The central city of Danang is becoming a magnet for businesses in the information technology and electronics sectors, with many domestic and global "eagles landing to nest" there.
Among those are Foster Electric Co., Ltd and Mabuchi Motor Co., Ltd from Japan, Ho Chi Minh City-based Viet Hoa Group, T.T.T.I Da Nang Co., Ltd, Hanoi-based FPT Software, Axon Active from Switzerland, and Logigear and Magrabbit from the U.S.
$878 million in IT revenue
Vice Chairman of the Danang People's Committee Le Quang Nam recently signed a plan to develop the information technology (IT) industry in the city until 2030.
In the 2016-2020 period, the local IT industry saw rapid and sustainable growth in both revenue and output with an average annual expansion of 11%, gradually asserting itself as one of the spearhead economic sectors of the city. Software exports alone increased 15% per year, with Japan and the U.S. being the largest markets.
Da Nang’s information and communication industry posted total revenue of VND34.3 trillion ($1.44 billion) in 2022, 3.4% higher than the plan and up 9.6% year-on-year. Of which, VND20.92 trillion ($878.2 million) came from IT services.
Last year, software exports fetched $132 million, up 20% compared to the plan and 34% over the same period in 2021.
According to the city's People's Committee, by the end of 2022, Danang had a ratio of 2.3 digital technology enterprises per 1,000 people. The city’s IT enterprises and zones operate in the fields of IC design, hardware production, game design and production, software outsourcing, and automation.
Notably, in the field of hardware and electronics, Danang has attracted many FDI projects. These companies specialize in manufacturing high-tech electronic products such as micro electric motors, headphones and mobile phone components.
A number of software enterprises such as eSilicon and Global CyberSoft of the U.S., and global unicorns Acronics and Uniquify have also gradually formed research and design groups for electronic and microchip products.
In the field of software and digital content, Danang has seen the presence of a number of well-known and reputable domestic and global software enterprises such as FPT Software, Axon Active, Logigear, Magrabbit, Hitachi Vantara Vietnam, Enclave, AsNet, Monstarlab Vietnam Co., Ltd, NeoLab, Nippon Seiki, and Enouvo IT Solutions which provide software outsourcing services to foreign markets.
Typically, Danang Nippon Seiki Co., Ltd has developed software in the instrument clusters for motorcycles and automobiles of famous manufacturers in the international market like Honda, Toyota, Suzuki and Audi, with annual revenue of $3 million.
Japan and the U.S. remain the two main markets of Danang software exporters, alongside other markets like the E.U., mainland China, Singapore and Taiwan.
By the end of 2022, the city had 47,500 IT workers, accounting for 7.7% of its total labor force. Among them, 22,000 worked in the field of software and digital content, with an average monthly salary of VND18 million ($755) per person.
At least 7 IT, software parks by 2030
According to the municipal People's Committee, the local IT sector is revealing a number of shortcomings and limitations. For example, enterprises investing in infrastructure of concentrated IT zones are yet to enjoy preferential policies as prescribed.
Danang’s IT and software parks have not yet attracted large-scale investors and international corporations. In particular, the city also lacks highly qualified IT human resources.
Therefore, Da Nang has set a goal of perfecting mechanisms and policies to develop modern and synchronous IT infrastructure, ensuring capacity and information safety and security.
"Da Nang is a safe destination for domestic and foreign investors. It aims to promote the development of the IT industry as a spearhead economic sector, contributing to economic restructuring towards sustainability, creating motivation for implementing digital transformation in the city’s socio-economic fields. The industry will be synchronously connected with the smart city networks in the country and the ASEAN region," according to the plan.
Regarding specific goals, Danang will focus on developing the digital economy so that it can contribute at least 20% of the city's GRDP by 2025 and at least 30% by 2030. The respective figures for the IT industry will be 10% and 15%.
At the same time, the city will support startups and establish technology businesses, aiming for a ratio of three digital technology enterprises per 1,000 people.
By 2030, Danang will strive to have at least 8,950 digital technology enterprises and 115,000 workers in this field. The annual revenue growth rate of the IT industry in the 2021-2030 period is set to reach 10%, while the growth rate of software export revenue in the period is expected at 12% per year.
By 2030, the city will have at least seven IT and software parks, while forming its second coastal fiber optic cable station to ensure infrastructure for businesses to invest in connecting with the international undersea fiber optic cable.
In addition, all businesses in local industrial parks will have access to infrastructure to deploy Internet of Things (IoT) applications. Half of the IPs in the city will be covered by 5G networks.
Danang is one of the five centrally-managed cities in Vietnam, along with Hanoi, Hai Phong, Ho Chi Minh City and Can Tho.
In the first six months of 2023, the city attracted $26.21 million of registered FDI, including $9.5 million in 62 newly-registered projects, $2.77 million of capital contribution for stake acquisitions, and $13.94 million of additional capital for ongoing projects.