Vietnam reaches for a homegrown tech revolution
Communist planners and private players have prioritized development of indigenous social media and computing platforms to supplant Facebook and Google
Nguyen Manh Hung has been acting Minister of Information and Communications for only two months but he has already reverted to the script left by his predecessors: Vietnam needs to develop its own homegrown social media platforms, he said this month.
This has been a popular refrain by successive information ministers since the beginning of the decade, either because of a desire to more effectively control political content expressed on social media or as a way of developing Vietnam’s emergent tech industry.
Yet the perennial desire to trump the likes of Facebook and Google – unlike in China – have so far remained elusive.
Most of Vietnam’s 57 million active social media users spend their time predominantly on Facebook or Youtube. We Are Social, a social media analytical agency, found in a recent report that Vietnamese users tend to spend almost the same amount of time on either of these platforms.
The study also found that Vietnam has the seventh highest number of Facebook users worldwide, at 58 million users, a figure that has increased 16% from last year.
Vietnam has more than 200 homegrown social media platforms, but few are popular and most are either simply imitations of forums or resemble technology developed a decade ago in America, analysts say. There are some exceptions, however.
Zalo, a messaging app, reportedly has 70 million subscribers and 35 million active users in Vietnam, far more than competitors like China’s WeChat or WhatsApp, which is owned by Facebook. But Facebook Messenger beats Zalo as the most popular messaging app in Vietnam in terms of monthly active users, according to We Are Social data.
Still Information Minister Hung’s latest appeal might win more success than past evocations.
Earlier this month, he said that he wants homegrown social media platforms to gain a 60-70% market share by 2022. That figure is likely unachievable, say analysts, but it doesn’t mean that indigenous platforms cannot compete increasingly more effectively with foreign competitors.
For starters, social media, along with associated e-commerce sites, will play an important role in building Vietnam’s technological economy, a goal of government leaders for several years.
In 2012, when the government issued its national strategy for science and technology, it projected high-tech products and applications to make up 45% of gross domestic product (GDP) by 2020, an estimate that could be achievable with a longer end-date.
Vietnam is desperate to avoid a “middle-income trap” and has tapped its growing tech industry as a means for climbing up the skills ladder. Last year, software exports were worth US$2.5 billion, according to data from the Ministry of Information and Technology.
That’s a reflection of rising investment in Vietnam’s tech industry. The Topica Founder Institute, a regional startup accelerator firm, reports that US$291 million was invested in Vietnamese startups last year, up 42% from 2016.
While the majority of those funds came from foreign investors, several new Vietnamese venture capital firms, such as ESP Capital and Sea Group, are focused on funding tech startups.
VNG, the company which owns the Zalo platform, reported revenues of US$186 million last year, up almost 40% from 2016. It is financially backed by Chinese tech giant Tencent, the Chinese giant behind WeChat.
China’s online retail giant JD.com has also invested in Tiki, a Vietnamese e-commerce platform. VNG also controls a 38% stake in Tiki, according to local media reports.
Vietnam’s tech industry also has major private sector support. Vingroup, Vietnam’s biggest privately held company, announced last month that it will expand into the fields of artificial intelligence, software development and big data.
It also has plans to create a Silicon Valley-style community of entrepreneurs and developers in the capital, the FT reported. Part of this plan is the formation of VinTech, its new tech unit, that will create two research institutes to develop big data and high-tech applications.
“Investments in the two sectors will not only help Vingroup reach new heights, but also create a new tech-industry environment to boost Vietnam in the world’s technology ceremony,” Vingroup’s deputy general director, Nguyen Viet Quang, was quoted as saying.
Vietnamese social media firms may benefit from greater state intervention, especially if Hung remains as acting minister of information and communications.
He brings the expertise he gained while serving as CEO of Viettel, a military-run telecom giant that dominates Vietnam’s telecoms sector and now controls a substantial stake in the telecoms industries of other developing nations, including in Myanmar.
The relationship between Vietnam’s tech firms and its Communist Party is opaque. Some human rights activists claim that the government has ties with VNG Group, but this is unconfirmed and there are no obvious overlaps. Moreover, there is scant evidence that Hanoi wields the dominant control over its tech sector as Beijing does in China.
Nonetheless, Vietnam’s homegrown tech firms will still likely be more pliant to the Party’s wishes than foreign-owned platforms. Whenever Hanoi announces its desire for more Vietnamese-made social media platforms, it is usually interpreted as an attempt by the ruling Communist Party to control the internet.
When the previous Minister of Information and Communications, Truong Minh Tuan, raised the subject of homegrown social media last year, he framed the debate around what he called the “good and bad people on social media.”
Hung, the current minister, has also noted the political nature of the debate. “Without our own digital ecosystems or social networks, we simply cannot negotiate with Facebook or Google. They will continue to disobey our laws, while we are unable to cut business ties,” he said in September.
Social media has immeasurably altered Vietnam’s political landscape, allowing for the formation of a “public sphere” that has never really developed offline since the communists took power and unified the country’s northern and southern regions in 1975.
Hanoi doesn’t possess the censorship technology of China’s so-called “Great Firewall”, nor can its regulators effectively block virtual private networks (VPNs), which means domestically banned websites are still easily accessible.
In 2015, then-prime minister Nguyen Tan Dung noted that the government “won’t be able to ban” social media, so he advised ministers to adopt the platforms for their own sake.
But since the 2016 Party Congress, at which Party Secretary General Nguyen Phu Trong emerged supreme, the current administration has arrested and jailed far more people for posting critical messages on social media than under Dung.
It has also outsourced censorship responsibilities to internet service providers (ISPs) and, since last year, to social media firms themselves.
This is increasingly true of predominant foreign social media firms, including Facebook and Google. Between January and July this year, Facebook removed more than 1,000 posts that were considered in violation of local laws and deactivated 137 accounts that “slandered” the Communist Party, claimed former information and communications minister Tuan.
Yet politics doesn’t explain it all. Hung made the economic nature of the debate explicit when speaking earlier this month. Social networks in Vietnam, he said, create US$370 million in advertising revenue each year. Of that figure, he added, US$135 million went to Google and US$235 million to Facebook.
(Asia Times could not independently corroborate the figures.)
The Vietnamese government also complains that foreign tech firms, namely Facebook and Google, pay unacceptably low amounts of tax. Between 2016 and 2017, the domestic partners of these two companies paid less than US$5.3 million combined in taxes, according to a Ministry of Finance report from last year.
As part of a new cybersecurity law, which will come into effect in January, foreign-owned tech firms will be required to open representative offices and branches in Vietnam, which will mean they will also be bound to pay higher taxes.
Controversially, they will also be required to build servers in Vietnam, on which local user data will be stored, according to the new law. If the Ministry of Public Security, in charge of cybercrime, decides that it wants to access user data from their servers, foreign tech giants will be obligated by law to relinquish it.
It will also mean a more level playing field for competing Vietnamese social media companies. If homegrown firms can dominate the market, the government would be able to increase its own revenue through higher taxes while also gaining tighter control of the country’s online sphere.