As the second fastest growing economy in Asia, Vietnam's internet growth is surging ahead.

According to the Vietnam Internet Network Information Centre (VVNIC), as of the end of 2007, the country's internet penetration was at 20.6 percent of the population, or 17.5 million internet users out of Vietnam's overall population of 85 million (Vietnam is the 13th most populous country in the world).

Vietnam is also experiencing strong growth in its mobile sector with a 33 percent penetration rate (28 million subscribers at the end of 2007). According to a report titled 2008 Asia - Telecoms, Mobile and Broadband in Cambodia, Laos and Vietnam (published by Paul Budde Communication), "Vietnam's mobile market had passed the 28 million subscriber mark coming into 2008. The country's annual growth rate in the mobile market was running at around 75 percent and looked set to continue."

While Vietnam is still in a relatively early stage of technological development (although 2007 saw a significant surge in online access in Vietnam), relevant explanatory factors for the growth of its internet and mobile subscribers are threefold: economic growth and shift in the Vietnamese lifestyle, and outside technology investments).

Economic growth and shift in the Vietnamese lifestyle
Due to the encouragement of private ownership (after adhering to communism) in industries, commerce and agriculture, Vietnam achieved around eight percent annual GDP growth from 1990 to 1997 and continued at around seven percent from 2000 to 2005, making it the world's second-fastest growing economy. Simultaneously, foreign investment grew threefold and domestic savings quintupled. (Wikipedia 2007).

With its marked economic growth to date, the country is in good position for growth due to increased per capita income and improved living standards. As an example, according to the CIA World Fact Book, the unemployment rate in Vietnam is one of the lowest in the world at only two percent.

Vietnam's entrance to the World Trade Organization (WTO) in 2007 also appears to have marked the country's foray into growing wealth. In conjunction with Vietnam's induction to the WTO, "the number of higher-income earners is increasing rapidly in Vietnam with over 700,000 households with monthly disposable income of over US$500 (high purchasing power locally) in 2007. According to EuroMonitor International, "This group will more than quadruple to over 3.4 million households by 2015, presenting huge opportunities for this income group." Opportunities that come to mind are in the consumer goods sector. Market research company TNS recently published a report that says the Vietnamese are spending far more than ever before on entertainment, high-tech consumer goods, and health and beauty products.

With regard to the internet and its impact on the economy, according to the Vietnam Ministry of Foreign Affairs, "The education, business and healthcare sectors are considered the driving force of the country's internet growth over the past decade. Vietnam's universities and colleges are now hooked up to the internet, while 92 percent of companies and 50 percent of secondary schools and provincial-level hospitals are also networked."

Interesting to note is that according to a recently published article titled Vietnam Draws Bright Spot on World Internet Picture, the Vietnam government developed a plan for the internet and telecom sector expected to obtain annual growth rates that double the country's socio-economic growth rate, "Keen to cash in on the industry's potential, the government developed a plan for the internet and telecom sector expected to obtain annual growth rates that double the country's socio-economic growth rate."

Outside technology investment
Did you know that in 2008, INTEL is opening a $300 million chip factory that will be the centerpiece of the Saigon HiTech Park and the largest U.S. manufacturing investment in Vietnam?

A November 2006 article that appeared in Fortune, titled Vietnam VROOOOOM, stated that "…Vietnam has a ravenous appetite for any technology, training, or infrastructure Intel can offer." 

According to John Davies, an Intel vice president who runs the World Ahead programme, which is training 30,000 Vietnamese teachers in IT skills and plans to bring broadband access to rural areas, "It's close to a global role model. Along with HP, Acer, and a number of local manufacturers, Intel is also providing 100,000 PCs to Vietnamese consumers for as little as $265 each. And it is establishing an open-source lab to test software for 27,000 PCs used by the Communist Party to create an e-government programme. Overall, the idea is to jump-start the market. You can't give exact ROI numbers, says Davies, but it's a very nice return."

And more developments. In January 2007, Microsoft announced that it will establish its first information technology training centre at the Post and Telecommunication Technologies Institute in Hanoi. Under a recent five-year Memorandum of Understanding (MOU), the centre will train students from the Institute to use Microsoft's certificate system while fostering lecturers and students IT skills. It was reported that the centre comes as part of Microsoft's commitment to help develop Viet Nam's post and telematics sector (Viet Nam News - 27-01-2007).

While Vietnam is still relatively early in its technological developments, the Vietnamese Ministry of Culture and Information encourages people to use the internet because it contributes to rapid social development and speeds up integration with the world. The International Telecommunication Union has also named Vietnam as the world's second fastest-growing telecom market, after China.

It is evident that Vietnam has a very promising future -- both for internet/ online opportunities as well as mobile marketing. Not only do the number of internet and mobile users increase daily, but the many initiatives that are taking place to penetrate this market are promising -- especially with its global economic development.

Elizabeth M. Lloyd is co-founder and chief revenue officer of 9Global, Inc.