Telecom firms expect competitive pressure from EU trade deal

15:37 | 06/12/2019 Companies

(VEN) - Vietnamese telecommunication enterprises are expecting heavy competition pressure once the recently signed European Union-Vietnam Free Trade Agreement (EVFTA) takes effect next year.

telecom firms expect competitive pressure from eu trade deal

Cautious control

Currently, the scale of telecommunication services that Vietnam has committed to open up under EVFTA is similar to its commitments as a member state of the World Trade Organization (WTO). However, the commitment levels in the new trade deal are wider in some services, especially value-added telecommunications services that do not use internet infrastructure.

The Vice President of the Vietnam Chamber of Commerce and Industry (VCCI) Tao Quang Phong said cautious control is required in implementing Vietnam’s telecommunications commitments under EVFTA because they are closely associated with information security and have direct, immediate impact on all socioeconomic activities.

Over the past decade, Vietnam has been one of the fastest growing telecommunications markets in the region and the world, with revenue of VND395.8 trillion in 2018, a year-on-year increase of 7.3 percent. Vietnam has developed 2G, 3G, 4G technologies and the 5G network is being tested, making Vietnam one of the world’s earliest 5G testing countries. As of July 2019, 63 enterprises had established public telecommunications networks, and 75 enterprises had been licensed to provide telecommunications services.

Advantages and pressures

Nguyen Quy Quyen from the Department of International Cooperation (under the Ministry of Information and Communications) said that once the EVFTA takes effect, foreign investors will find it hard to access the successful domestic telecom scene. Vietnamese businesses will have access to a new market of hundreds of millions of customers in the EU, whereas EU countries will have a market of only 90 million people in Vietnam.

However, the telecommunications sector will face new competition pressures. Director of the WTO and Integration Center under the VCCI, Nguyen Thi Thu Trang, expects that initially, the EVFTA will not have a big impact on foreign investment in Vietnam’s telecommunications service market. However, five years on, significant changes can be expected in value-added services not based on internet infrastructure, when Vietnam permits the establishment of 100 percent foreign-invested enterprises and puts heavy competitive pressure on domestic enterprises. Customers are expected to demand higher quality, better service prices, and stricter management mechanisms. Telecommunication enterprises will have to offer better, more diverse, and safer services at more reasonable prices to attract and retain customers.

Director of the WTO and Integration Center Nguyen Thi Thu Trang: When the EVFTA takes effect, positive change is forecast for the telecom sector. However, domestic enterprises will have to overcome challenges in information security, governance of data safety, and improvement of competitive capacity.

Hoa Quynh