More efforts needed to realise VN’s huge cloud computing potential: analysts

January 25, 2021 | 09:42 am GMT+7

According to Viettel IDC, the Vietnamese cloud computing market is worth around US$133 million and is expected to grow to $500 million by 2025.


 A survey by the IBM Institute for Business Value (IBV) has found that Vietnamese enterprises plan to increase their rate of expenditure on hybrid cloud services from the current 41 per cent  to 43 per cent by 2023.

Hybrid cloud refers to a mixed computing, storage and services environment made up of on-premises infrastructure, private cloud services, and a public cloud, such as Amazon Web Services and Microsoft Azure, with orchestration among the various platforms.  
IBV also says that 56 per cent of Vietnamese enterprises are using cloud management platforms.
These figures indicate Việt Nam’s fledgling cloud computing market is growing rapidly.
Indeed, according to the Ministry of Information and Communications, in recent years the market has been growing at 30 per cent on average, and in 2020 the growth rate reached 40 per cent due to the COVID-19 pandemic.
According to Globe Newswire growth in the market is led by a surge in segments such as infrastructure as a service (IaaS) and software as a service (SaaS) and the growing number of small and medium-sized enterprises. Moreover, cloud is cost-efficient as users are not required to install any hardware or software.
Enterprise mobility and the rising need for data storage are expected to drive further growth.
By service type, IaaS dominates the Vietnamese cloud service market as it involves various solutions such as servers, storage, networking, and virtualisation, which saves IT staff time since many users can work on a single piece of hardware anywhere and at any time.
However, SaaS is expected to grow fastest in future since it helps companies in the form of lower upfront costs as it is subscription-based and has no upfront licence fees resulting in lower initial costs, according to Globe Newswire.
Digital transformation
The key players in the Vietnamese cloud services market are FPT Corporation, Viettel-CHT Limited Company, CMC Corporation, IBM Vietnam Company, Microsoft Vietnam, Amazon Web Services Vietnam Company Limited, Mat Bao Corporation, NTC Cloud Computing Company Limited, SAP Asia (Vietnam) Co, HPT Vietnam Corporation, Google LLC, and, Inc.
Việt Nam has 27 date centres with 270,000 servers operated by 11 domestic companies who provide services at fairly affordable prices.
Analysts said before 2020 Vietnamese enterprises accounted for a modest 20 per cent of the cloud service market share.
But things had changed with the entry of many local cloud service providers partly thanks to the establishment of the Vietnam Cloud Computing and Data Centre Club in late 2019.
Besides, 2020 was nominated by the Government as the year for starting the national digital transformation programme.
As a result, digital transformation has been occurring at a rapid speed and having a dramatic impact on digital government, digital economy and digital society.
The Covid-19 pandemic also triggered demand for such digital platforms as distance learning, distance health checks, teleworking, video conferencing, e-paper, and cybersecurity, and so the need for cloud storage has also hugely increased.
According to Lê Hồng Minh, the general director of VNG, each Vietnamese now creates 1.7 gigabytes of data every single day.
Data has become a limitless resource, and plays a very important role in a country’s socio-economic development.
The question is how Vietnamese enterprises can process billions of gigabytes of raw data to create value for serving the goals of socio-economic development and life while still fostering the confidence in people that their personal data is being respected and protected.
Many industry insiders said though demand was huge it was very difficult for domestic cloud service providers to compete with foreign rivals who are strong in technology, infrastructure, experience, and resources.
Lê Hoài Nam, deputy director of Viettel IDC, told Đầu Tư newspaper that Vietnamese enterprises had the opportunity to exploit the market since they had so far mainly focused on cloud computing infrastructure services and had yet to tap software services on cloud computing platforms, which bring huge revenues.
Small and medium-sized businesses had adopted cloud computing services quickly especially due to the pandemic, and online services were booming.
This strong rise in demand required the Government to constantly update policies to encourage both cloud computing service providers and users.
Tống Mạnh Cường, the general director of VNPT IT, called on the Government to adopt strategies that abet businesses’ digital transformation, which would increase cloud computing demand.
The Government should also build its own cloud computing infrastructure to offer all its services online, he said.
The foundation of digital transformation is data and data connectivity, and so data management and sharing mechanisms and regulations are of great importance, according to Cường.
In other words, according to Vũ Minh Trí, CEO of VNG Cloud, they should not only ensure privacy but also enable relevant parties to share data, making it easier for them to serve their customers.
Analysts agreed with cloud industry experts, saying it would be necessary to create an appropriate legal framework that would foster investment in digital infrastructure and services, support start-ups and encourage innovation and technology to increase preparedness to usher in a digital technology era.
It would be necessary to encourage digitisation in every area like manufacturing, ICT, finance, banking, insurance, and housing, they said.
Mastering cloud computing platforms would be a crucial factor for many of the country’s important future projects and plans.
VN property market still a magnet for foreign investors
Despite the COVID-19 pandemic, the property sector attracted foreign investment worth $3.3 billion last year, an increase of 15 per cent over 2019.
In November alone more than $1 billion was committed in two huge projects - $774 million in the Starlake project by South Korea’s Daewoo E&C and $246 million in Central Palace by Singapore’s Capital Land - in Hà Nội.
Analysts said the market was entering a period of strong recovery, and the country was proving a magnet for foreign investors with its political stability, improved investment environment and strong digitisation of many industries.
Investors were keenest on its industrial and tourism property segments, and this was likely to continue, they said.
Dr Sử Ngọc Khương, director of Savills Việt Nam, said while 2020 was a year of challenges due to the pandemic the property market not only proved resilient but even achieved high growth in some segments like industrial property.
Economist Đinh Trọng Thịnh said the industrial property segment would continue to prosper if the Government has appropriate policies.
Analysts also talked up the tourism property segment’s prospects, especially that of the tourism complex model comprising resorts, shopping malls and sports and amusement facilities that has proven successful around the world.
Since 2018 this had been a trend with both local and foreign investors focusing on tourism complexes.
Việt Nam had a great opportunity to become a new regional and global tourism destination, so it would attract domestic and foreign investors to develop the high-end tourism real estate segment, they said.