VIET NAM: The Challenges in Information Technology As a New WTO Member

Introduction

Viet Nam is at an important crossroad in its transition towards a market-oriented economy and steadily improving its international relations. One of its biggest accomplishments was achieving its status as the 150^th member of the WTO on January 11, 2007.

Viet Nam is in now faced with new and emerging technologies that are commonly found in developed countries and other WTO members. It must now stretch itself to not only compete, but to comply with WTO rules and regulations. Making this transition more difficult is its own problems particularly in Information Technology.

Can Viet Nam be an “Asian Tiger” in the Computing Industry like India, the “Asian Elephant?”

Currently, Viet Nam is just beginning. It is only beginning to learn to dance in the jungle of IT after becoming as a newest WTO member.

The challenges of Viet Nam in IT industry can be alleviated in many avenues but it must take initiative. These problems can be resolved by narrowing the educational disparities between rural and urban areas, job creation, privatization of the economy, and less corruption and control by the government.

The Information Technology Agreement

Viet Nam has signed the plurilateral agreement on Information Technology that immediately allows duty-free trade on IT-related products via the Information Technology Agreement (ITA). Moreover, Viet Nam grants full trading rights to companies in foreign ownership with certain exceptions. The Bilateral Trade Agreement (BTA) with the US is the economic ingredient to stimulate the prosperity of Viet Nam in the future. It also ensures trade rules are clear, particularly the protection of intellectual property rights.

This zero-duty act has translated into benefits and brought substantial advantages to Viet Nam, however, the free import tariff will be gradually reduced over periods ending in 2010 to 2014. (Source: WTO-business-in-asia.com). The agreement gives Viet Nam the increased advantages of financial assistance, knowledge transfer, updated information, partnership and investment from developed countries such as United States and Canada. For example, a five-year project of the Vietnam-Canada Information Technology (VCIT) was struck with a 10 million dollar budget for the purpose of implementing the National Program on Information Technology (NPIT).

Fast Economy versus Slow Economy

Viet Nam has been facing the common problems of IT along with other Lesser Developed Countries such as Columbia as Paraguay. IT has is enormous importance in fostering economic connections to the rest of the world. Viet Nam is a “slow” country wherein the IT is the key to the distinction that divides it from the “fast” Highly Developed Countries (HDCs) in the IT world.

As defined by Professor Seymour Goodman, one of the fundamental features of a “fast” country is the first-rated telecommunications system that connects it to world markets.

The flow and pace of information translate capital flows in investments and bring unprecedented opportunities to new ideas. Hence, in the HDC, the velocity of speed of data, information pulse generates the wealth and power.

The IT National Policy

Viet Nam’s original initiatives were chaired by minister Dang Huu from 1976 to 1984 in the National IT Program Steering Committee (NITSC) and pushed by then Deputy Chairman Phan Dinh Dieu. It was in August 1993 that a document was signed by the Vietnamese Prime Minister Vo Van Kiet.

There are two fundamental goals in the above document:

“The first is the application of the advanced achievements of IT to improve the activities in all socio-economic sectors of our country. The second is to develop IT as an independent segment of the economy –an IT industry”.

Hence, the National IT plan has two facets: computerizing the public sector AND formulating a set of policies and incentives to promote and facilitate IT in the private sector. However, can the government be judiciously utilized to build an indigenous IT industry? Will foreign investments find sufficient ROI (Return on Investment) and incentives for funding public sector computerization?

The IT National Policy once again was recently ratified by National Assembly in 2006 creating the first legal framework for the sector. Its implementation reflects underlying problems of inadequate funding and organization in many fundamental aspects such as IT standards, telecommunications, hardware and software, human resources training and education, and intellectual property rights protection. These are the key challenges and cast enormous cloud for Viet Nam in Information Technology.

The IT Standards

Standards are a main concern for IT in Viet Nam and must be entirely adopted and judiciously adapted to local conditions. In 1993 the Viet Nam General Department for Standardization made an intensified effort to publish the first Vietnamese national IT Standards and Microsoft Windows 95 produced the Vietnamese-enabled version based on code page 1258 of national IT standards TCVN/JTC1/5712:1005.

The standards area with coded character sets is a strong domestic initiative because of the legacy of incompatible coded character sets for the national language and script.

The Vietnamese character set called Quoc Ngu does not fit all into 8-bit coded character set, therefore, many such sets were created for computer needs such as Unicode, VPS, VNI…etc.

The IT standardization effort in Viet Nam still is a government initiative and remains under the control of government effort. It should involve broader by private sectors including vendors and users whose participations such as IEEE with Standard Process Automation Systems (SPAsystem) may engender better standards-making process and lend to effective assistance to Viet Nam.

Moreover, the IT standardization efforts should encompass the conformance validation with respect to consumer protection and government procurement.

The Telecommunications

Viet Nam has the fastest broadband growth in Q4 2006 with 35% grown, despite this number many, mostly rural, communities continue to lag far behind and fixed phones are not always available. At present, Viet Nam has only one telephone per 350 people, with nearly 80% residing in rural areas. In its current state Viet Nam has 25.5 million telephones, over 4 million Internet subscribers and in 2006. In 2006, it had a record of 10 million new telephone subscribers for an increase of 188% (Vietnam Net Bridge on 29/12/2006).

Viet Nam Military Telecom also provides VoIP, mobile and Internet services to Cambodia. The Internet usage is widely popular with more than 15 millions users in May 2007 (about 18.5% population) managed by The Vietnam Internet Network Information Center (VNNIC) which has substantially increased from 10,000 in 1998. During this time, the Vietnamese government has been actively in the development of cyber laws, being very cautious about allowing free access to online information, considering it a potential source of harm to political integrity. The censorship of communication and broadcasting were key barriers to delay the entrance of Viet Nam into the World Wide Web until 1996.

In November 2006, the Multimedia Corporation (VTC) also provided the digital television services via mobiles in Viet Nam. Viet Nam has six licensed mobile network operators, three operate under GSM and three are under CDMA via mobile markets such as Vinaphone, MobiFone, Viettel, S-fone etc. Vietnamese telecommunications businesses started to enter into international markets and Viet Nam Post and Telecommunications (VNPT) has promoted the cable network in Laos and Cambodia.

With foreign investment, firms Intel, USAID, Vietnam Data Communication Company (VDC), a member of Viet Nam Post and Telecom Group (VNPT) deployed the WiMAX base station blankets in Lao Cai and its surroundings with direct Internet and Voice over IP (VoIP) via a fiber-optics backhaul. Viet Nam is the first rank of the top ten countries in broadband growth in the Q4 2006.

According to WTO agreement in telecoms, the foreign capital contribution to non facilities-bases such as telephone services, packet-switched data transmission services, facsimile etc. shall not exceed 51% of legal capital. For facilities-based services, joint ventures with telecommunications service suppliers a duly license will be allowed but legal contribution will not exceed 49%.

Viet Nam has eight underwater cable systems; six of which are under foreign ownership and two owned by Viet Nam. Unfortunately, one of them was broken by cable theft incident last March by fishermen for copper. The stolen section was 11-km section of 560 Mb/s cable from Viet Nam to Thailand. The loss of the cable system has made the country dependent on other countries. Viet Nam now depends on a single 10Gb/s cable that links Viet Nam to China, Hong Kong and Singapore (The Register.co.uk: Biting the hand that feeds IT by Austin Modine on June ,2007) that causes an enormous political and socio-economic concerns for Viet Nam.

If the Vietnamese Government continues hope to play central role in telecommunications but it has not been able to consistently present an attractive market to foreign investors.

In sum, the limitation of ownership and the dilemmas of dependency of fiber optics cables are enormous obstacles for the building of infrastructure of Viet Nam telecommunications.

The Hardware

Although the internet usage is widely popular, PC-ownership for individuals and telephone, facsimile are still considered luxury commodities. The networks, communications links, high-speed connections are still in the embryonic stage and insufficient. Viet Nam cannot immediately aspire to a high-speed digital network unless more modern and extensive telephone system is established and connecting 64 provincial capitals.

Computer usage also requires more PCs, high quality modems and graphic-oriented end-user software customized for Vietnamese users. Most consumer electronics and computing equipment was imported although in 1998, Gen Pacific was founded as a joint venture between the government’s Ministry of Heavy Industry and unnamed French partner for an assembly plant. This company was dissolved in 1991 and became computer giant Bull which eventually upgraded the assembly plant to make 386 processor and 486 processor based PCs. Intel Corporation also established the chip manufacture in Ho Chi Minh City, but its Vice Chairman Brian Krzanich had to sign with Viet Nam SHTP agency the business ethical conduct agreement on 10 October 2006 to prohibit any form of briberies in any Intel business activities.

The Software

In the software development, Viet Nam virtually has no software development applications for socio-economics except the bureaucracy-serving applications.

Each ministry has a staff with ideas for applications they would like to implement rather than building something that is nationally binding and widely accessible. This is an obstacle to allow other users decide how to best utilize the infrastructure.

Although at present, 2500 enterprises have business licenses on the software with 8000 employees in Vietnam and 20 enterprises assembling computers and trademarks according to the claim of Nguyen Thanh Binh, head of Development of IT and database construction.

In the software development, the lack of a universally accepted standard Vietnamese-language character set and accompanying operating system is a persistent barrier to the software development. Insufficient investment in software for local needs in IT and technical specialists such as business analysts, developers, and database architects, etc. also contribute to the weakness of software development.

Viet Nam should promote common share platforms that are systematically localized for the Vietnamese language.

Viet Nam faces various vicious cycles as other least developed countries where the cost of computer and standard software, operation systems are well beyond the means of income of individuals and organizations. As a consequence, this reality leads to the pervasiveness of a copyright-infringing culture. Besides being expensive, the software also tends to grow more demanding in processing power and hard disk capacity that Viet Nam cannot afford to constantly upgrade. Its software would become obsolete and little alternative to the current status quo.

The Technical Training

IT education and training need to be balanced with the rest of the infrastructure.

Historically, Vietnamese professors have been trained in European universities in esoteric fields such as mathematics. The same resources might be better explored to obtain practical master level education for a larger number of people. And those people in turn can contribute and build the emerging infrastructure and applications and train others.

Viet Nam estimates to have 20,000 IT professionals by year 2010, half of whom would be programmers and a quarter system analysts. Recently, the market pressures result in the creation of private schools and universities and provide technical opportunities for more students than state universities such as Lotus College and Van Lang University. This is a small private two-year college and sponsored by a consortium of Vietnamese and foreign companies.

APTECH and Softech are main technical training institutions which provide about 5,000 technicians in programming, network management, and databases in Vietnamese and one English program for ePIT.

In sum, the deficiency of IT curriculums in schools, lack of PC usage and technical training for state employees, students in universities, high schools, vocational schools and teachers remain the main problems for IT advancement.

Intellectual Property Protection

The cost of computers and standard software such as office suites are well beyond the means of most individuals and organizations and prohibitively expensive to average citizens. As a consequence, Viet Nam either forfeits benefiting from technological advances or makes a choice to infringe the copyright laws.

Hence, Viet Nam faces the same problem of copyright infringement as other Less Developed Countries and leads to the pervasiveness of a copyright-infringing culture.

Unless the problem is strongly supported by judiciary systems, this infringement limits the foreign investments and trading. It also violates the Bilateral Trade Agreement (BTA) of United States and Trade-Related Aspects of Intellectual Property Rights (TRIPS) of World Trade Organization.

Recommendations

As a result of becoming a WTO member, Viet Nam has gained greater access to financing and advanced technology. Therefore, Viet Nam should mobilize the funding from state, international organizations and private investment institutions to accelerate the Information Technology in:

- Formulating the IT national standardization for language character sets, protocols and technical standards

- Developing IT infrastructure for networking, fixed telephone systems and satellite to avoid the dependencies of neighboring countries

- Creating core software applications and computerized projects that respond for domestic needs in state and local sectors

- Developing utility software and applications to be used in teaching and learning, and agriculture purposes.

- Promoting the nation-wide use of PC and applications to ministries, state sectors and localities.

- Providing human resource training in IT for teachers and professors, students at universities, high schools and vocational schools, state employees.

Forming a competent base of experts for infrastructure support

- Providing more opportunities, better wages and work environment for talented individuals and entrepreneurs

- Sending teachers, instructors and distinct students to overseas training

- Encouraging overseas Vietnamese, foreign experts and international companies to invest in business development and technology training

- Collaborating with foreign partners in research and development

- Formulating policies to ease the information access to industrialized countries

- Developing business models for support services for communities

- Strictly enforcing intellectual property rights and advocate social awareness of software copyright protection.

- Increasing the government procurements and market intelligence

Conclusion

Viet Nam must change the key policies in regards to:

- Trade liberalization should be implemented so Viet Nam‘s companies can be made stronger by exposing its industry to domestic and international competitions in order obtain the access to new markets for better technological trade.

- Law and regulations should be more open and transparent.

- Bureaucracy should be eliminated for governmental approvals and permits so that processes can be streamlined for faster end results.

- Privatization should be allowed so that more jobs can be generated and lower the

cost of goods and services.

- Narrowing the disparities between and cities and rural areas.

Viet Nam will become an Asian Tiger in Information Technology if the government seriously addresses those above issues in concert with economics reforms.

The Vietnamese people have a traditional commitment to higher education, made evident by remarkable achievements of Vietnamese students in international academic competitions and a strong interest in personal computing.

Moreover, Viet Nam has enormous potentials for growth with low cost labor along other advantages such as the admission to the Association of South East Asian Nations (ASEAN), the normalization of US-Viet Nam relations in July 95 and the diasporas of 2 millions Vietnamese in a massive exodus by the end of the Viet Nam war who may repatriate to Viet Nam to establish IT enterprises and provide knowledge and expertise.

Le Ngoc Diep, Oracle IT.

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