Vietnam Information Technology Report
Published 03 October 2014
BMI View: We maintain a positive outlook for the Vietnamese IT market in the Q4 update, but we highlight increased downside risk from a tightening of domestic credit conditions in H214 as a result of a build up of bad debt. Credit markets could cause short term disruption but our forecast for robust medium term growth in Vietnamese IT spending remains in place, with a forecast for a compound annual growth rate ( CAGR ) of 12.6 % between 2014 and 2018 . We expect growth will be driven by rising incomes, enterprise modernisation and the policy environment put in place by the government. We also highlight larger opportunities in the retail market where penetration of devices and services remains below the level in neighbouring markets , which vendors will be able to tap as incomes rise. Meanwhile, Vietnam 's development as an outsourcing destination is a significant medium term factor , with the services segment expected to expand rapidly. There is also increasing momentum towards Vietnam becoming a global centre for electronics production as wages rise in China and manufacturers look to protect margins by moving to Vietnam , where wages are as little as a third of those in China.
Headline Expenditure Projections
- Computer Hardware Sales: VND 38.9 trn in 2014 to VND 58.3 trn in 2018, CAGR of +11.3% in local currency terms. Rising incomes and declining device prices, along with PC subsidy schemes, will support demand growth across all three main device categories over the medium term.
- Software Sales: VND 10.1 trn in 2014 to VND 17.9 trn in 2018, CAGR of +16.1% in local currency terms. There are considerable opportunities in business software and security solutions for vendors willing to accept narrow margins in a price-sensitive market.
- IT Services Sales: VND 14.2 trn in 2013 to VND 25.1 trn in 2018, CAGR of +15.1% in local currency terms. Domestic demand for services remains weak.
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