1. eCommerce Current Situation in Vietnam Based on E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Seminar in November 99 during VINIT99 in Hanoi Stefan Probst, Opticom Technologies Ltd.

2. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Characteristics ConventionalDigital Production IndustryContent Industry (tangible goods)(intangible services) Investmentusually highmostly low Labourlow to mediumhigh Skillslow to mediummedium to high Trading Sizemedium to highlow to medium Dependenciesmedium to highlow to medium Proceduresrather establishedquite new (VERY paper based)(paper less)

3. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Procedure Problems: General Issues - Few End Customers in Vietnam Own a Credit Card - No Bank in Vietnam Knows How to Handle Merchant Accounts for E-Commerce - There are No “Clearing Houses” in Vietnam - Internet is Very Expensive in Vietnam: WebSpace for Sellers Browsing for Customers - E-Commerce Servers are Only Inside Approved ICPs - Vietnamese Companies are Inexperienced in Internet Dealing with Foreign Companies - “Internet Invoices” are Not Legally Recognised in Vietnam

4. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Legally Valid Invoices: VietnamInternational / Internet - Invoice No. controlled - Invoice No. controlled by Tax Officeby company - only approved forms- form decided by company - needs seal of seller- company has no seal, stamp not required - needs signature of seller- no signature needed at all (and possibly of customer)

5. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Procedure Problems: Domestic Trade End CustomerBusiness BuysBusiness Sells Buysfrom Businessto Business Digital Content - no contract- no contract delivery via internet- financial invoice e.g. WebPage Design has to be sent separately Tangible Goods - no contract- no contract conventional delivery e.g. Handicraft Items

6. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Procedure Problem: Import / Export End CustomerBusinessBusiness ImportsImportsExports Digital Content - possible,- expenses- VAT accounting? delivery via internet but not taxed bookable? 0%VAT, e.g. WebPage Design no contract VAT deduction no fin. Invoice no exp. contract no confirmed imp. no conf. export - not taxed Tangible Goods - standard,- difficult with - difficult with conventional delivery taxed by customs customs customs e.g. Handicraft Items no import contr. no export contr. no payment conf.

7. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Conclusions: Big Opportunities - for individuals (start business, earn money) - for society (reduce unemployment) - for national economy (earn foreign exchange) Severe Obstacles - Training - Legislation & Procedural Problems: Banking, Taxation/Accounting/Customs

8. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam

9. A Kick-Start Solution:

10. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam The Hanoi Cyber Square a Virtual Building to Start e-Commerce in Vietnam

11. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Hanoi Cyber Square Goals of this Virtual Pilot Project: - Provide favourable business environment for new e-Commerce businesses - Provide testing ground for regulatory bodies to set-up and adjust new rules in co-operation with the tenants - Provide clearly defined & limited environment that can be well monitored to enable exceptional and temporary rules “From Industrial Park to e-Commerce Centre”

12. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Hanoi Cyber Square The Foundation: - Low cost, suitable office space in adequate area - Cheap, high-speed internet connection - State-of -the-Art Telecom (e.g. ISDN) - Backup Power - Favourable Taxes “Make it Easy to Reach a Critical Mass”

13. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Hanoi Cyber Square Ground Floor(s): PC Shopping Mall - “Normal” PC equipment shops & stores - Easy, fast supply of hardware to other tenants - Cover some of operational costs of the building - Act as a magnet for customers - Examples: BKK: Pantip Plaza HKG: Golden Shopping Centre SIN: Funan Centre, Sim Lim Square, Sim Lim Tower low rent & cheap, high-speed internet & favourable taxes

14. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Hanoi Cyber Square State Offices: - Steering Committee with wide ranging power: Telecom/Internet, Finance, Trade,... - Tax Office for VAT related issues etc. - Customs Office - Industrial Property Rights / Copy Rights Office low rent & cheap, high-speed internet & favourable taxes PC Shopping Mall, Canteen, Bank, Post Office,...

15. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Hanoi Cyber Square Financial Services: - Bank(s) for Merchant Accounts, e.g. Vietcom Bank - Clearing House(s) e.g. Rep. Office of Experienced International Comp. low rent & cheap, high-speed internet & favourable taxes PC Shopping Mall, Canteen, Bank, Post Office,... State Offices: Steering Committee, Tax, Customs, Copy Rights

16. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Hanoi Cyber Square Internet Services: - Domain Name Registration Service (for.vn and international Domains) - Web Hosting Services low rent & cheap, high-speed internet & favourable taxes PC Shopping Mall, Canteen, Bank, Post Office,... State Offices: Steering Committee, Tax, Customs, Copy Rights Financial Services: Bank f. Merchant Accounts, Clearing House

17. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Hanoi Cyber Square Content Business: - Producers, Traders … - Training & Research in Co-operation w. Universities... low rent & cheap, high-speed internet & favourable taxes PC Shopping Mall, Canteen, Bank, Post Office,... State Offices: Steering Committee, Tax, Customs, Copy Rights Financial Services: Bank f. Merchant Accounts, Clearing House Internet Services: Domain Name Registration, Web Hosting,...

18. E-Commerce for Digital Content Industry Opportunities and Obstacles in Vietnam Hanoi Cyber Square Content Business: - Content Producers, Traders … - Training & Research... PC Shopping Mall, Canteen, Bank, Post Office,... State Offices: Steering Committee, Tax, Customs, Copy Rights Financial Services: Bank f. Merchant Accounts, Clearing House Internet Services: Domain Name Registration, Web Hosting,... low rent & cheap, high-speed internet & favourable taxes © Stefan A. Probst, Nov. 99, Sept. 01