The Internet in Vietnam sees stagnant growth, ailing Internet service providers (ISPs) and unbalanced development between hardware and software services, said chairman of the Ho Chi Minh City Informatics Association Le Truong Tung.


With 80 million people, 20 million of whom live in urban areas, Vietnam has had less than one million Internet users (including some 200,000 subscribers) and four operational ISPs after five years of being hooked up to the Internet.

It had 1,961 Internet subscribers by late 1998, 7,847 by 1999, 102,139 by 2000, 166,616 by 2001, and 174,144 by June 19, 2002, according to statistics from the Vietnam Network Information Center (VNNIC). Such growth rates are relatively low compared to those in China, which recorded a 50% increase between June 2001 and June 2002, to 32.8 million users. Only four of the 12 licensed ISPs, the Vietnam Data Communication Company (VDC), the Corporation for Financing & Promoting Technology (FPT), NetNam and SaigonNet, have provided Internet services, the first two being the only fully functioning ISPs, partly ecause they bring about small profits, even losses. SaigonNet reported Internet service losses of VND600 million ($ 39,500) in 2001, though it has offered the service for five years. Netnam, an Institute of Information Technology's arm, says it manages to break even in terms of Internet services.

Revenues generated from Internet services mainly come from Internet access charges because advertisements and transactions via the Internet in Vietnam are still in their infancy. Current Internet access charges are fixed at VND40-VND180 (0.3-1.2 US cents).
ISPs signed up 10,000 subscribers in the first half of 2002, down 67% on-year, and realizing only 6% of the yearly plan, according to VNNIC. By June, VDC had the largest Internet market share at 56.85%, FPT 30.64%, NetNam 5.97% and SaigonNet 6.54%.

However, experts assume that the Internet market is not saturated, but Internet services are not attractive enough, giving that there are too few websites written in the Vietnamese language, and too few businesses interesting in e-commerce. According to a survey by the Mekong Project Development Facility, only 3% of Vietnamese enterprises
apply some phase of e-commerce, 7% intend to use e-commerce at different levels, and the remaining 90% have little knowledge of this advanced trading method.

Tung said the local information technology (IT) market stood at $ 340 million in 2001, with hardware representing up to 82%. Although the proportion of software and services in the market's value rose by 4% on-year, it remains low in comparison with the world's figure of 49%. Vietnam now has 370 software companies with a 7,400-strong workforce. The high incidence of software copyright violations, a slowdown in Internet use, and the poor quality of IT training courses are attributed to the fledging IT industry, he said.

One of the key challenges in 2002 will be fresh government attempts to regulate the use of the Internet, say foreign experts. Recent legislation has clarified provisions governing the activities of IXPs and ISPs. The real question, however, is whether there will be a ministerial clash between those in government wishing to promote Internet services versus those wanting to maintain control of information exchange.

Recently, FPT and the Military Telecommunications Company were licensed to act as Internet exchange providers or IXPs (formerly known as Internet access providers), breaking the monopoly of VDC over the past five years. It will take much time, however, for them to function as IXPs because they have to undertake complicated procedures. The government approved an IT application and development framework up to 2005 on July 17, which will receive total investment equaling 2% of gross domestic product. The framework, which focuses on developing software, hardware and human resources, consists of three main goals, with the first being to match the average IT development level of regional countries. systems, and 4-5% of the population should be Internet users. The second goal is to reach an annual growth of 20-25%, while the third is to train 50,000 more IT experts, half being advanced experts and programmers with a good command of foreign languages.

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