Post-telecom clears the way for WTO

If Vietnam joins the WTO on schedule, the telecommunications industry will develop in a direction beneficial to both business and clients, said Post and Telematics Deputy Minister Mai Liem Truc.

However, experts believe there will be no boom in Internet services once the country realises its WTO itinerary.

Focus on investment and expansion

According to Mr Truc, foreign telecommunications groups that have invested in, or are planning to invest in Vietnam, are experienced partners.

Swedish firm Comvik, after ending its business cooperation contract (BBC) with the Vietnam Mobile Telecommunications Services Company (VMS), are still eager to stay in Vietnam. This shows that, in the eyes of foreign investors, the Vietnamese telecommunications market has potential.

According to Mr Truc, Vietnamese enterprises will have increased opportunity to access advanced technologies and test their strength in a wider and more level theatre once Vietnam joins the WTO.

“We will create good conditions in mechanism and policies for the operation of the Vietnamese IT and telecommunication market,” he said.

The Ministry of Post and Telematics has joined forces with related ministries and departments to continue perfecting the legal system to facilitate investment by domestic and foreign investors. However, they must continue to wait until Vietnam is an official WTO member.

Vietnamese enterprises are aware that WTO membership will open opportunities for them to test their mettle in the global market. As a result, many IT and telecommunication enterprises are urgently preparing, engaging in extensive investment and expansion.

The pioneer is the Vietnam Post and Telecommunications Corporation (VNPT), which has initiated a scheme to establish an economic group. VNPT is preparing for the equitisation of the two largest mobile phone networks in Vietnam, VinaPhone and MobiFone.

The Saigon Telecommunications Joint Stock Company (Saigon Postel) is on the same path, spending around $150mil expanding its coverage to 15 new areas. The firm also plans to raise investment capital to $300mil in the next few years.

The Vietnamese telecommunications market has potential and will be a destination for many foreign investors, said Kim Seong Bong, new Managing Director of the SLD Telecom Group, the Korean partner in the business cooperation contract of the CDMA S-Fone mobile phone network.

However, it is difficult for SLD Telecom to increase its investment in this network since its cooperative contract will not allow it, especially when Vietnam is about to open its market. SLD Telecom is lobbying the Ministry of Post and Telematics to allow the business to shift from the current contract into a joint venture.

Comvik has tried a similar shift to maintain its presence in Vietnam, pre-empting local closure when the contract with VMS ends this May.

Open to foreign investors

With five million mobile phone subscribers of a total population of 80mil, the Vietnamese telecommunications market should be lucrative for foreign investors.

With these figures in mind, Hong Kong’s Hutchison Telecommunications S.A.R.L is spending hundreds of millions of dollars in the second CDMA mobile phone network in Vietnam.

As part of the integration itinerary, a more diverse range of investment forms will be allowed in the telecommunications industry. “Therefore, the mobile phone market will grow strongly when we open the market,” said Mr Truc.

The aim of the telecommunications sector when the market opens is to attract foreign investors in all fields.

American investors are allowed to hold equal share in projects to develop Internet services in Vietnam.

However, there have been no such projects submitted to the Ministry of Post and Telematics, despite the Internet market being said to have potential.

An official from the Military Telecommunications Company (Viettel) said that this field is less attractive to foreign investors because the purchasing power and communications spending of Vietnamese people is still low, and the Internet market is still small.

According to the official, profit from Internet services is at rock bottom, while large-scale capital is needed in Internet development projects.

Companies that are licensed to offer Internet services are working slowly, some even in trial operation, said Vu Hoang Lien, Director of the Vietnam Data-communication Company (VDC). This explains why the Internet market is still unattractive to foreign partners.

“If Vietnam officially enters the WTO, the area will be also attractive to American investors. But we are not sure about what degree it is,” he said.

However, according to Mr Lien, the Internet market will not change much if foreign investors join because strong competition already exists in the market, which has open pricing and regulations.

An official of the Vietnam Power Telecom Corporation (VP Telecom) said that market opening doesn’t mean all doors will open at the same time.

He said it would be more gradual, with State management bodies still at the helm to resolve problems for enterprises.

Deputy Prime Minister Vu Khoan has guided the Ministry of Post and Telematics to cooperate with WTO negotiators over the country’s itinerary to access to the WTO.

The Deputy PM also requested the telecommunications sector learn from China’s experience in the development of technical standards and regulations, in order to remain in line with international laws while still protecting information security and local enterprises.

VietNamNet, April 29, 2005