June 2005

ICT Application for Business Development in Rural Vietnam

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In Vietnam, nearly 75 % of the people live in rural areas. Developing agriculture and rural economy are the most important orientations of the Government of Vietnam. ICT has been creating not only opportunities but challenges to business in rural areas to narrow the gap between different regions, realise gender equality and the advancement of women to promote sustainable growth and poverty reduction. To promote step by step development of the rural areas, the Vietnamese Government has improved the legal framework, mechanisms and policies with a view to create favourable conditions and offering high preferences for ICT application and development in rural areas.

The project 'Policy and Measures to Promote ICT Application and Deployment for Business Development in Rural Areas in Vietnam' aims at investigating factors of mechanisms, policy environment and major measures and their influences on the acceptance and application of ICT in business in rural areas.

To a certain degree, the project will investigate problems and difficulties faced by grassroot business, small organisations, Small and Medium Enterprises (SMEs) and households in rural or backward areas in dealing with the shift to new mode of economic activity and life. The duration of the project is 20 months (from July 2004 to December 2005). The main responsible institution for the project implementation is the Ministry of Science and Technology of Government of Vietnam. The project team so far consists of the persons from departments of Ministry of Science and Technology, some government organisations, non-government organisations, Department for Science and Technology of some provinces, ICT training centres, universities and enterprises.

As outcomes, a number of conclusions and recommendations for policy-making process will be drawn for governments, authorities and business managers to promote ICT application and development in business in rural areas. As such, the project will have a bottom-up approach in trying to send a signal from below to the policymakers and get the response from the government to the need of the people and business communities.

Objectives of the project

General objective
The general objective of the project is to contribute to the process of creating the conducive policy environment for acceptance, development and application of ICT in rural areas of Vietnam, especially for business development.

Specific objectives

  • To conduct a general assessment of policy environment, including gaps between existing policy environment and the required need in ICT application and development in business in rural areas;
  • To assess the readiness of the business and point out the real problems and difficulties faced by grassroot business organisations in ICT application and development for business development in rural areas;
  • To suggest recommendations to the central government, ministries, local authorities and also to the business managers on policies and measures to promote ICT application and development in business in rural areas.

Research issues
The project has the following elements as research issues:

  • The role of IT in business activities in rural areas;
  • Existing status of legal infrastructure related to ICT application and development in rural areas;
  • The role and relationship of various government departments with regard to ICT application and development in rural areas;
  • Readiness of business in rural areas for IT application and deployment – willingness, capacity, problems and difficulties;
  • Required policy environment and measures for ICT application and development in rural areas;
  • Gaps between the current policy and the required one;
  • Lessons and recommendations to policy makers in central and local governmental organisations, authorities, and also to the business managers on policy and measures to promote ICT application and development in business in rural areas.

Research methodology
The project has the following activities and the methodology for conducting research in a duration of 18 months, commencing from July 2004 to December 2005:

  • Inception workshop about ICT application and development in Vietnam (some issues at stake), especially for business development in rural areas.
  • Assessment of the current state polices and strategies on ICT application and development in Vietnam, especially for business development in rural areas in Vietnam. This includes the following:
    • Study policies and legal documents on ICT in Vietnam and related policy documents, strategies, measures for ICT application and development in rural areas;
    • Carry out an inventory of all goals (explicit and implicit), expectations, plans, strategies related to ICT application and development in rural areas;
    • Interview officials from about 10 related governmental agencies and ministries and 15 local authorities to identify and understand different visions, tendencies and biases in ICT application and development in rural areas;
    •     Organise a seminar to discuss the status of policy environment in relation to ICT application and development in rural areas;
    •     Produce a report on the status of policy environment.
  • Collecting foreign experiences in ICT application and development in rural areas. This includes collecting and studying policy documents, strategies, measures for ICT application and development in rural areas of some countries such as Thailand, China, Canada, Singapore, etc., producing the report on lessons and experiences that Vietnam can learn and organising a seminar to introduce the study results.
  • Conducting a national survey of business enterprises in the rural areas to assess their role and impacts of ICT on their business development. The survey will also assess their needs, readiness, difficulties and impacts of the policy environment for ICT application development in business. The purpose of sampling survey is to identify research population (business enterprises who have access to the Internet in some rural provinces representing the Northern, Central and Southern parts of Vietnam). This population will comprise enterprises operating in different sectors with differing background, especially SMEs and households in traditional trade villages. The tasks associated with it are- developing survey tool and questionnaire, conducting the survey and processing the survey data, analysis and writing survey report.

The other methodologies include:

  • Conducting 15 in-depth case studies of selected enterprises,
  • Producing the National Survey Report based on the sampling and in-depth surveys,
  • Organising a workshop to present the survey results,
  • Analysing and writing project report,
  • Final conference for dissemination of the project outcomes,
  • Upgrading, revising and finalising the final project report based on the ideas and comments from participants at the final workshop for submitting to the authorities and policy makers and preparing for potential publication.    


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Users and beneficiaries
The project would contribute to the formulation process of all strategy, policy and master plans to promote ICT application and development in rural areas of Vietnam. Immediately, the project results will contribute to the formulation process of Vietnam National Master Plan in ICT for the period of 2006-2010.

The first immediate users of the study would be the related governmental bodies, such as Ministry of Science and Technology, Ministry of Post and Telecommunication, Ministry of Justice, Ministry of Trade, Ministry of Agriculture and Rural Development, local authorities and National Programme on Science and Technology Application and Deployment for socio-economic development in rural areas. The recommendations and findings of the project would be very useful for them in considering what options may be available, feasible and realistic.

One important benefit of the project is the capacity building for policy analysis and decision making of the relevant organisations. This will be the direct outcome of the project to help solving policy-related problems faced by organisations.

Vietnamese companies and households in rural areas would get benefited from the study. Based on the findings, they could design, adapt and adopt appropriate business strategies and plan of actions in the most suitable way toward ICT application and deployment for business development.

Local communities, grassroots will also benefit from the outcome of the project, as the IT application and development will improve their living standards.


Credit: Yves Beaulicu, IDRC, 2003

In addition, foreign donor's community, researchers and overall public could use the study for different purposes like funding plans, input for further research, awareness raising campaign or education and training.Last, but not least, the project team itself and their associated organisations would also benefit from the project. After the completion of the project, research capacity of the members of the team will be enhanced and they could exchange their professional experiences to each other.

Research activities and research findings

  • Inception workshop about ICT application and development in Vietnam was organised in December 2, 2004 especially for business development in rural areas. More than 70 participants in this workshop were the ICT experts, researchers, policy makers, officers from some ministries, government organisations, non-government organisations, ICT providers with software, hardware and services, ICT training centres and universities and SMEs and households from traditional trade villages in the Red River Delta and in the Northern Vietnam.  The participants discussed and exchanged views on ICT development in rural areas, specially in business development. Some recommendations and lessons from consultant groups of other projects will serve as a basis and analytical framework for project studies and activities.
  • Assessment of the current state policies and strategies on ICT application and development in Vietnam, especially for business development in rural areas in Vietnam has been made. A package of legal document has been selected and reviewed. Some officials from provinces and ministries have been interviewed about visions, tendencies and biases in ICT application and development in rural areas.
  • The policy documents, strategies, measures for ICT application and development in rural areas of some countries such as USA, Japan, Thailand, India, Indonesia, China, Australia, Canada, Singapore, UK, France, etc. have been collected and studied. The assessment and research focused on the following issues:
    • Social and economic impacts of ICT in rural development, specially the business development;
    • Challenge in ICT development in rural areas, specially for business development;
    •     Common barriers to ICT application and development in rural areas, specially in business development;
    •     Common policy framework;
    •     Common strategies;
    •     Successful initiatives.
  • A survey has been conducted to enhance understanding of the levels of ownership and usage of ICT by Vietnamese business across all their business processes and also to highlight areas of relative strength and weakness of ICT application across SMEs.

Survey findings

The survey findings are as follows:

  • Only 30% of the registered enterprises are located in rural areas (58/61 provinces). Most businesses in rural areas are micro businesses (0-9 employees), small businesses (10-49 employees) and only few medium businesses (50-249 employees).
  • The ICT application and deployment in business in rural areas are still backward. Only few business return the survey questionnaire sent by mail to them, which means that they don't care much  and are not interested in the issues of ICT application in business.
  • The survey group has spent time to do the interview in person with businesses in 3 traditional trade villages in the north of Vietnam and here are some results:  
    • 100% of the businesses in the selected villages have telephone lines;
    •     The villages closer to capital city Hanoi have better ICT applications both in households and busineeses;
    •     Most of the computers used are made in Vietnam;
    •     The software mostly used are Microsoft's MS Word and Excel and some Vietnamese software on accounting;
    •     Dial-up modems are the main means of connection for SMEs in rural areas;
    • Businesses are more likely to use ICT to obtain the information than to provide information;
    •     Businesses expressed the main areas of concern to be set-up and running cost of ICTs and lack of ICT skill of their staff;
    •     Among those businesses that don't use computers, the main reason is that they don't see it as beneficial for their business and believe that they do not have the technology in place to do so and so they prefer  to deal face to face;
  •     The main reason for not using e-mails is that they don't see a need or feel it as appropriate for their business and prefer face to face or telephone contact;
  •     The website is not used enough because of the lack of use of Internet by their customers, the cost involved, lack of skills of the staff and also they think that it is not of benefit for their type of businesses;
  •     They avoid online payment as they are concerned about security and fraud;
  •     Begger businessmen are making more sophisticated use of ICTs than their smaller counterparts;
  •     Technical infrastructure is poor and technical level differs among businesses in the different regions in the countries;
  •     There is not much information sharing and information content in networks and websites are still weak;
  •     There is lack of legal environment to encourage non-state sector, specially private SMEs in ICT use and development;
  •     There is inequality in accessing to IT knowledge between rural, remote areas and urban areas, between men and women and also between people in different regions and business groups.

Participatory policy making in Nepal
In 1999, the Nepal's Planning Commission supported by the Canada based International Development Research Centre (IDRC), started an innovative process of ICT policy making. The process began with the constitution of the National Information Technology Development Working Committee and IT Policy Sub-committee under it. Leading IT professionals, the industry and leaders in the field of education and telecommunications were invited to share their own vision for a 'connected and vibrant' Nepal. Three areas of critical importance were identified – universal access to information technology, education and training and IT applications in business and government. The next step in the process was the formation of consultative groups on universal access to IT, on ICT infrastructure development, on human resources development, on software and services, on electronic commerce and on electronic governance. Each group chose experts as the leader and chose their own paper writer. These papers were carefully studied to see how government could make these strategies a success. This led the drafting of the IT Policy, which was publicly debated by the academia, government, media, researchers, civil society and the industry. Within a year of the steering of this process, the Government of Nepal adopted the recommendations and approved its Information Technology Policy in October 2000.

The ICT application and deployment in grassroot business in rural areas is still backward.

Key lessons learned

  • ICT has vital role in connecting the rural community to outside world, specially in business development;
  •     The government should issue strategies, policy and measures to:
    • Reduce inequality in opportunities to access to ICT,
    •     Formulate and implement programmes to support ICT use and ICT development in rural and remote areas,
    •     Raise awareness on IT use and development in rural areas, specially in business,
    •     Create favourable legal environment for IT use and development in rural areas, especially in business development,
    •     Mobilise funding resources for all these targets.

     

  •     ICT activity comprises of two proponents – ICT infrastructure and application software:
    •     The government should take partial responsibility to the cost of ICT establishment in rural areas. Alternatively, the government may encourage key players in ICT and finance industry to co-invest in ICT development,
    •     The construction of ICT infrastructure should be based upon local needs and actual circumstance and also on workable technology at affordable price,
    •     Software localisation should be encouraged,
    •     Relevant information should be available in local language.

Conclusion
It is evident that people who work in businesses that include ICT are facing problems  in their business planning. Successful ICT projects must come from the business's overall strategic planning process and should have clear measures of costs and benefits. Successful implementation of ICT projects relies on the top leaders of the business and organisation.

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