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Taken to heart

Released at: 10:26, 13/07/2015 Vietnam-US relations

Taken to heart

Mr. Tan Jee Toon, Country General Director of IBM Vietnam, spoke with VET about how IT development has fared over its nearly 20 years in the country.

by Doanh Doanh

■ In 1996 IBM Vietnam was established as one of the first 100 per cent foreign-invested IT companies in Vietnam. How have things changed in terms of the business environment since that time?

As with any other business, aligning with the market’s socio-economic environment is the key to sustainable development. Since its return to Vietnam nearly 20 years ago, IBM has actively supported the fast-growing economy of Vietnam, establishing ourselves as a trusted and committed partner of local government departments and enterprises and helping them in their business transformation goals.

From our inception, with two offices in Hanoi and Ho Chi Minh City, to the mid-2000s, when computerization and infrastructure-building was the focus of the country, Vietnam was one of the first countries where IBM chose to bring its expertise and support to selected sectors, including government, telecommunications, and banking. Our solutions helped these sectors increase their competitiveness and comply with international industry standards.

Notably, Vietnam’s banking and finance sector - 60 per cent of which are IBM’s partners - was pioneering international integration with strong core banking infrastructure and IT services, which built a strategic foundation for growth and transformation for the country.

Vietnam’s telecommunications industry was also one of the first industries in the country to go beyond just basic connectivity to enabling individuals and organizations to interact in ways that are on par with international telecommunications industry standards. In 2009 GTEL Mobile was one of IBM’s first telecommunications clients in building high performance IT infrastructure, a mobile service network, and a range of business solutions to support its commercial launch in Vietnam.
Since 2007, when Vietnam joined the WTO, IBM Vietnam has grown rapidly with focused investments from the IBM Corporation. A number of new centers for specific industries have been set up to build local capability to support our clients.

In the late 2000s, when the economy experienced a period of stagnation, many foreign-invested companies were having a hard time pondering business consolidation or pulling out of the country. Just like our clients, IBM also faced critical and urgent decisions to seize upon the major shifts that were reordering our industry. I believe other businesses in Vietnam are also transforming themselves to stand the test of time.

■ Do you think Vietnam has potential for US investors like IBM?

Vietnam has been very successful in attracting foreign direct investment (FDI), with numerous multi-billion dollar FDI projects registered over the last decade. The good thing is that Vietnam officially encourages foreign investment as part of its development strategy, and the government has stated its commitment to improving the country’s business and investment climate. Multilateral and bilateral trade agreements, especially WTO membership, have opened up the market, helping the country to drive productivity and competitiveness. The possibly upcoming TPP can be seen as a phenomenal catalyst for economic development as well.

In the area of ICT, the government’s commitment to leverage the power of technology for the country’s modernization is clear in the IT master plan by 2020. Earlier this month the Prime Minister approved the “Master Plan for the Development of High-tech Zones until 2020 and Orientations Towards 2030”, which is expected to contribute to innovating the growth model and accelerating the country’s industrialization and modernization process. In the medium and long term, I expect FDI will return to the country in hi-tech areas.

■ What are the challenges for US investors like IBM in Vietnam at this time?

Although Vietnam boasts a young and eager-to-learn population, in the area of IT the country needs to build a workforce of “T-shaped professionals”, who are ready to build, run and optimize the types of IT infrastructure and solutions that became the foundations of 20th century organizations. These T-shape people, though they must certainly have deep skills in a specialty (the vertical axis of the T), must also have sufficient understanding of a broad range of related disciplines (the horizontal axis), to allow both breadth and depth in various cultures and disciplines.
As new technologies such as Cloud, Big Data & Analytics, and IT managed services, etc. emerge, Vietnam’s IT industry has the potential to continue growing if the right policy framework is created. However, relevant legislation still needs further amendments to support the development of IT as well as the continued investments of IT companies in Vietnam.

Another challenge for companies like IBM is the IT maturity of the market. We can see some industries are investing in technology to drive growth and harnessing analytics-led solutions to gain better customer insights, manage risk and financial metrics more effectively, and strive for unique market differentiation. Leading the trend is the telecommunications industry, and banks are also progressive in terms of IT adoption. For the government, IT adoption at the central level is improving from just computerization, but some cities are aggressively driving IT adoption plans to reach their development vision. Apart from these groups, the road is still long and winding for industries and sectors to get ready for higher-value IT solutions, such as social business or mobility.

■ Do you have any plans to expand your business in Vietnam?

We believe open ecosystems and partnerships are key to our future innovation. This is a significant new element of our growth strategy. IBM will add to and scale up partnerships with companies like Apple, Twitter, SAP, and Tencent, etc. We will continue to invest in skills development, supporting our clients and business partners to receive greater value from cloud, analytics, mobile, social and security.  
■ How do you foresee FDI from the US in Vietnam in the time to come?

The warming up of the Vietnam-US relationship through the large number of recent activities, especially the visit to the US of Vietnam’s Party General Secretary and a series of activities around the 20th anniversary of the Vietnam-US relationship, is expected to lead to an uptrend in investment flows from the US into Vietnam. In March this year the US ASEAN Business Council, which consists of representatives from key multinational firms, including IBM, held positive dialogues with government officials around addressing key business challenges and developing tactical advocacy efforts that would improve the business climate for US companies investing in Vietnam. And I believe the upcoming TPP and the recent FTA will be a great catalyst for improving the economic and investment landscape of Vietnam.

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