Electronics and information technology in Vietnam: The need for policy coor dination

Why this report?
The need for cross-sectoral coordination

Nobody knows the 'IQ' of Vietnam. It is impossible to measure the total capacities of a whole nation to learn and adapt intelligently to the changing socio-economic environment. There are no methods to aggregate, nor any techniques to quantify a country's 'intelligence'.

However, industrial firms and corporations are often graded according to their capacity to compete commercially, to invent new products and processes, and to successfully launch these products on various markets. This requires not only material resources, but also adequate knowledge about how to design, manufacture, market, and distribute new products, as weil as sys- tems to collect, analyze, and distribute information. Effective management of limited information may even compensate for lack of other resources.

Companies learn by turning data into information, and by analyzing this information, thereby creating superior knowledge and competitive advantage. More and more, 'organizational intelligence' is recognized as a principal competitive resource among business firms, government institutions, and other organizations.

Vietnamese companies do not stand alone in this competitive world. They, too, have to improve their 'organizational intelligence'. The world's largest firms engaged in information and communications technologies (ICT, or simply IT) -- like IBM, NEC, Fujitsu, UNISYS and Ericsson -- are now on the Vietnamese market. Over the last 4-5 years many foreign companies active in the field of electronics and IT have entered the Vietnamese market- place, while only a few have left or scaled down their operations. Due to their technical, financial, marketing, and other resources, some of these foreign-owned companies may soon influence Vietnamese electronics and IT more than many domestic companies. Even institutions of the central government may be less influential than these companies, several of which have annual budgets for research and development (RAD) that exceeds that of Vietnam many times over. Due to the many new players on the scene today, Vietnam's new market economy will increasingly feature both rivalry and cooperation among firms, foreign and domestic.

Under these circumstances, Vietnam has to raise its 'IQ'. Vietnam's government and industry; its R&D, educational, and training institutions; its consultancy firms and professionals, all have to improve their capacities to learn and adapt intelligently, given limited resources and a rapid rate of change. As Vietnam becomes fully integrated with the world economy, new technologies will be employed, industries will change, and markets will expand. Modern information and communications technologies may become the key instruments in such a process of innovative capacity building. These technologies are designed to gather, process and distribute data and information which an organization could use to plan, monitor and control its activities. In this respect, modern IT can be an important tool to promote 'organizational intelligence' also in Vietnam. On a national scale, widespread use of IT can enable fundamental changes in socio-economic activities and affect the way markets function and develop.

New technologies will also require new skills, but the question remains: How much of this learning will take place on Vietnamese soil? How much of the local creativity will drive the development? In the field of IT and modern electronics, Vietnam runs the risk that an increasing range of products will be produced abroad by foreign companies to be passively consumed on the Vietnamese market with little learning taking place inside of the country. Foreign companies could install, service, and operate their own equipment on a massive scale. One of the principal challenges facing Vietnam is for all actors on the emerging IT market to work more actively together to create new knowledge and use the coming changes as an opportunity to advance local capacities to learn, adapt, create and compete.

The main thrust of this report is to convince not only governmental decision-makers, but also industrial managers, IT professionals, investment bankers, and others in Vietnam that more coordination and cooperation is needed to effectively and creatively diffuse modern information technology and stimulate the growth of the electronics industry inside the country. Coordination and cooperation is needed not only at the level of policy- making, but also at the level of inter-organizational relations and for the im- plementation of any major decisions.

Given the magnitude of the technological and economic challenges facing Vietnam today, government ministries must not only work closely and cooperatively with one another, but also with other organizations in Vietnam such as local firms, foreign firms, educational institutions, and research centers to achieve results.

Through public and private means, it is recommended (1) that a 'pro-active approach' to the advancement, diffusion, and application of information and communications technologies be developed. In order to capture the synergy between the production and use of advanced technologies, it is also recom- mended that local electronics production capacity be upgraded and expanded as quickly as possible. Such national ventures could contain medium-term policy means such as these:

No single ministry or government agency in Vietnam can orchestrate all these policy means by itself. A range of firms and institutions plus specialists and other professionals (also in the private sector), will have to become involved in policy development and implementation. That is why this report suggests a wider policy framework for the development of information and communica-tions technologies in Vietnam. The need for orchestration of policies will be emphasized again and again. Without deliberate policy coordination, and without collaboration with private sector firms and institutions, little can be achieved.

In the previous report on Vietnamese electronics and IT development, prepared in 1989 and published in 1990, the facts and assessments presented highlighted strategic issues to be considered by both government and indus- try.' This report should appear as a continuation of the earlier UNIDO report, since it up-dates some of its findings, adds new insights, and provides a framework for the elaboration of policy alternatives.

Because of the country's economic renovation, its "open-door" policy, and the improvements in its regional and overseas trade relations, the time seems ripe for a reappraisal of strategies for industrial development and eco- nomic growth through electronics and information technology.

Foot Notes:
  1. Some of these proposals listed below have been inspired by Christopher Freeman and his paper: Technical change and unemployment. The links between macro-economic policy and innovation policy, Maastricht: MERIT (University of Limburg), October 1993 (working paper), pp. 34 35

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