Why is the Vietnam Market Potential?
Vietnam is poised to become the next big player in the telecommunications industry, offering tremendous potential for companies looking to tap into the rapidly growing Asian market.
With a population of over 100 million and a rapidly developing economy, Vietnam is a hotbed of innovation and progress, making it the perfect place to launch or expand your telecoms business.
The government’s investments in the sector have led to the development of cutting-edge infrastructure and advanced technologies, making Vietnam a hub of progress and growth. Whether you’re a seasoned player in the industry or a newcomer eager to break into a dynamic market, Vietnam has something to offer.
Digital Transformation of Vietnam
One of the main forces behind Vietnam’s digital revolution is the telecoms sector. In 2022, the ICT sector, which includes the telecommunications industry, might account for up to 8.02 percent of Vietnam’s GDP. As the country moves to implement the fourth industrial revolution, the telecommunications industry will play a vital role in the process.
The Vietnam telecommunications market had a value of US$6.3 billion in 2021 and was expected to grow at a CAGR of about 1% between 2021 and 2027. The digital transformation of corporations and the pandemic have fueled a surge in demand for internet and telecommunication services, and this industry is expected to expand much more.
In a highly competitive climate with a promising economic outlook, the Vietnamese telecoms sector is developing and offers tremendous prospects for both domestic and foreign investors. Between 2022 and 2027, average GDP growth of 7.2% is forecasted. Future growth is expected to remain strong despite an aging population in the long run due to already high mobile phone penetration and rising fixed broadband take-up in households.
According to the press release, international businesses will consider several strategies for entering the market, such as investing in local partners or concentrating on other service sectors with lots of opportunity for growth and competition, like data centers, the cloud, and other platform services.
For example, DCConnect Global Limited, a leading autonomous networking infrastructure with Carrier Neutral and Cloud Neutral, enables enterprises to provision all sorts of infrastructure in just a minute. We have more than 1000+ Points of Presence (POPs) and 200+ cloud platforms, allowing users to connect their network facilities in a Data Centre to the DCConnect global Ecosystem. Our DC Gateway enables the ecosystem partners to reach out to companies for their network resources. It also connects all other data centres and cloud players from different countries.
Opportunities and entry barriers for foreign investors
Due to high entry barriers, the telecoms industry in Vietnam is currently dominated by domestic players like FPT, NetNam, Viettel, and CMC, though CMC has 45 percent of shares owned by a Malaysian firm.
The Vietnamese government only allows foreign investment in the telecoms industry in the form of:
Joint ventures, partnerships, or buying shares for basic telecommunications services;
Purchase of shares, partnerships, joint ventures with telecommunications enterprises in Vietnam that have been licensed to establish a network infrastructure for services with network infrastructure.
Any organization or individual that already owns more than 20 percent of the charter capital of a telecoms enterprise is not entitled to own more than 20 percent of the charter capital of another enterprise in the same segment.
However, foreign investors are allowed to own up to 100 percent of the undersea fiber optic cable transmission capacity ashore at the fiber optic cable station in Vietnam and can sell that capacity to any licensed telecommunications network operator in Vietnam.
What Impressive Growth Continues to Attract Foreign Investment in Vietnam’s Data Center Sector?
As the world continues to rely heavily on data-driven technology, the demand for reliable and efficient data center services has never been higher. The data center market has experienced tremendous growth, with Vietnam emerging as a leading destination for investment in this field. Vietnam has emerged as a leading player in this growing industry, experiencing impressive growth in the face of the COVID-19 pandemic and attracting foreign investment as a result.
According to the “Cloud and Data Center Growth in Emerging Market” report, Vietnam’s data center sector is ranked among the top ten emerging landscapes for global data centers, offering both a large market size and exceptional service delivery capabilities. In 2020, the market size was valued at USD 858 million and is expected to experience a compound annual growth rate (CAGR) of over 14.64% until 2026 .
The country’s continued investment in its data center infrastructure, along with the persistently increasing demand for data center services, positions Vietnam as a highly attractive destination for foreign investors in the years to come.
