Vietnam telecom no longer calls the shots
HANOI - State-owned giant Vietnam Posts and Telecommunications
Corp (VNPT) has admitted that it has a battle on its hands, as powerful
US firms start sizing up the Vietnamese market.
VNPT executive Bui Quoc Viet said that last year's ratification of the
Vietnam-US bilateral trade agreement (BTA) is one of the greatest
challenges facing the domestic telecoms industry, but also a potentially
lucrative opportunity.
"The BTA will allow us to work closely with US conglomerates to develop
IT services, especially value-added services; and American research
centers will help us get access to the latest technology," Viet said. "But it's
also going to be difficult to compete with the big American players, both
here and in the United States."
He said that VNPT and other domestic IT firms will be able get their
hands on technology, management techniques, capital, marketing skills and
other know-how. On this front, the BTA restricts US firms from building
up their own network and infrastructure, so they will perhaps be more
likely to use Vietnamese partners and share their knowledge. But IT
equipment and technology imported from the United States, or from US
subsidiaries in Asia, will fire up tough competition in Vietnam.
Viet said that the requirement that all companies compete for tenders or
supply contracts on an equal footing is also a major threat to companies
like VNPT. "What's more, the American firms can piggyback on the
existing infrastructure and network, keeping their capital costs low. They
can concentrate on investing in the big cities, where profits are easier to
come by," he said. "VNPT, meanwhile, is responsible for developing
infrastructure nationwide, including extending costly services to low-profit
rural, mountainous and isolated areas."
The company is busily devising strategies to bolster telecoms
infrastructure, readying it for the demanding US companies. VNPT is also
taking steps to remould its bulky, bureaucratic structure and become more
sleek and efficient. But hanging on to its best staff may prove challenging,
as American companies have the resources to pay higher salaries. Despite
this threat, the company will invest heavily in skills training and
management reform.
Meanwhile, the usual corporate imperatives apply: Lifting service quality
and reducing prices are at the top of VNPT's strategic agenda. In the
United States, Viet said, VNPT would struggle to meet technical
standards, comply with import-export rules and cover the high costs of
marketing. "To succeed in the United States, we will have to study and
master its IT laws and regulations, consumer tastes, quality standards, and
marketing techniques," he said. As Viet sees it, the key to this education
process will be to find useful US partners.
The BTA appears to be a minefield for VNPT, but riches lie on the
horizon. Vietnamese IT companies will get easy access to the American
market, and Vietnam-US joint ventures will be allowed locally in many
areas within two-three years. US companies will still be restricted to
providing just 50 percent of a joint venture's capital. Joint ventures in basic
IT services will be allowed in four years, with American capital
contributions limited to a maximum 49 percent. In the area of fixed
telephone services, Vietnam-US joint ventures will be allowed after six
years, again with a 49 percent ceiling for American capital. The good
news is that within this framework, it seems there are opportunities for
VNPT and US firms to be collaborators as well as competitors. Time will
tell, but the clock is already ticking.
Asia Times - January 15, 2002.
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