Investment flows in and AI, fintech begin to flourish
Vietnam’s burgeoning IT sector is showing no signs of slowing down and continues to generate strong revenue for local and foreign players alike.
Hanoi and Ho Chi Minh City, in particular, have developed an extraordinary IT ecosystem and seeing a mushroom growth of startups. Meanwhile, there has been considerable growth in the influx of foreign investment as well.
The southern province of Binh Duong has just recently licensed the Internet Service Supply Project of Japan’s NTT Group with a registered capital of US$171 million.
In many ways, this demonstrates how much promise IT truly holds in the country.
According to the e-Conomy Southeast Asia report of 2019, the growth rate of Vietnam’s internet economy is 40 per cent, making it a leader in this sector alongside Indonesia in Southeast Asia.
It’s no secret that the nation’s IT industry is ripe with opportunities. However, one question that many investors and entrepreneurs alike would be asking is which of the subsectors has the highest potential of turning a big profit.
So using the latest data, I have shortlisted four most lucrative niches of IT in Vietnam.
Statista’s Digital Market Outlook (DMO) study states that nearly 50 million internet users in Vietnam bought consumer goods online in 2018. Although this data is from a year ago, recent stats are no different as the trend has shifted further towards eCommerce.
Surprisingly, travel purchases dominate this sector with e-travel being worth US$3.5 billion. Among consumer goods; electronics and fashion items were mostly purchased followed by food and furniture.
Customers in the country prefer popular Southeast Asian platforms like Shopee and Lazada for most of their internet shopping while domestic firms like Sendo and Tiki also maintain a significant share in the market.
Around 70 per cent of Vietnam’s ecommerce sales are conducted in Hanoi and Ho Chi Minh City. However, rural internet connectively has greatly improved in recent years and this has created a great opportunity for eCommerce platforms to target the country’s biggest population.
With such vast potential, an industry complementary to eCommerce is already emerging in Vietnam.
Affiliate marketers are acting as a bridge between consumers and online retailers. And companies themselves are teaming up with different online influencers for coupon marketing to drive more customers towards their brands.
At the same time, eCommerce platforms targeting different niches are popping up across the country.
While Vietnam is far from being the hub of AI in Southeast Asia, the potential of this technology is strong in the country. Applications of AI like the Internet of Things (IoT) and Machine Learning in areas such as healthcare, manufacturing, e-commerce, and agriculture can reap extraordinary benefits for all stakeholders involved.
Even with a lack of infrastructure, large databases and resources –companies are implementing AI projects.
Vietnamese telecommunications company Viettel uses AI in thwarting attacks by cybercriminals and assist business with their IT security. Examples such as this exist across the IT industry.
Likewise, International tech companies that create AI technologies are also exploring Vietnam but due to lack of highly trained resources, the progress on this end has been rather slow.
However, 2020 will be a big year for automation and like every other facet of IT –it’s expected that ventures related to Artificial Intelligence will gain important ground in the Southeast Asian country.
Fintech remains a pillar of Vietnam’s entire digital economics landscape. And with the current efforts to accelerate its growth, the industry is expected to reach the US$7.8 billion in revenue in the coming year.
The country’s emerging middle class coupled with affordable internet access has created an environment where fintech is thriving. Around 120 companies currently offer services like digital payments, insurance, and risk management.
Vietnam’s fintech has managed to create headlines across the world with startups like Momo being featured among the top fintech firms and Money Lover ranking first in financial management apps.
Going forward, blockchain and cryptocurrency will play a key role in this sector. Companies like Kyber Network and TomoChain are already leading the way in making the crypto transaction easier.
As the world, in general, comes around to cryptos, blockchain will become an integral part of Vietnam’s fintech ecosystem.
A SaaS company KiotViet recently raised the US $6 million in Series A funding. In 2018, a startup named Base was able to gain the US$1.3 million in pre-Series A funding round for its regional expansion.
It’s quite clear that investors see potential in this sub-sector and they’ve every reason to think this way. SaaS plays a significant role in the Vietnamese cloud service market which is expected to reach US$291 million.
Cloud is a cost-efficient option for small businesses that do not possess the resources to install advanced hardware and software. However, large enterprises have also taken a liking to this technology.
With the recent commercial boom in the country, there’s a growing need for data storage in the country and this has created a significant SaaS-based B2B market.
The expanding economy of Vietnam will drive further growth in the SaaS sector, creating space for more startups and small businesses to provide third-party software solutions.