2014-01-25 19:46:28 - Recently published research from Business Monitor International, "Vietnam Information Technology Report Q1 2014", is now available at Fast Market Research
Vietnam's IT market is a regional outperformer and we expect strong growth to continue over the medium term. We forecast IT spending will grow at a compound annual growth rate (CAGR) of 14.1% to 2017, driven by rising incomes, enterprise modernisation and the policy environment put in place by the government. Significant opportunities remain in the retail market due to relatively low penetration of devices and services, which vendors will be able to tap as incomes rise. The government is also a significant factor underpinning our bright outlook as it pursues a range of ICT initiatives and allocates funding to develop Vietnam's domestic IT industry. These policies include the promotion of Vietnam as an outsourcing destination, with the services segment
expected to expand rapidly. There is also increasing momentum towards Vietnam becoming a global centre for electronics production as wages rise in China and manufacturers look to protect margins by moving to Vietnam, where wages are as little as a third of those in China.
Full Report Details at
- www.fastmr.com/prod/760722_vietnam_information_technology_report ..
Headline Expenditure Projections
* Computer Hardware Sales: VND44,389bn in 2013 to VND68,935bn in 2017, CAGR of +12.5% in local currency terms. Low penetration of devices and rising incomes will support strong sales growth, although access to credit continues to be a bottleneck despite partnerships between some retailers and banks.
* Software Sales: VND5,610bn in 2013 to VND10,378bn in 2017, CAGR of +17.5% in local currency terms. Piracy continues to be a drag on the market, but there are large opportunities in business software and security solutions for vendors willing to accept narrow margins in a price sensitive market.
* IT Services Sales: VND12,083bn in 2013 to VND22,812bn in 2017, CAGR of +18.2% in local currency terms. Services expected to be the outperforming segment of the IT market as demand grows in several verticals, including banking, telecoms, energy and government. Additionally, there is a potential boom in outsourcing from Japanese enterprises to drive outperformance of services segment.
Key Trends & Developments
Vietnam is rapidly emerging as an important location in global supply chains for both IT hardware and services. The government has created an attractive policy environment, including targets for training skilled employees from local universities and the use of tax incentives to persuade firms to locate offices in the country. These policies, combined with low wages and proximity to large markets, means the trend of firms investing is gathering momentum. The first major investment came from chip manufacturer Intel, announced in 2006, but other investments have followed from Samsung Electronics, which expects to produce as much of 40% of its global smartphone and tablets in Vietnam by 2015. Vietnam is also an emerging destination for outsourcing, with multinationals increasingly turning away from China in favour of lower cost and higher security locations.
While Samsung and Intel's production facilities are primarily geared towards export, there is also significant interest in the domestic retail hardware market where low PC penetration and forecasts for rising incomes means there is a solid platform for growth over the medium term. However, a lack of credit has restricted sales in the past as PCs remain big-ticket purchases for the majority of Vietnamese households. BMI believes this bottleneck will be less of a problem in the future as retailers such as Vien Thong A, Dienmay.com, Phong Vu, Hoan Long and Nguyen Kim cut prices and partnered with banks including HSBC, VietinBank, ANZ and Sacombank to directly offer interest free instalment payment plans from mid-2013.
Report Table of Contents:
The table of contents for this report is available upon request.
About Business Monitor International
Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010
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