Foreign investors race for Vietnam’s smart city solutions providers

ABB Group is among many foreign investors who are showing their ambitions to pursue many smart city projects in Hanoi, Ho Chi Minh City, Danang and other localities in Vietnam.

The Swedish group has recently signed a memorandum of understanding (MoU) for cooperation with Danang’s Department of Information and Communications in developing the beach city into a smart city by 2020 as per a smart city scheme worth VND2.1 trillion (US$91.3 million).

According to the MoU, ABB will support Danang in the areas of clean water and leakage management, waste and wastewater management, data center expansion, and help establish a marine operations center.

“ABB products and solutions are at the heart of a city's critical infrastructure, relied upon for everything from the supply of power, water and heat, to the automation of the factories and buildings we work in,” said Brian Hull, country managing director of ABB in Vietnam.

Other Swedish giants such as Ericsson, Volvo Buses, Electrolux and IKEA are also showing their intentions with new plans to support the smart city initiatives of cities and provinces in Vietnam.

Ericsson and its local partner Viettel has recently announced the operation of 5G mobile network on a trial basis, with a plan to roll it out on a large scale from 2020 onwards. It is now in strategic partnerships with mobile operators in the country to continue building out 4G networks.

Similarly, Dutch investors are working on specific smart city plans for Binh Duong. In particular, Philips plans to install smart lighting equipment, while other companies, including FabMax and NXP, are planning to build front-end chip plants in Ho Chi Minh City and back-end chip plants in Binh Duong.

Companies from Japan, South Korea, the US, and EU countries are also joining the race. Germany’s Bosch has invested US$450,000 in a new center to study new solutions towards building smart cities and Industry 4.0.

“We plan to develop Ho Chi Minh City into one of our centers to supply the Internet of Things solutions for Bosch in the Southeast Asian region in the long term,” said Guru Mallikarjuna, managing director of Bosch Vietnam.

Big opportunities

With ambitious plans to develop into smart cities, Hanoi, Ho Chi Minh City and Danang are now luring many investors from the US, the EU, Japan and South Korea.

Notably, the interest of foreign investors with the plans has been intensified after the Vietnamese government late last year approved a master plan for Vietnam’s smart and sustainable city development strategy for 2018-2025, with a vision towards 2030.

According to experts, basing on the concrete strategies in the plan set forth by the government, investors are now confident in the development of future investment plans, with fewer fears of unpredictable changes, which have been an issue in the past.

David Wong Nan Fay, chairman of the Asian-Oceanian Computing Industry Organization (ASOCIO), said that the potential for foreign investors to join smart city projects in Vietnam is great because of a lot of solutions on offer there. International groups have great potential to work closely with local Vietnamese partners to implement the solutions.

Digital infrastructure, IoT, cyber security, and education for talents are among the most attractive targets to foreign investors interested in smart city development, Fay said, suggesting to attract investor interest, the cities should launch programs, including business-to-business and mission trips, to promote these opportunities to international investors.