Vietnam’s commitments to increase foreign equity caps in the telecommunications sectors under the EU-Vietnam Free Trade Agreement (EVFTA) will ease European investors to enter the country’s industry.
Under the EVFTA, which is expected to take effect next year, in the telecom sector, Vietnam will raise the foreign equity cap in non-facilities based virtual private network services from the current 70 percent to 75 percent.
In non-facilities based value-added services, the foreign equity cap will be removed for the first time, enabling European investors to acquire up to 100 per cent ownership without the obligation to form a joint venture.
In facilities based value-added services, the current 50 percent foreign equity cap will be increased to 65 percent. Besides, the foreign equity cap will be raised from 65percent to 75 percent in non-facilities-based internet access, and from 50 percent to 65 percent in facilities-based internet access.
Denis Brunetti, co-chairman of the European Chamber of Commerce in Vietnam, told the media that European businesses see the adjustments in the EVFTA as a continuous and positive journey, which will further contribute to increased investment potential across the telecommunications industry.
According to Brunetti, Vietnam’s move up the value chain, its embrace of Industry 4.0, and the ongoing liberalization of its telecommunications market will continue to attract investment from European telecommunications companies.
European investors have so far also shown their strong interest in Vietnam’s telecom market. Sweden-based Comvik Group, for example, has for the third time expressed interest in becoming MobiFone’s strategic partner, as the Vietnamese telecom company is in the process of privatization.
During his meeting with Deputy Prime Minister Vuong Dinh Hue in May, chairman of Comvik International Vietnam AB M. A. Zaman said that with its existing strength in technology and capital, Comvik is ready to take part in MobiFone’s privatization.
Comvik is working to shift to 6G technology, and Sweden is the world’s leading country in this digital technology, Zaman said, adding that his firm wishes to have opportunities to invest in this field in Vietnam.
Apart from Comvik, Norway-based Telenor Group has also expressed interest in purchasing MobiFone’s stakes while Asseco Central Europe, one of the biggest software developers in Central and Eastern Europe is also looking to establish a joint venture with a Vietnamese partner.
Opportunities in digital economy
Experts said that foreign investors have opportunities in Vietnam’s growing telecom sector as it has been considered a major sector of the country’s development in the digital economy.
According to Brunetti, the Vietnamese government’s strategic plans on the Fourth Industrial Revolution, smart cities, startups, and the National Innovation Network Program, enabled by state-of-the-art 4G and next-generation 5G Internet of Things mobile telecommunications networks, is clearly helping the ICT sector continue to record strong revenue growth.
Reports from the Ministry of Information and Communications showed there were some 136 million phone subscribers in the country by the end of June.
The number of wired broadband internet subscribers also continued to increase, with some 54.2 percent of the country’s population using the internet now.
Additionally, there is a high rate of fiber-optic cable coverage across the length and breadth of the nation. It is forecast that the strong growth in the country’s fixed broadband penetration will continue over the next five years to 2022 driven by rising fixed line penetration, in particular the rollout of fiber access.
Vietnam currently ranks among the 17 countries with the highest number of internet users while the government aims to elevate the country into the top 10 in terms of software and digital content outsourcing services, enabled by a thriving telecommunications industry.