Vietnam has recently become an attractive foreign investment destination due to a less heavily regulated business environment and more flexible labor laws. GDP in Vietnam expanded 6.8 percent in the third quarter of 2015 over the same period of the previous year. Goldman Sachs forecast that Vietnam’s economy, which currently ranks 55th in the world, will rank 17th in 2025 with total GDP rising to US$450 billion from $186 billion at present.
Vietnam has recently become an attractive foreign investment destination due to a less heavily regulated business environment and more flexible labor laws. GDP in Vietnam expanded 6.8 percent in the third quarter of 2015 over the same period of the previous year. Goldman Sachs forecast that Vietnam’s economy, which currently ranks 55th in the world, will rank 17th in 2025 with total GDP rising to US$450 billion from $186 billion at present.
Vietnam’s total foreign direct investment (FDI) in the first month of 2015 reached $663.4 million, a 67.1 percent increase compared to the same period last year. January saw a total of 44 newly registered FDI projects worth $392.2 million, up 85.5 percent compared to the same period in 2014.
Moreover, Vietnam is one of 12 member states of the Trans-Pacific Partnership (TPP) agreement, which will create favorable conditions for Vietnam to export goods with zero tariff rates to a broader market. Security demand in Vietnam is also tied to the development of foreign-invested construction and property projects. Fortunately, the growth of foreign businesses and government infrastructure development has stimulated the security market.
Promising Vietnamese Security Market
As an emerging market, Vietnam’s need for security continues to grow across several sectors, and education is required to boost growth in the private sector. In 2014, safety and security equipment was worth $143 million in Vietnam, a $10 million increase compared to 2012, and the numbers are expected to continue to grow as development of foreign-invested construction and property projects expand, according to the U.S. Commercial Service. “Application of security and surveillance are a huge necessity for developing countries such as Vietnam. Being a new market, Vietnam has limited implementation for security and surveillance, such as in banking or government security. Security for enterprise management or personal use is still on a minor scale with basic and simple applications. For these reasons, Vietnam is expected to be a potential and well growing market for the security industry,” said Quy Dang Ngoc, Deputy Director at Namson Technology.
The nature of the security market in Vietnam is drastically different in the north and south. Northern Vietnam focuses on government projects, while southern Vietnam mainly consists of commercial projects. “The northern part of Vietnam is largely dominated by government projects that drives the growth of the video surveillance market, while the growth in the south is largely driven by following verticals like entertainment, education, and malls. Large amount of foreign investment comes into this thriving city,” explained Sunny Kong, Director of Sales in Asia at
Milestone Systems.
In the past, companies generally focused solely on the market in either the north or south of Vietnam. However, due to the competitive market, companies are expanding to cover both regions, opening offices in Hanoi and Ho Chi Min City to increase local manpower. “Bosch Security Systems Vietnam has been able to balance our share in the growth between the north and south of Vietnam. We have also increased our sales growth in central Vietnam, since the establishment of our branch office in Da Nang in 2012,” said Terence Ng, GM of Vietnam and Cambodia at
Bosch Security Systems.
More Local Brands Coming to the Market
The numerous prospects in Vietnam has led to more local brands coming to the market. In Vietnam, there are over 1,000 electronic physical security equipment and services providers, around 1,000 to 2,000 fire safety companies, and approximately 700 to 800 guard services companies. In Vietnam, many companies play the roles of systems integrators, distributors, and contractors simultaneously.
Though the majority of Vietnam’s security products are imported, local players have started to take part in the opportunities available in the market. New local brands such as Vantech, VDTECH, Questek, Seavision, and Escort are now in the game to take a piece of the action. With their own factories in Vietnam, local brands have an advantage as local assembly is more cost effective than imported products, thus having the upper hand when it comes to price competition.
2015 has been a good year for Vietnam, with socio-political stability, and preparation of the Trans-Pacific Partnership (TPP), the security industry is expected to pick up its pace to further growth along with the improved economy.