Vietnam’s economic growth continues to boom, but it feels the growing pains of inflation and a depressed currency. John Shi, a&s Editorial Director, explores key trends in security and hot market segments.
Vietnam's economic growth continues to boom, but it feels the growing pains of inflation and a depressed currency. John Shi, a&s Editorial Director, explores key trends in security and hot market segments.
Southeast Asia weathered the financial downturn with nearly no ill effects, which was evident in Vietnam. Government estimates peg 2010's GDP to grow 6.5 percent in a flat global economy, country an investment target for multinationals. Corporations such as Intel and Samsung have set up production facilities in the country for its stable government, young work force and low- cost labor.
However, 2011 ushered in new challenges. Inflation has increased with economic growth, reaching 7.5 percent. While the government plans to curb inflation, this has resulted in tighter credit.
Electricity and energy costs have also risen to more than 18 percent, taking a toll on the bottom line. As the cost of living increases, salaries are expected to increase 30 percent.
However, public employees are unlikely to see doubledigit growth on their pay slips, as the government has slashed spending by 10 percent. This has put a damper on public security projects, which have been delayed or reduced in size.
Not all is bleak for security. A number of infrastructure projects are still on track, such as a high-speed railway connecting north and south Vietnam over 1,630 kilometers. While the market While the market is affected by economic pressures, the overall outlook is positive for Vietnam.
SAFE AND SOUND
Vietnam has mercifully been spared of major terrorist attacks. It is also on good terms with its neighboring countries in the region, making it a safe place. While a low risk of homeland security attacks makes Vietnam a good place to do business, the minimal threat level also slows equipment sales. Physical security is usually the last priority on public projects, resulting in analog enjoying a market share of 80 percent, according to some industry experts.
Partly because of the low threat levels, as well as low crime rates, Vietnam has relatively little security legislation, except for fire codes. Video surveillance, access control and intrusion are not mandated, reducing demand for security equipment.
Security demand is further reduced by cheap manpower, as guards are deployed for most sites. “Especially in Vietnam, there are police almost everywhere and the public believes the police are enough,” said Sy Nhat Le, President and CEO of Tan Bao Information Solutions. “Even in places equipped with cameras, customers do not know how to use them properly. So the majority of the market still prefers security guards.”
Security awareness is relatively low among users. “There's a Vietnamese saying, ‘Lock the door after the thief has come in,'” said Van Hung Chu, Director of Tanthanhan. “No beforehand planning is part of Vietnam's culture.”
However, people are becoming wealthier and understand the need to protect their possessions. Increased media reports of crime, either through the Internet or television, have raised awareness and made consumers more interested in security equipment, said Gordon Tat, MD of Ion, a distributor. The concept of home insurance has yet to become mainstream, but more homeowners are taking measures to protect themselves.
MAPPING SECURITY
Hanoi, the nation's capital, is driven by government projects. Roughly 80 percent of northern Vietnam's security market consists of public projects, making the government one of the largest buyers.
However, the bulk of security projects take place in southern Ho Chi Minh City, formerly known as Saigon. As the financial hub of Vietnam, Ho Chi Minh City's security market is about three times the size of Hanoi's, said Tran Trung Vinh, President of Silver Sea, a local distributor. Vietnam's regional breakdown for security finds 70 percent of business in the south, while the north makes up 20 percent and the central region forms the remaining 10 percent.