VN social networking sites shaken by draft amendment
More than 500 local social networking sites will need to secure a permit to continue earning revenue if the draft decree amending Decree 72 is approved.
|Over 500 small local social networking sites may have to apply for a permit to continue earning money from their services|
Social networking sites with more than one million users or 10,000 interactions a month will have to get licensed through the Ministry of Information and Communications (MIC) to operate in the country, according to Article 23 of the draft amendment to Decree No.72/2013/ND-CP outlining the management, provision, and use of internet services and online information.
Moreover, only licensed platforms will be allowed to charge subscription and usage fees, not even for live-streaming.
At the end of December 2019, Vietnam had 614 social networking sites, less than 10 per cent of which had more than one million users. Thus, the remaining 90 per cent (more than 500 platforms) do not satisfy the requirements to charge users.
The draft also mentioned that sites with less than one million users or 10,000 interactions a month would have to file a document to the appropriate authorities to get permission to maintain operations.
Discussing with VIR, Trinh Minh Giang, CEO of Venture Management Consulting Group specialised in tech startups, said that small-scale platforms will find it more difficult to earn revenue than their larger counterparts. Accordingly, setting up a social network requires large investment and even the largest local platforms in Vietnam have yet to turn a profit. The common difficulty for local social networks is luring in more users to generate larger revenue streams – which they do by generating user data to attract advertisers. As a result, social networks of a small scale (less than one million users) have been struggling to survive in the race against Facebook and Google’s YouTube.
Hence, the amendment would not resolve the issues facing small-scale platforms which heavily outnumber larger platforms in Vietnam. Therefore, Giang advised consulting the related laws of other countries, especially those which have succeeded in creating a win-win situation for both the government and companies, before outlining similar rules in Vietnam. “This will allow the platforms to be hit less by new regulations.”
On the other hand, the draft does not fully cover the gaps related to overseas platforms such as Facebook and YouTube which have been operating in Vietnam without licenses and gathered the lion’s share of the country’s advertising market.
Indeed, local social networks running in Vietnam without licenses or with expired licenses are fined for VND20-30 million ($870-1,300) following Article 63 of Decree No.174/2013/ND-CP stipulating the administrative sanctions in the telecommunication and postal services. Similar to the latest draft, it has no clauses related to violations by overseas platforms.
Consequently, local platforms have been disadvantaged compared to international players for a long time. Even if the new rules could be extended to overseas platforms, the sanctions are tiny compared to their earnings in Vietnam and would prove little deterrent.
Responding to VIR, Nguyen The Trung, deputy head of Technology Solutions and Security for Local E-government, said that based on the $15-20 Facebook earns from each local user, the social network earns about $1 billion a year in revenue in Vietnam. Similarly, Google ranked second with the annual revenue of hundreds of millions of US dollar.
Previously, the MIC also promisedto take the necessary technical measures in case Facebook shows no willingness to comply with Vietnamese regulations. According to Giang from Venture Management Consulting Group, there should be discussions between the drafting board and representatives of overseas social networks so that the appropriate sanctions can be worked out that would help balance the benefits of operators and business users of these platforms.
“If the platforms are forced to terminate their operations in Vietnam because they do not have licenses, these users will be the first to suffer. They will lose a great deal of important data related to their business, and lose an effective business tool,” said Giang. “The drafting board should also work with international experts to research policies of nations with an effective online environment.”
Otherwise, assessing the current sanctions under Decree 174, Giang said that the local government encourages the development of “Made in Vietnam” platforms, so local platforms, especially small-scale ones, will be supported.
“Social networks could get a fine of medium severity for their first violation of the new rules, which would then increase for the next infractions,” said Giang.
Vietnam among world’s earliest in banking digital transformation: forum
Speaking at the Financial Services – Retail Banking Forum in Ho Chi Minh City last week, Vu Viet Ngoan, former chairman of the National Financial Supervisory Commission, said the habit of using digital products had become more prevalent than ever in Vietnam.
More than 30% of the population uses banking apps, second globally only after China (41%), according to Ngoan.
Vietnam’s banking and financial sectors would continue to play a key role in establishing a “fully digitised, human-centred system”.
He also pointed out that the digital transformation in the country would be an important process of how banks and financial institutions analyse, interact and satisfy their customers.
The government has set a target of increasing financial inclusion to cover more than 80% of the adult population by 2025.
Phan Thanh Duc, dean of the management information system faculty at the State Bank of Vietnam’s (SBV) Banking Academy, said Vietnam had recorded a surge in digital payment everywhere from online marketplaces to small convenience stores and even vegetable and fruit vendors.
Le Duc Anh, director of the Ministry of Industry and Trade’s Centre for Information and Digital Technology, pointed out that technologies such as blockchain, AI, cloud computing, machine learning, and customer data collection, management and analysis were being adopted.
The banking sector had invested over 15 trillion VND (639.22 million USD) in digital transformation as of the end of last year, according to a report by the SBV.
Digital payments have been growing at 40% for the last four years, one of the world’s fastest digital transformation rates.
According to the report, more than 95% of Vietnamese banks have a digital transformation strategy.
Around 90% of banking transactions are handled through digital channels with 74.6% of adults having a bank account.
As of March around 3.71 million mobile money (or mobile payment) accounts had been opened, over 70% in rural, remote and disadvantaged regions across the country.
Non-cash payments have also seen significant growth, with 82 credit institutions offering internet-based payment services and 51 offering mobile payment services as of the end of last year.
There are 48 licensed intermediary payment organisations.
Digital transformation has helped banks bring down the cost-to-income ratio to 30%, on par with regional and international standards.
But experts say the legal framework for digital financial services is inadequate.
It is vital to improve institutional frameworks and upgrading infrastructure, they say.
The lack of human resources with up-to-date skills is another major challenge to digital transformation, they warn.
Organised along with the forum was a fair introducing the advancements needed for the financial industry’s digital transformation.
The event was hosted by the Vietnam Association of Securities Business, the Vietnam Digital Communications Association, and the International Data Group.
Source: Nhân Dân
Vietnam’s first unicorn VNG reports VND1,500 bln after-tax loss in 2022
The fact that the unicorn recorded more expenditures connected to taxes, intangible fixed assets, and allowance for financial investment activities led to the greater loss after taxes that the company experienced.
VNG aimed for a revenue of VND 10,178 billion in 2022 and anticipated a loss of VND993 billion after accounting for taxes. Therefore, the management unit of Zalo has merely met about 77% of the revenue plan, and the loss after taxes surpasses the projections.
The company recorded a loss of more than VND90 billion after taxes for the first quarter of 2023, with a net loss of more than VND40 billion during the same time period. The increase in net revenue to 1,852 billion Vietnamese Dong was 11% more than the same time the previous year.
The majority of the reason for VNG’s loss in the first quarter of 2023 stems from the fact that the firm is still under pressure from huge operational expenditures. The selling expenses for the company totaled VND544 billion, and the administrative expenses totaled VND337 billion. On the other hand, as of the end of March 2023, the total amount of the company’s undistributed profit after taxes amounted to VND 5,052 billion.
VNZ shares have been subject to trading restrictions since May 25 on the Hanoi Stock Exchange. This is because the company was late in filing its audited financial accounts for 2022 by more than 45 days, which is in violation of the laws. The trading of shares will take place solely on Fridays.
With a price of VND 771,900 per share as of the market’s close on May 29, VNZ continues to be the most expensive stock on the stock exchange.
India car rental app Zoomcar leaves Vietnam after 1.5 years
For customers, the app stops service from May 24, and will serve any bookings dated before May 24. Zoomcar will fulfill its obligations of payments to car owners normally until June 30.
In Vietnam, Zoomcar initially operated in Ho Chi Minh City and had plans to expand to Hanoi and Danang in 2023, as part of its target to become the biggest car rental service in Vietnam, said Zoomcar Vietnam CEO Kiet Pham. Vietnam’s car rental market, with a compound annual growth rate (CAGR) of 14%, can reach $884 million in 2027, he added.
The business attributed the decision to the market dynamics and projected complicated developments.
The car rental market in Vietnam has recently witnessed many new players, leading to fierce competition.
In March, Pham Nhat Vuong, chairman of Vietnam’s largest private conglomerate Vingroup, set up a new company, named GSM (Green-Smart-Mobility) JSC, offering electric car and motorbike rental and taxi services. It is the first green and integrated transport service model deployed in the world to popularize an electrified mobility experience, according to the company.
In December 2021, MoMo, a top e-wallet app in Vietnam, launched its car rental service. The move was in cooperation with Mioto, a HCMC-based car rental business. MoMo said its service would deliver cars to users’ homes and is available across major cities and provinces of Vietnam.
Foreign businesses also participate in the market. In 2017, MP Executives and Enterprise Holdings Inc. formed a partnership to launch Enterprise Rent-A-Car in Asia Pacific, starting with Vietnam. Enterprise Rent-A-Car is among the largest transportation solutions providers in the U.S.
In 2019, U.S. car rental business Hertz returned to Vietnam with initial operation in HCMC, after first-time operation in 2012. The Vietnamese franchisee, named New City Rent A Car, aims to serve foreigners in Vietnam and businesses with long-term demand to hire cars for staff.
Source: The Investor
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