. Dell follows closely at 28 percent and 20.6 percent respectively. Cisco occupies around 2 percent of the market, and the rest is made up of other firms like Fujitsu and Hitachi. Enterprise demand for cloud service solutions has driven growth in this market.
In the management software, data integration and data analysis software market, key players include FPT, VNPT, CMC TS, MISA, and HIPT. They share somewhat equivalent pieces of the pie in providing software solutions, telecommunications equipment, and data analysis.
In the data security market, the pie is split between a host of major players, including FPT, SAP Asia Vietnam, IBM Vietnam, Viettel Cyber Security Company, Microsoft, Amazon Web Services Vietnam, Cisco, and HPT Vietnam. They compete to provide data encryption, user authentication, system monitoring, enterprise management, and other security measures.
Current application of digital technologies in the banking sector
Technology is a key driver behind the heated competition between commercial banks in Vietnam. Up to 92 percent of banks are developing mobile banking applications, with half of them promoting automation and 16 percent developing IoT capabilities.
The banking sector is also characterized by close cooperation with Fintech companies in payment services, digital banking services, Big Data, and Blockchain. Commercial banks highly embrace the application of advanced analytics, AI, machine learning (ML), and chatbot in value creation. Successful launches of digital banking platforms include Timo/Yolo by VP Bank, Robot OPBA by Nam A Bank, and Live Bank by TpBank.
Yet there is still a gap in the pace of digitalization between big global banks and Vietnamese banks, indicating opportunities for Fintech and ICT solutions providers to tap into the banking market.
Vietnam’s data market is a young, but dynamic market that has captured the attention of big global ICT firms. The market is in a transition phase, with competition quickly ramping up and the pie increasingly shared between foreign and domestic players.
With government initiatives and growing demand across Vietnamese industries, business prospects await ICT players planning to enter this market.
This article was originally written March 14, 2023. It was last updated August 30, 2023.
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