Da Nang is quickly developing into a tech hub, and its many opportunities are attracting the attention of investors and startups from all over the world. The Vietnamese coastal city is quietly building its stage through the support of significant business investments, as well as big plans by the local authorities to build a digital ecosystem by prioritising foreign projects in the high tech sector.
The previous software outsourcing model in Da Nang has evolved from low-cost services to something much bigger: creating major opportunities for startups. The first start-up fair was held in 2016 to develop the city's technological capabilities, while a US $1.3 million incubator was also installed to empower new businesses in the region.
Here are some of the reasons why you should consider Da Nang as a home base for your tech projects:
1. Notable government initiatives and support
According to Long Lam, CEO of QuangTrung Software City (QTSC), the technology sector is one of the main axes of the country's economic growth. After heavy government investments into a new $60 million airport and $93 million highway system, the city's infrastructure is far better suited for large-scale economic growth than Hanoi and Ho Chi Minh City (HCMC).
On top of that, the software outsourcing industry receives particularly favorable treatment in terms of tax costs. While the standard corporate income tax in Vietnam is 25% percent, companies involved in software development can qualify for rates of just 10% for up to fifteen years.
2. Increasing investment
In the early 2000’s, Vietnam had only a small role in global IT services, but now there are about 14,000 technology companies spanning the hardware, software, and digital content sectors. With a population of 1.5 million, there is a large enough customer base to try out new ideas and concepts with lower risks. Emerging companies can be established here to test, experiment and develop ideas without worrying that a failed product will be the end of their business. Deputy Minister Pham Anh Tuan said that in the context of the world economy, Vietnam has entered a period of growth based mainly on technology and innovation.
IBM agrees; in 2012, the company selected Da Nang as one of 33 cities in the world to receive their “Smarter Cities Challenge” grant, a three-year, $50 million program designed to renovate the city's infrastructure to better facilitate economic development, sustainability, transport and urban planning. "Da Nang is emerging as a well-planned and fast-growing city, which I believe puts them in a perfect position to experience new economic development initiatives," said Tan Jee Toon, General Manager of IBM Vietnam.
The city's potential as a technology hub continues to grow as companies from Japan, Europe, and the United States begin to come together to put down roots there.
3. Innovation nest
Da Nang offers a strong talent pool, with a growing population of young coders, engineers, entrepreneurs and students driving economic growth and technological innovation.
Da Nang University of Science and Technology, one of the three largest IT universities in the country, produces engineers who are recruited directly from the local workforce. "We offer the largest number of IT engineers for Central Vietnam," said Dr. Binh Nguyen, Director of the IT Department at Da Nang University of Science and Technology. “Last year we graduated 250 students and now we have 30 PhD students. Most students choose software engineering. All students carry out internships in companies for between two and five months, and last year 50 percent of the interns were hired.”
4. Da Nang offers a reliable and low-cost workforce
When it comes to costs, it's not just about finding the cheapest place to do business. You get what you pay for, and endless lines of error-ridden code are useless even at the lowest prices. This isn’t the case in Da Nang however, which provides some of the best talent around, while salaries remain low compared to western countries or more developed Asian neighbors such as South Korea, Japan and Singapore.
5. Da Nang: a "smart city"
The Vietnamese leader in information technology, FPT, aims to turn Da Nang into a "smart city", focusing on fields such as medicine, energy, traffic and agriculture.
They will work to prevent traffic jams through real-time road control and traffic sign management. They also plan to introduce an electronic patient registration system for hospitals, a crop management tool and technology to respond to natural disasters, like tsunamis and floods.
6. Da Nang biotech plans
Da Nang has invested $28.3 million to help turn the city into a biotech hub. Most of the investment has gone into upgrading the Da Nang Biotechnology Center to make it a major research and development facility in the region.
The city also hopes to attract investment for five high-tech farms outside of Da Nang to promote innovation in this field. In 2018, the city launched a high-tech agricultural zone with Vinamilk, Hapras and Greentech among the investors for a 117-hectare project.
7. The Vietnamese way of life
Da Nang is famous for its beautiful beaches right next to the city, great weather, breathtaking views, the Marble Mountains, delicious food, and super friendly people. Yes, the salaries are lower for the general workforce, but the low cost of living allows those who choose Da Nang to have a great quality of life.
Recognised by locals as the most dignified place to live in Vietnam, Da Nang has recently been voted by the famous travel magazine "Live and Invest Overseas" (LIO) as one of the 10 best places to live, which also consolidates Da Nang's position in the world tourism market.
At Rhino Ventures Asia, we spent many months weighing up the pros and cons of different cities across Asia to use as a base for our innovation hub. The more we found out about Da Nang, the clearer it became about how unrivalled it is in terms of its offering. Our CTO, Trevor Lewis concludes: “The stunning location of Da Nang, paired with the fantastic business incentives and burgeoning tech scene made it a no-brainer for us, and we can’t wait to start building up our team there!” So, with that in mind, we very much look forward to joining as a key player within the tech landscape of Da Nang in 2021 and taking advantage of everything the city promises.