There have been many ‘new Silicon Valley’ initiatives worldwide over the years, which have had varying degrees of success. Southeast Asia now has its own in Ho Chi Minh City, Vietnam. Real Times investigates.
Vietnam is a 21st century technology success story. Ten years ago the country was home to just 4 million internet users, today there are over 40 million. Smartphone penetration has also exploded, with more than 30 million in use today. It is the third fastest-growing smartphone market in the world with social media as the number one application. Vietnam is a country whose technological time has clearly come.
Tech growth attracting talent
In Vietnam’s tropical south, Ho Chi Minh City recently established its own version of Silicon Valley, Saigon Silicon City, located around 15 minutes’ drive from downtown. The city has been set up with the goal of attracting tech startups and entrepreneurs and aims to create a technology hub that will bring in around $1.5 billion worth of investment. The Vietnamese-American founder of tech company Klout has already relocated there and has brought his US venture capital company 500 Startups with him. And tech giants Samsung and Intel have offices in Ho Chi Minh City’s nearby hi-tech park, while Microsoft also recently backed a startup accelerator.
Fostering entrepreneurs, encouraging ideas
After years of tightly controlled markets, it appears that the landscape in Vietnam is ripe for tech entrepreneurs and startups to reap the benefits. The Vietnam government is committed to developing an advanced, sustainable ecosystem for startups, as evidenced by its launch of the Vietnam Silicon Valley (VSV) project in June 2013. The VSV initiative is designed to bring startups and entrepreneurs together with advisors, investors and other useful connections.
It seems to have had an impact with Vietnamese tech startups enjoying new successes in 2015. In the first quarter of the year a domestic rival to Google, Coc Coc, entered the market backed by $14 million in funding. Another great example is Lozi, a Vietnamese restaurant rating and food ordering app, which by the end of the year had raised seven-figure funding from Singapore’s Golden Gate Ventures and Japanese Internet media company DesignOne Japan Inc. This after getting started on seed funding of $10,000 from VSV.
The ideas and demand are there in Vietnam, so it is encouraging to see it being backed with more than just words. Vietnam’s deputy prime minister Vo Duc Dam is a big advocate of the country’s startup ecosystem and in 2015 held high-profile roundtable events with entrepreneurs to discuss new ideas.
Favorable economy in general
The general economic climate is also encouraging. The World Bank’s “Ease of Doing Business” index ranks Vietnam at 90th – not that high at first glance, but ahead of its neighbors and local rivals Indonesia and the Philippines. The newly-inked Trans-Pacific Partnership trade deal will also be a boon for Vietnam, with analysts predicting big investment into the country as a result. The Asia Development Bank forecasts that Vietnam will enjoy more than 6 percent growth in 2016, with other reports saying that the trade agreement will boost the country’s GDP by 11 percent over the next 10 years.
Online services booming
But back to technology. The mobile-first nature of Southeast Asia’s consumers makes Vietnam a perfect breeding ground for tech startups. They include mobile e-commerce and disruptive apps like Grabtaxi, a mobile cab hailing service similar to Uber. The Vietnamese government has estimated that its e-commerce market will generate $4 billion in 2016, a massive increase compared to the market’s value of $700 million in 2012.
Ultimately Vietnam is well-positioned to become home to Southeast Asia’s first real version of a Silicon Valley. The country is experiencing rapid technology growth, has a consumer base who are mobile-first focused and at government level, innovation and entrepreneurship are being encouraged. Watch this space.
Find out more about the Orange Business Services presence in high-growth markets, such as Vietnam.