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Promoting smart cities in developing countries: Policy insights from Vietnam

Article  in  Telecommunications Policy · November 2017

DOI: 10.1016/j.telpol.2017.10.005

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 Promoting Smart Cities in Developing Countries: Policy Insights
from Vietnam
Khuong Vu1 and Kris Hartley2

Suggested citation:

Vu K. and Hartley K. (2018). Promoting Smart Cities in Developing Countries: Policy Insights from Vietnam;
Telecommunications Policy, Forthcoming.

DOI: https://doi.org/10.1016/j.telpol.2017.10.005

Abstract

Smart city initiatives have been researched primarily in the developed country context. In
developing countries, however, emerging technologies are enabling progress on urban
functionality, productivity, and livability. A deeper understanding of facilitative policy conditions
unique to developing countries would be useful to both theory and practice. This study presents
empirically grounded insights about the policy implications of smart city development in
developing countries, based on surveys of experts from the public and private sectors in 10
Vietnam cities. The study makes three contributions. First, it provides new evidence that pursuing
smart city development (SCD) is not a development alternative but a critical strategic choice.
Despite being faced by many persistent problems, the readiness for SCD of cities in developing
countries as represented by Vietnam is significant and rapidly improving. Second, it provides new
insights into related policy issues and challenges, including the positive link between e-government
development and control of corruption, the risk of bias toward operational management over
institutional reform, and the lack of a clear development strategy. Finally, it proposes a model for
guiding smart city initiatives in developing countries.

Keywords: Smart city; developing countries; public policy; local government; Vietnam.

1. Introduction and background

The accelerating pace of urbanization in developing countries, and Southeast Asia in particular, is
presenting new opportunities to apply emerging technologies to the challenges of city
management. The integration of urban governance and technology, generally referred to as “smart

1
Lee Kuan Yew School of Public Policy, National University of Singapore, 469C Bukit Timah Road, Singapore 259772
2
Department of City and Regional Planning, Cornell University, 213 Sibley Hall, Ithaca, NY 14853

1
cities,” is driven both by global private enterprise and by local and national governments seeking
to strengthen economic competitiveness and improve quality of life. Despite these trends, smart
city development (SCD) in developing countries is not as closely studied as it has been in
developed countries. Using results from a survey-based study of SCD readiness among Vietnam’s
secondary cities, this article focuses on three questions. First, why should developing countries
prioritize SCD over other development alternatives? Second, what are the policy challenges faced
by cities in developing countries when embracing SCD? Third, what kind of strategic policy
framework should these cities adopt in pursuing SCD?

SCD exhibits three features that are relevant to this study. First, SCD is an increasingly salient
policy issue in both developed and developing countries. Global networks of smart cities include
localities not only in the US and EU but also in Sub-Saharan Africa, Asia, and Latin America.3
SCD has elicited interest from government leaders even in least developed nations. For example,
the third Transform Africa Summit, held in Kigali (Rwanda), convened over 300 mayors across
Africa for a focused discussion on SCD.4

Second, SCD increasingly involves joint efforts among multiple stakeholders. A recent EU study
identified 240 SCD projects concurrently involving government, industry, and civil society (EU
2014), with all examined projects using a mix of public and private finance (p. 56). However, the
degree and nature of participation varies, indicating that technology progress can sometimes
outpace institutional development.

Third, governments in some developing countries have launched ambitious national plans, in the
style of top-down industrial policy and central planning, to promote nation-wide SCD initiatives.
China and India are particularly illustrative examples. In China, six government agencies 5 are
actively participating in SCD initiatives. By the end of 2013, “a total of 311 cities in China, which
include all cities above the sub-provincial-level and 89 percent cities at the prefectural-level and
above have proposed or are embarking on smart city development” (PDSF, 2004: 10). In India,
Prime Minister Narendra Modi announced the government-backed Smart Cities Mission in June
2015.6 The strategy includes development of 100 smart cities, with a competitive selection process

3
For example, see https://smartafrica.org/?-Members- for the African countries committed to building smart
Africa and http://smartcities4all.org/20170627_press_release_English_pdf.php for the 10 leading smart Cities in
Latin America.
4
Source: “Africa: 2016 Transform Africa to Focus on Smart Cities” by Collins Mwai, 18 May 2016; available at
http://allafrica.com/stories/201605180014.html.
5
These include the Ministry of Industry and IT (MIIT), National and Reform Commission (NDRC), Ministry of
Science and Technology (MOST), Ministry of Housing and Urban-Rural Development (MOHURD), National
Surveying, Mapping, and Geoinformation, and National Tourism Administration.
6
This mission aims to help India more effectively manage rapid urbanization from a low level (the country’s urban
population share is expected to increase from 31 percent in 2015 to 40 percent in 2030). Source: “What is a smart
city?”, available at http://smartcities.gov.in/writereaddata/What%20is%20Smart%20City.pdf

2
that encourages flexibility and creativity in SCD initiatives.7 With the promotion of SCD
increasingly regarded as a strategic imperative for leveraging urbanization for development,
numerous countries are embracing ambitious planning visions such as these.

Smart city technologies present opportunities for developing countries to manage the impacts of
rapid urbanization, and this study’s case of Vietnam is an illustrative example. Vietnam’s
urbanization has accelerated since 19908 as the impacts of the country’s 1986 economic reforms,
known as Doi Moi, began to take shape. The share of Vietnam’s urban population increased from
20 percent in 1990 to 24.4 percent in 2000 and 33.6 percent in 2015. At the same time, the country’s
ICT infrastructure began to rapidly develop starting in 1995, when penetration rates were only 1
percent for fixed lined telephones, 0.03 percent for mobile phones, and zero for internet. The
government’s ambition to leverage ICT for economic development played a crucial role in driving
Vietnam’s improved ICT penetration rates (Vu and Austin, 2015). By 2015, Vietnam
outperformed most developing Asian countries on internet penetration and was well above its
income-predicted level (Figure 1). In 2016, Vietnam ranked 79th out 139 countries in the World
Economic Forum’s Networked Readiness Index, having improved 6 places since 2015 (WEF,
2016). Vietnam also ranked high on several ICT-related sub-indices: 3rd on affordability, 61st on
government use, and 65th on social dimensions (WEF, 2016: 192).

Figure 1: Per capita income and internet penetration (2015)

7
Source: http://smartcities.gov.in/writereaddata/Strategy.pdf
8
Due to difficulties caused in part by economic mismanagement, Vietnam’s urbanization was sluggish for the
decade after 1976 reunification. Over this period, the share of urban population in the total population increased
insignificantly, from 19 percent in 1976 to 20 percent in 1990.

3
 100
Japan
90 South Korea
Hong Kong
80
Singapore
# subsribers/100 inhabitants

70
Vietnam
60 Predicted line
China
50
Asia Pacific
World
40
Philippines
India Thailand
30 Cambodia

20 Myanmar
Laos

10 Indonesia
Pakistan
Bangladesh
0
6.0 7.0 8.0 9.0 10.0 11.0 12.0

Ln (per capita income in current PPP$)

Data source: World Development Indicators, accessed September 20, 2017

Although Vietnam’s SCD is still in its early stages, several individual efforts are noteworthy. Da
Nang received an IBM Smarter Cities Challenge grant to improve “smart” functionality in
transportation and water. Using IBM smart cities technologies, the Da Nang Transport Department
now collects real-time data about city buses, providing passengers with information about routes
and arrival times. Likewise, the city’s water utility, DAWACO, processes real-time data about
treatment processes to monitor water quality and service levels for residential and industrial users.9

Vietnam is also now soliciting advice from countries that are leaders in SCD. For example, the
Ministry of Construction and KOICA (Korea International Cooperation Agency) plan to
collaborate between 2016 and 2018 on a US$650 million SCD project that includes training and
equipment support for Vietnam’s Green City Index, Green City law, and urban planning

9
“Da Nang kicks off smart city project”, August 28, 2013, http://www.vietnambreakingnews.com/2013/08/da-
nang-kicks-off-smart-city-project/, accessed 25 August 2017.

4
guidelines.10 Additionally, in 2015 central government pledged to develop at least three pilot smart
city projects between 2016 and 2020, in a sweeping program to foster national ICT development.11

It is evident that Vietnam’s urbanization, structural transformation, and increasing willingness to

embrace technology for development have established a fertile environment for the emergence of
SCD. In fact, As of May 2017, nearly 20 out the country’s 63 provincial level cities and provinces
have launched their pilot projects to build smart cities.12

In light of these advancements, studying SCD in Vietnam can provide valuable insights into SCD
in developing countries, for three reasons. First, Vietnam is broadly representative of developing
countries in population size and level of development.13 Second, Vietnam has made strong policy
efforts to embrace ICT and SCD in pursuing development. Third, Vietnam’s challenges in
promoting SCD are similar to those faced by developing countries, including infrastructure,
governance, and resourcing. As such, the policy insights and action frameworks emerging from
the Vietnam case are helpful for policy makers in other developing countries.

The remainder of this paper is organized as follows. Section 2 provides a literature review about
trends related to smart cities, including urbanization and the use of technology in urban
management. Section 3 presents the empirical analysis, including a description of the survey and
key findings. A strategic policy framework is proposed in Section 4. Section 5 concludes with a
summary and suggests further research directions.

2. Literature review
This review presents a brief examination of the literature about SCD, with a focus on developing
countries. Discussions of SCD in developing countries are often situated within the context of the
challenges of rapid urbanization. Urbanization is an indelible force, based on recent trends in
developing Asia, and its impacts on national economic development are varied. On one hand,
urbanization fosters efficiency, innovation, and productivity through agglomeration,
specialization, modernization, and global connectivity (Dixit and Stiglitz 1977; Fujita and Ogawa
1982; Becker and Henderson 2000; Krugman 1991). On the other hand, poorly governed

10
“KOICA supports VN Green City planning model,” October 12, 2015, KOICA,
http://www.koica.go.kr/english/board/press_releases/1320720_3534.html, accessed 25 August 2017.
11
Prime Minister’s Decision 189/QĐ-Ttg on approval of the National Program on ICT applications in government
agencies for period 2016-2020, October 26, 2015
12
Symposium on building smart cities in Vietnam, May 19, 2017, The Voice of Vietnam,
http://english.vov.vn/society/symposium-on-building-smart-cities-in-vietnam-349869.vov, accessed 10 August,
2017.
13
In 2015, Vietnam’s population was 92 million, per capita income was US$2,111 (third decile) and PPP$6,034
(fourth decile), and urban share in total population 33.6 percent (2nd decile). Data source: World Development
Indicator dataset.

5
urbanization can generate complex problems such as pollution and public health degradation
(Eckert and Kohler 2014) and socio-economic inequality (Cohen 2006).14

Emerging technologies, including those used for SCD, offer possible solutions to these and other
challenges of urbanization, in addition to providing a basis for economic competitiveness and
development. According to Dobbs et al. (2015), ICT is among the major forces that will shape
global development in the first half of the 21st century. Given that 90 percent of this increase in
the world’s urban population growth will occur in developing regions of Asia and Africa (UN
2014), ICT is likely to be a major urban policy interest in developing contexts. ICT is already
becoming a vehicle for cities to achieve development goals (Akcura and Avci, 2014), and
increasingly provides opportunities to leverage urbanization for strategic national development.
Introduced in the 1990s, the smart city concept has promoted applications of ICT to guide and
support urban development (Albino et al. 2015). The varied and evolving application of smart city
technologies implies that the concept eludes a universal definition.15 The International
Telecommunication Union (ITU) Focus Group on Smart Sustainable Cities defines a smart city
as:

“…an innovative city that uses information and telecommunication

technologies (ICTs) and other means to improve quality of life, efficiency of
urban operation and services, and competitiveness, while ensuring that it
meets the needs of present and future generations with respect to economic,
social and environmental aspects.”16

The European Innovation Partnership on Smart Cities and Communities defines smart cities as:

“…systems of people interacting with and using flows of energy, materials,

services and financing to catalyze sustainable economic development,
resilience, and high quality of life; these flows and interactions become smart
through making strategic use of information and communication
infrastructure...”17

For the purpose of this article, the term smart city is conceptualized as the institutionalized and
integrated application of smart technologies with a digital age mindset to the tasks and challenges
of urban management. This definition includes institutional aspects and integration in order to
emphasize the long-term commitment needed by governments to embrace technology for
development. In particular, this article focuses on the obstacles and opportunities for government

14
For a recent and useful overview of such challenges, see Collier and Venables (2017).
15
A summary of definitions of smart cities can be found in Albino et al. (2015).
16
Source: ITU, available at http://www.itu.int/en/ITU-T/focusgroups/ssc/Pages/default.aspx, accessed 25 August
2017.
17
Source: European Innovation Partnership on Smart Cities and Communities - Strategic Implementation Plan;
European Commission, 2013, available at http://ec.europa.eu/eip/smartcities/files/sip_final_en.pdf, accessed July
20, 2016.

6
institutions to shape, and be shaped by, technology. Hence, the definition is suited to the scope and
aims of this empirical study.

SCD has been seen as a platform for addressing market and government failures, challenges often
faced during rapid urbanization. Government failures common to urbanization include
management of externalities and coordination. Government interventions themselves can also
generate failures, including information constraints and rent-seeking (Rodrik, 2008; Nodé, 2010;
Aghion et al, 2011; Krueger, 1974; Lin 2009). Externalities emerge primarily from the mismatch
between private gains and impacts on external or public parties (Warwick 2013). Without
government-backed incentives, entrepreneurs may refrain from investment in projects that could
produce social and economic benefits, due in part to the problem of appropriability (Rodrik 2004;
Lin 2009, 2012; Naudé 2010; Harrison and Rodríguez-Clare 2009). SCD helps cities overcome
this problem partly because large-scale initiatives often involve public-private partnerships,
encouraging entrepreneurs to assume risk in developing SCD applications. A recent study by EU
(2013) finds that public-private partnerships (PPPs) are highly important in successful SCD
projects. Indeed, a strand of literature has emerged focusing on the role of public-private
partnerships in SCD, including the role of open data initiatives and social networking in public
utility innovation and local digital agendas (Balena et al. 2013), the riskiness of relying on private
investment in smart city initiatives (Hollands 2008), the coordination of public and private
activities in an open platform for smart city initiatives (Lee et al. 2014), and public-private
partnerships for the digitization of public health governance (Tavares 2016).

Coordination failure is another major obstacle to development (Rodrik, 2004, 2007; Lin 2012),
referring in this context to provision of infrastructure, regulation, and legislative action. Such
initiatives compel private industry to make simultaneous investments that generate economies of
scale and spill-over effects. Coordination includes institutional arrangements facilitating
collaboration among agencies and between the public and private sectors, improving the quality
of decision-making and aligning interests among stakeholders. Coordination can also help firms
to overcome finance, infrastructure, and logistics constraints to market entry and upgrading, and
to achieve synergistic gains through deeper industry linkages. In regards to improved coordination,
promotion of SCD can be classified into several dimensions (see Lombardi et al. 2012; EU 2014):
(i) smart governance; (ii) smart economy; (iii) smart people; (iv) smart living; (v) smart
infrastructure and mobility; and (vi) smart environment. These elements are adopted as the basis
for the survey structure in this study.

Finally, academic studies about SCD preparedness have been applied largely to the narrow context
of developed countries. The literature about smart city preparedness in developing countries is in
its early stages, and deserves further empirical support. Studies of smart cities in Southeast Asia
in particular are few and idiosyncratic; these include smart city projects in Kuala Lumpur (Yau et
al. 2014), lessons from Singapore in SCD in Southeast Asia (Calder 2016; Niculescu and Wadhwa
2015; Mahizhnan 1999), smart-grid development in Thailand (Leeprechanon et al. 2012), and
infrastructure investment for smart cities in Vietnam (Ha and Fujiwara 2014). The dynamics of
7
SCD in Southeast Asia, including facilitative policy interventions, have little theoretical consensus
in the literature and limited empirical support. This study is an effort to help fill that gap. Insights
from the survey in this study enrich the literature about smart cities by illustrating the challenges
of smart city governance as they differ between developed and developing contexts. For example,
SCD in developing countries can be obstructed by the variety of governance challenges (e.g.
inefficiency and corruption) that plague most other policy initiatives across sectors such as health,
education, infrastructure, and trade. This study provides evidence of this dynamic.

3. Survey of SCD readiness in Vietnam’s cities

3.1 Survey approach and questionnaire

3.1.1. Survey approach

The objective of this study is to gain insights into the SCD readiness of Vietnam’s cities, in order
to inform insights about related policy and governance issues. To meet this objective, the survey’s
is designed to focus on three crucial areas: expert perceptions, secondary cities, and case city
representativeness.

First, the study adopts an expert perception survey approach. The survey seeks to understand the
SCD readiness and related governance issues in a given city by examining the opinions of
respondents from government and non-government sectors who are knowledgeable of SCD
concepts and their respective city’s development policies. The expert perception survey approach
is justified because SCD is a relatively new concept to most of Vietnamese society, and the most
useful insights can be gained from a focused sample group.

Second, the survey targets Vietnam’s secondary cities rather than major cities because the former
are representative of the current and future dynamics of urbanization in Vietnam. Vietnam has a
total of 94 officially recognized cities, including two “mega-cities” (Hanoi and Ho Chi Minh City),
58 secondary cities, and 34 third-tier cities (see Appendix A1 for an overview of Vietnam’s cities
by classification). As presented in Appendix 1, Vietnam’s secondary cities are capturing the largest
share of national urban growth. Additionally, Vietnam’s two mega-cities are unique in their
political-economic character (Hanoi as the national capital, and Ho Chi Minh City as a long-time
economic hub), and their exceptional characteristics could limit the generalizability of survey
findings.

Third, the survey selected 10 cities and targeted 50 respondents from each city. The characteristics
of the 10 selected cities, reported in Table 1, indicate their representativeness of Vietnam’s
secondary cities in terms of population size, year of establishment, and geographic location. In
particular, the range of their population size, from 100,000 (Lao-Cai) to 1,000,000 (Bien-Hoa)

8
encompass the range for nearly all of Vietnam’s secondary cities. Additionally, the geographic
locations of the 10 cities are fairly well distributed across the country (Appendix 2, Figure A1).

Table 1: Summary information for surveyed cities

Distance from
economic hubs (km)
Area
City Province Population Year of HCM
(km2) Hanoi
establishment City

Bien-Hoa Dong Nai 1,054,108 263.55 1976 1,684 40

Da-Lat Lam Dong 217,720 394.39 1920 1,481 280
Ha-Long Quang Ninh 257,577 271.5 1994 151 1,566
Ha-Tinh Ha Tinh 117,546 56.2 2008 353 1,306
Hue Thua Thien Hue 350,345 71.7 1802* 700 1,000
Lao-Cai Lao Cai 108,221 230 2004 280 2,014
My-Tho Tien Giang 224,018 81.5 1928 1,765 70
Nha-Trang Khanh Hoa 412,112 253 1977 1,278 488
Thanh-Hoa Thanh Hoa 406,550 146.77 1994 155 1,560
Vinh Nghe An 308,868 105.07 1927 295 1,424
Source: VAIP, Vietnam’s General Statistical Office.
Note: Hue was the royal capital during the Nguyen Dynasty from 1802 to 1945.

3.1.2. Survey questionnaire

The survey questionnaire consists of three parts. Part A assesses readiness as defined by the SCD
framework presented in Section 1. Questions are organized along five dimensions: (i) smart
governance (20 questions); (ii) smart economy (15 questions); (iii) smart human capital
development (22 questions); (iv) smart infrastructure and mobility (18 questions); and (v) smart
environment (8 questions). Part B investigates the degree to which key factors characterizing SCD
have changed over the three years preceding the survey in each city (22 questions). Part C solicits
opinions about obstacles and priorities for each city in SCD (23 questions). A summary of the
survey questionnaire is provided in Appendix 3.

For survey questions soliciting assessments, a 1-7 likert scale is used (1=strongly disagree;
2=somewhat disagree; 3=disagree; 4=neutral; 5=somewhat agree; 6=agree; 7=strongly agree).
This elongated scale outperforms the frequently used five-point scale by allowing for additional
granularity and nuance in respondents’ judgment, in particular for the often complicated topics

9
addressed by the survey.18 For each question (indicator), an average score above 4.0 implies a
positive overall perception, while an average score below 4.0 implies a negative overall perception.
The score by a given respondent for an aggregate topic such as “smart governance” is calculated
as the simple mean of that respondent’s scores for all questions addressing that topic.

3.2. Survey administration

The survey was administered by the Vietnam Association for Information Processing (VAIP).
VAIP has important advantages that were considered crucial to ensuring the success of the survey.
These include (i) national coverage (VAIP has an extensive national network that reaches most
cities), (ii) ICT focus (VAIP is a nationwide association with the charge to promote ICT adoption
and applications), and (iii) rich experience with data collection and survey administration. VAIP
has been the principal partner of the Ministry of Information and Communication (MIC) in
collecting data for the “Vietnam ICT Index” report, published annually.

The survey was conducted from March to June 2015. VAIP representatives in each of the 10
surveyed cities recruited 50 to 60 people and provided detailed explanations to ensure that
respondents clearly understood the survey questions. The sample of respondents for each city was
recruited from among government officials, business people, and professionals. The sampling
strategy was based on three criteria. First, respondents (considered as experts) should be
knowledgeable about the basic concepts of SCD and their respective city’s development. Second,
the sample should have the same number of respondents from government and non-government
sectors. Finally, the selection of respondents was conducted to ensure as random a sample as
possible.

3.3. Respondent profile

The overall sample comprises 504 respondents, of whom 52 percent are incumbent government
officials and 48 percent non-government representatives including business people, professionals,
and retirees (Figure 2). 78 percent have work experience of more than five years; 90 percent have
lived in their city for at least five years; 68 percent are between 30 and 50 years old; 100 percent
frequently use email and 95 percent Facebook. This profile supports the claim that respondents are
experts. Checks of internal consistency, presented in Appendix 4, confirm the reliability of the
survey’s results.

Figure 2: Respondent profile (N=504)

18
This seven-point scale has been extensively used by many well-known surveys, including the expert opinion
survey conducted by the World Economic Forum for the annual Global Competitiveness Report.

10
 Work experience

> 20 years ≤5 years

20% 22%

6–10 years
11–20 years 26%
32%

Length of time living in the city Age

≤5 years
above 50
9% Below 30
13%
19%

6–10
years
15%
> 20 years 11–20 years
54% 22%

30-50
68%

3.3. Analytical framework

Analysis of the survey results is based on the following simple model:

𝑌𝑖𝑗 = 𝛼 + 𝛽𝑋𝑖𝑗 + 𝜃𝑖 + 𝜖𝑖𝑗 (1)

Where 𝑌𝑖𝑗 is the score on a given question by respondent 𝑗 in city 𝑖. 𝑌𝑖𝑗 can also represent the gap
between scores on two related questions. 𝑋𝑖𝑗 is a vector of explanatory factors, which can include
the score on a related question, the characteristic of the respondent (for example, government or
non-government), and interaction terms. 𝜃𝑖 represents city-specific effects, and 𝜖𝑖𝑗 is the random
error term. Controlling for city-fixed effects enhances the accuracy of estimation of the standard
errors, and hence the confidence interval of the estimated coefficient (Petersen, 2009).

11
Additionally, government and non-government respondents may have certain structural
differences in their views about some issues. For example, Appendix 5 shows that government
respondents are notably more positive than non-government respondents in assessing governance
and change-related issues. To address this potential bias, sampling weights are used in all
regressions to ensure that government and non-government respondents have equal shares (50-50)
in each city-level subsample. Finally, when there is no variable in vector 𝑋𝑖𝑗 , regressing model (1)
using the Stata command “areg,” with pweight and absorb (city), reports the mean of the score of
interest.

3.4. Selected survey results

This section describes selected survey results that specifically provide policy insights for
promoting SCD in developing countries. The results are grouped into six areas: problems faced by
city governments, SCD readiness, the changing dynamics of SCD readiness, bias toward
operational management, and obstacles and priorities faced by city government in promoting SCD.

3.4.1 Problems faced by city governments

Survey results indicate that corruption, traffic accidents, crime, economic inequality, and
unemployment, in decreasing order of severity, are the most significant problems faced by
governments in Vietnam’s secondary cities (Table 2). The aggregate scoring given by respondents
on each of these issue is in negative zone (below the mid-line value 4.0). For corruption, the most
severe problem, the upper bound of the 95% confidence interval is 3.45, is far below 4.0.

Table 2: Problems faced by Vietnam’s secondary cities

95% Confidence
Issue Score Robust SE
Interval
Corruption 3.29 0.078 3.14 3.45
Traffic accidents 3.50 0.081 3.34 3.66
Crime 3.50 0.079 3.35 3.66
Inequality 3.54 0.075 3.39 3.69
Unemployment 3.63 0.079 3.47 3.78
Notes: Perceptions are rated on 1-7 Likert scale. The statistic summaries are based on model (1),
controlling for city fixed effects and sampling weights.

3.4.2 Readiness for SCD

In an overall picture, however, survey results indicate that Vietnam’s secondary cities are in
positive zones along the five SCD dimensions (Table 3), with aggregate scores well above the 4.0

12
threshold. Cities appear to be best prepared on the smart economy dimension of SCD, with an
aggregate score of 5.1. Although smart infrastructure and smart government are the two
dimensions on which the cities are least prepared, their scores were not significantly below 5.0.
This implies that the readiness of cities is somewhat established across all the five SCD
dimensions.

Table 3: Readiness of Vietnam’s secondary cities for SCD

Aggregate 95% Confidence

SCD Dimension Robust SE
Score Interval
Smart economy 5.1 0.048 5.01 5.19
Smart human capital
5.0 0.041 4.87 5.03
development
Smart environment 4.8 0.052 4.71 4.89
Smart government 4.6 0.047 4.50 4.72
Smart infrastructure 4.6 0.056 4.49 4.71
Overall score 4.8 0.054 4.70 4.91
Notes: Perceptions are rated on 1-7 Likert scale. The statistic summaries are based on model (1),
controlling for city fixed effects and sampling weights.

3.4.3 Changing dynamics of SCD readiness

Respondents’ perceptions about changes in SCD readiness were strong among all five dimensions,
with the overall score of 5.2. Smart infrastructure (score=5.4), smart human capital development
(5.3), and smart economy (5.2) show the largest changes, while smart government (4.9) and smart
environment (4.9) were somewhat weaker and below the 5.0 level (Table 4).

Table 4: Changing dynamics of SCD readiness

95% Confidence
SCD Dimension Score Robust SE
Interval
Smart infrastructure 5.4 0.043 5.28 5.45
Smart human capital development 5.3 0.05 5.19 5.36
Smart economy 5.2 0.05 5.08 5.28
Smart government 4.9 0.046 4.80 5.00
Smart environment 4.9 0.043 4.74 4.96
Overall score 5.2 0.055 5.06 5.24
Notes: Perceptions are rated on 1-7 Likert scale. The statistic summaries are based on model (1),
controlling for city fixed effects and sampling weights.

13
Examining the link between changing dynamics and level of SCD readiness, as measured by the
survey, reveals two additional insights. First, for a given SCD dimension, respondents’ perception
score on readiness for a given city is strongly associated with that of changes over the preceding
three years. As shown in Table 5, the correlation coefficient between these two perception scores
is positive and statistically significant at the 1% level. This suggests that the current level of
readiness of a city on a given SCD dimension depends significantly on its level change over the
preceding three years. In light of this finding, two observations deserve further explanation. First,
the relatively low score on readiness for smart government can explained by the relatively low
score on change for smart government. Second, the score on current level of readiness for smart
infrastructure is relatively low, the score on change for smart infrastructure is relatively high. This
indicates that although infrastructure in the surveyed cities has improved considerably over the
three years preceding the survey, the current condition of infrastructure remains only modestly
developed due to the low starting point.

14
Table 5: Link between change and readiness scores on SCD dimensions

Dependent variable: Readiness score

Current level of readiness

Explanatory Smart Smart Smart Smart Smart
variable Government Economy Human capital Infrastructure Environment

Change over the

preceding three 0.671*** 0.567*** 0.633*** 0.632*** 0.431***
years
(0.042) (0.039) (0.039) (0.053) (0.044)
Constant 1.307*** 2.149*** 1.591*** 1.186*** 2.688***
(0.221) (0.211) (0.207) (0.299) (0.229)
Adj_R2 0.51 0.49 0.55 0.39 0.33
N 353 412 416 380 436
Notes: The perception is rated on 1-7 Likert scale. The regressions are based on model (1),
controlling for city fixed effects and sampling weights. The figures in parentheses are robust
standard errors. ***p<0.01; **p<0.05.

Second, for each SCD dimension, the score on change is higher that on readiness (Table 6). This
indicates that the views of respondents about the future prospects of their cities tend to be
optimistic, as change is a strong driver of readiness.

Table 6: Gap between scores on change and readiness along SCD dimensions

SCD Dimension Readiness Change Gap

(1) (2) (2)-(1)
Smart infrastructure 4.6 5.4 0.8
Smart government 4.6 4.9 0.3
Smart human capital development 5 5.3 0.3
Smart economy 5.1 5.2 0.1
Smart environment 4.8 4.9 0.1
Overall score 4.8 5.2 0.4
Notes: Perceptions are rated on 1-7 Likert scale. The statistic summaries are based
on model (1), controlling for city fixed effects and sampling weights.

15
3.4.4. Operational management versus institution building efforts

This subsection investigates the gap and link between operational management and institution
building in SCD efforts. Questions related to online government services (OS) and corruption
control (CC), respective proxies for operational management and institution building, are chosen
for this analysis. The investigation first examines the gap between OS and CC in their scores on
current levels and change dynamics. The investigation then assesses the link between CC and OS
to identify whether improving OS (operational management) can be an effective way to enhance
CC (institution building).

Gap between OS and CC

As shown in Table 7, the gap between OS and CC is notable: 1.6 for the score on current level of
readiness versus 1.0 for the score on changes over the preceding three years. These gaps indicate
that city governments may be biased towards operational management in promoting SCD, while
making progress on institution building is far more challenging. It is notable, however, that the
OS-CC gap on change (1.0) is notably smaller than the OS-CC gap on current level (1.6). This
suggests that changes may reduce governments’ aforementioned bias over time.

Table 7: Gap between OS and CC

95% Confidence
Indicator Score Robust SE
Interval
OS current level 4.9 0.07 4.7 5.0
CC current level 3.3 0.08 3.1 3.4
The OS-CC gap on current level 1.6 0.10 1.4 1.8
OS change 5.2 0.05 5.1 5.3
CC change 4.2 0.07 4.1 4.3
The OS-CC gap on change 1.0 0.06 0.8 1.1
Notes: Perceptions are rated on 1-7 Likert scale. The statistic summaries are based on model (1),
controlling for city fixed effects and sampling weights.

16
Link between OS and CC

E-government development can enhance the effectiveness of corruption control (Andersen 2009;
Elbahnasawy 2014). This subsection examines the potential effect of improvement in OS, as
measured by its score on change (OS Change), on the effectiveness of corruption control, as
measured by the scores on CC current level (CC Current) and CC Change.

As shown in Table 8, the coefficient on OS Change is positive and robustly significant at the 1%
level across regressions (1) through (4). The result in regression (1) supports the hypothesis that
improving OS has a positive effect on the current level of CC, while the result in regression (2)
suggests that the effect of OS Change on current CC is rendered through CC Change. Results from
regressions (3) and (4) further indicate that that the perception about positive effects of OS Change
on CC Current level and CC Change is stronger for respondents from the government than from
the private sector.

Table 8: Link between OS and OC

Explanatory variable Dependent variable

CC current CC Change CC current CC Change
(1) (2) (3) (4)
OS Change 0.252*** 0.584*** 0.202*** 0.537***
(0.077) (0.047) (0.079) (0.050)

OS*GOVT --- --- 0.059** 0.059***

(0.030) (0.022)
Constant 1.997*** 1.195*** 2.097*** 1.284***
(0.390) (0.244) (0.386) (0.244)
N 477 472 477 472
Adj-R2 0.15 0.43 0.16 0.44
Notes: The perception is rated on 1-7 Likert scale. The regressions are based on model (1),
controlling for city fixed effects and sampling weights. The figures in parentheses are robust
standard errors. ***p<0.01; **p<0.05.

3.4.5 Obstacles to SCD

In rating the top five challenges to SCD in their cities, 81 percent of respondents identified “lack
of a clear strategy,” which implies that strategy is the most serious issue (Figure 3). “Lack of
funding” (76.1 percent of respondents) and lack of capabilities to manage change (69.3 percent)
are identified as the second and third most significant obstacles. These findings suggest that city
governments, in their SCD endeavors, should see strategy formulation and capacity building as
more important than securing funding.

17
Figure 3: Obstacles to SCD

Source: Survey of Vietnam’s 10 secondary cities.

Notes: N=504. The score for a given challenge is the share of respondents who rank it as one of
the five most serious obstacles to SCD in their cities.

18
3.4.6 Priorities in SCD

In selecting the top five priorities from a list of given policy options, the largest share of
respondents (62.4 percent) chose “improving basic infrastructure,” which implies that upgrading
remains the most urgent priority, despite improvements in infrastructure over the preceding three
(Figure 4). Notably, priorities associated with institution building, including “enhancing
government competence” (59.5 percent), “strengthening the fight against corruption” (46.9
percent), “enhancing government transparency” (41.7 percent) and “empowering citizens through
ICT applications” (40.5 percent) are ranked above “increasing online government services” (34.5
percent). These findings suggest that while improving operational management through ICT
applications such as online services is important and well recognized, efforts on reforms that foster
institution building are essential.

Figure 4: Priorities in SCD

Source: Survey of Vietnam’s 10 secondary cities.

Notes: N=504. The score for a given issue is the share of respondents who rank it as one of the
five most pressing priorities for the city to take in order to succeed on its SCD.

3.5. Discussion

19
This section discusses the findings outlined in Section 3.2, focusing particularly on how SCD is a
strategic imperative for cities in developing countries. Across all survey results, several biases
regarding SCD governance in Vietnam’s secondary cities are evident: operational management
over institution-building, funding over vision, and FDI over government competence. Other issues
identified in the surveys include lagging government performance on coordination capabilities,
online services and e-government, and evenness of change. These dimensions are explored in this
section through four general themes: operational management, strategy, government competence,
and transparency.

The first general theme is that ICT has been applied more to operational improvements than to
institutional development. This reflects a common but misguided policy emphasis on the
“hardware” of development (e.g. technology) over “software” (e.g. governance and program
management). Operational improvements target aspects like public document availability, day-to-
day work efficiency, and connectivity to citizens. However, for ICT-enabled reforms, there
appears to be relatively lower priority on institutional dimensions such as citizen consultation and
performance feedback systems. This is also the case for transparency, despite scholarly evidence
that the use of ICT in governance systems can help reduce corruption (see: Andersen 2009;
Elbahnasawy 2014). Operational improvement may be more alluring because the application of
ICT can provide “quick wins” through immediate efficiency gains and capacity expansion.
Operational gains are also measurable and scalable, providing clear support for further investment.

Second, survey results reveal that lack of clear development strategy is seen as a top obstacle to
SCD. Governments may be tempted to implement ICT initiatives that are immediately available
and can fit existing systems. However, this risks channeling investment away from strategic
objectives. Governments should begin ex-ante evaluation for SCD by determining overarching
strategic priorities rather than focusing on immediate fiscal and operational gains. It is also
imperative that governments embrace realistic expectations about SCD potential; its ability to
solve wicked problems faced by developing countries can be overestimated. Governments should
understand what SCD can and cannot accomplish, and manage expectations among stakeholders
and the general public.

Third, survey results indicate that improving government competence is more urgent than
attracting FDI. Competence reflects the ability of government to fulfill citizen expectations.
Although Vietnam has reaped substantial benefits from attracting FDI,19 government competence
is a more vital concern for SCD; this implies that embracing ICT should go beyond a transactional
focus to emphasize institutional reforms. While gains from ICT are often quickly realized and
easily measured, integrating ICT into government functionality can also expose institutional
shortcomings and build the case for improving competence, capacity, and responsiveness.

19
Vietnam has become one of the most globally integrated economies in the world, with the trade-to-GDP ratio
exceeding 2.0, and the FDI sector accounting for 70 percent of total exports in 2015 (source: World Bank
Development Indicators).

20
Regarding FDI, government competence can be an attractive factor for foreign investors and
ensure that FDI gains are effectively managed.

Finally, survey results indicate that enhancing government transparency and empowering citizens
through ICT applications are urgent policy needs in regards to SCD. Building credibility through
transparency, not only among foreign investors but also citizens, is important for several reasons.
First, as economic growth leads to domestic prosperity, more capital is available for development,
including SCD. The feedback loop of domestic resource mobilization can complement FDI for
SCD. Second, as citizens gain confidence in governance quality, they may be more likely to
participate in policymaking. This may help ensure that the benefits of SCD do not accrue only to
foreign investors and domestic elites but also to citizens through social programs like education
and healthcare. Finally, increased transparency acts as a crowd-sourcing mechanism for
governance improvement, as NGOs and other actors better understand obstacles to SCD and can
propose solutions. Transparency in reporting can also help governments measure progress and
identify areas for improvement. Lack of transparency and citizen empowerment can hinder SCD
by compromising the functionality and credibility of governance. ICT can improve these two areas,
as data collection and dissemination generates an open-data environment that feeds transparency
and empowers civil society.

Policymakers should be aware of the challenges related to leveraging ICT to improve institutional
functionality. First, institutional conditions can be deeply embedded in governance systems. This
includes not only structural inertia and resistance to change based on complex interdependencies,
but also bureaucratic self-interest in maintaining a status-quo. Second, improvement in
institutional conditions can be difficult to measure, particularly in a short-term timeframe. In
fiscally constrained environments, justification for government expenditures is often politically
contentious. ICT-enabled reform of governance systems requires a clear justification such as proof
of fiscal or economic returns. When applying ICT to seemingly intractable governance challenges
like corruption, return is difficult to measure or attribute to ICT. Nevertheless, it is clear from the
survey results that city governments should pay more strategic attention to institution-building.
SCD will not realize its full potential without commensurate reforms. It was also evident in survey
results that lack of funding and lack of understanding of SCD concepts are serious obstacles to
SCD. Amidst fiscal constraints, strategic fit for SCD becomes even more essential as governments
cannot afford to lose investment returns.

4. Policy recommendations: the SMART framework

The discussions in Section 3 provide insights for developing a model to guide SCD initiatives. The
following model encompasses five dimensions: strategy, monitoring, accountability, rethinking,

21
and transformation. These five in combination can be labeled the “SMART” model.20 This section
briefly outlines each of these dimensions. First, lacking a clear development strategy is seen by
survey respondents as the most serious obstacle to SCD. Clear strategy is crucial for the following
three reasons. First, it establishes an objective that guides the efforts of individuals, government
agencies, and businesses. Second, it improves benchmarking by encouraging stakeholders,
especially governments and businesses, to survey cases for insights in leveraging strengths and
managing weaknesses. Third, in formulating strategies, governments ideally work with multiple
stakeholders, including the private sector, experts, and academics; collaborative buy-in can make
implementation more effective and efficient.

Second, monitoring progress in SCD through key performance indicators (KPIs) can help cities
target continuous improvements. KPIs include both process (efficiency) and outcome measures
(quality of life, policy efficacy, equality, and sustainability), with reflections and insights drawn
from each measurement period. KPIs should be agreed and designed into SCD projects at the
earliest stages, as should systems for collecting, analyzing, and reporting data. Further, monitoring
efforts are wasted without a plan to cycle insights back into the decision-making process. This
requires governments and SCD project managers to adopt a continuous-improvement mindset, and
requires SCD projects to be flexible in integrating new findings, including during development
and implementation. Monitoring is a key function of government and reflective of both
competence and efficiency, issues identified as areas of concern among survey respondents.

Third, survey results suggest that competence and change management capabilities are among the
most pressing issues in SCD. Lack of capabilities for managing change was cited by respondents
as the third greatest obstacle to SCD. Strengthening government accountability for progress on
SCD is a crucial step for improving competence and change management capabilities.
Measurement and monitoring are the foundations of accountability; understanding the degree to
which efforts are working towards stated goals generates valuable feedback. Responsibilities
should be clearly assigned to each party, and performance metrics designed to evaluate fulfilment
of these responsibilities. When parties fail to meet their obligations, enforcement mechanisms
should help maintain progress while recovering associated losses.

Fourth, SCD requires a paradigm shift in thinking about existing policies and governance models,
as profound reforms to regulatory frameworks and policy measures are needed. With lack of clear
development strategy listed by survey respondents as the top obstacle to SCD, rethinking how
development and technology are integrated is a crucial step for Vietnam’s secondary city
governments. Figure 5 provides a flow chart for a rethinking process concerning a given regulation
or policy measure, denoted by X. The rethinking process consists of three key steps to improve X:
(i) examine whether X is still relevant; (ii) examine whether X can be improved with applications

20
Letaifa (2015) proposes a SMART framework for building smart cities, which focus on five dimensions: Strategy,
Multidisciplinary, Appropriation, Roadmap, and Technology.

22
of smart technologies; and (iii) examine whether there are international best practices for
improving X. Filtering a policy measure through this rethinking process can help governments
better focus their management of ICT and SCD.

23
Figure 5: Framework for rethinking regulations and policy measures

Examining X: START

Is X still No
Abolish
relevant?

Yes
Yes
Can X be changed No Keep X unchanged but seek out
to foster digital int’l best practices for possible
transformation? improvements

Yes
Are there int’l best No
Change X with robust inputs from
practices for
revising X to best businesses and experts
support SCD?

Yes
Change X with robust learning
from int’l practices and inputs Examining X: END
from businesses and experts

Source: authors.
Note: X denotes an existing regulation or a policy measure

Finally, as discussed in Section 3, SCD tends to favor operational improvement over governance
reform. Systemic transformation is necessary to minimize this bias. Governments may be inclined
to focus on marginal or insignificant items that only signal progress. For example, a reduction in
wait times at road toll booths signals improvement of traffic bottlenecks, but does not impact the
travel demand patterns that underlie congestion. As another example, better monitoring of tax
payments may signal a more operationally efficient fiscal system, but makes no guarantee that tax
policy is achieving its social and economic goals.

Survey respondents cited infrastructure development as the top policy priority for SCD (Figure 4).
Infrastructure, as measured by the smart infrastructure element in Subsection 3.4.2, was cited as
having the strongest change dynamic among the five elements of SCD. However, government
competence was rated by respondents as the second highest policy priority, and fighting corruption
as the fourth highest priority, illustrating that it is not only infrastructure and operations but also
broader elements of governance that are essential for SCD. Survey results in Subsection 3.4.4
outlined a link between the provision of online services and strengthened efforts to control
corruption; this evidence provides an important basis for connecting operational and institutional
efforts, and provides support for the final element of the SMART framework. No technology is
sophisticated enough to overcome poor policy, but cities can use SCD as a mandate to improve
overall governance.

24
5. Conclusion

This article makes an important empirical contribution to the literature about smart cities in
developing countries. Aiming to deepen scholarly understanding about how government and
business leaders view the role of the public sector in embracing and implementing SCD, the study
has used a survey of over 500 experts from 10 of Vietnam’s secondary cities to provide insights
into three important issues concerning SCD in developing countries. First, SCD is not a
development alternative but a critical strategic choice. The increasing sophistication of ICT and
other technologies coincides with the growing trend of urbanization. Technology has been applied
to solve urban challenges in the developed countries that can afford large capital outlays for ICT
and historically had an advantage in reliable connectivity. However, as developing countries close
the digital infrastructure gap, the adoption of smart city technologies is now a realistic possibility
for local governments. Together with the private sector, cities are increasingly embracing pilot
projects to experiment with a variety of applications, from traffic and waste management systems
to e-governance and citizen participation. Such technologies are not merely luxuries but
competitive necessities for fast-growing cities in developing countries such as Vietnam. Survey
respondents from both the public and private sectors appear to recognize this imperative.

A second major finding is that cities embracing SCD run the risk of being biased toward
operational at expenses of institution building. Within this finding, there are two broad trends.
First, it is evident from the findings that for SCD endeavors, operational management is given
more attention than institutional development. This raises a significant concern for cities hoping
to leverage the full effects of the ICT revolution. While ICT can improve operational efficiency,
ignoring institutional development can hinder the potential of ICT to precipitate transformational
progress in how cities are governed. A crucial finding of this study that links these two issues is
that online government services are seen to have potentially positive impacts on the control of
corruption, illustrating that technology can be applied not only to improvements in efficiency but
also to institutional and governance reform. Concerns about governance were evident; government
competence was seen by respondents as a greater priority in SCD than attracting FDI, reflecting
the finding that institutional performance is more crucial than resource availability. Government
transparency is also seen as a higher priority than provision of online services. It is clear from these
survey trends that ICT can make only limited progress without associated improvements in how
policy is made and cities are governed.

The second broad trend regarding institution building is that lack of funding and procurement of
resources are seen as less an obstacle to SCD than lack of strategic vision, raising an issue that is
underexplored in the context of SCD. Funding constraints are often seen as major obstacles in
developing countries, and were identified as the second greatest hindrance to SCD by survey
respondents. Policy interventions are often designed accordingly, without broader consideration
about the need for a guiding vision. However, poor strategy can lead to implementation of SCD
initiatives that are strategically incongruous and even contradictory. The overarching theme across
findings is that a focus on applications and resources to procure them is more expedient than the
25
tedious work of implementing a broader SCD vision or the politically risky work of reforming
governance. Envisioning how SCD can improve both functionality and governance is a crucial
task for urban governments in developing countries, particularly as technologies become more
sophisticated and countries come under pressure to improve governance quality after achieving
the initial gains of early-stage development.

Finally, the article has introduced a policy framework for secondary cities in developing countries
to promote SCD, the SMART framework. The ICT revolution has brought connectivity and
computing power to developing countries, providing new opportunities to improve productivity,
governance, and urban management. The integration of disparate technologies into operational and
institutional systems has been broadly embraced through SCD, and governments are now realizing
the value of related investments. It is crucial at this early stage that governments embrace SCD in
a way that is productive, sustainable, and realistic about its potential. In providing a guide for the
development of SCD policies, the SMART framework encompasses five dimensions: strategy,
monitoring, accountability, rethinking, and transformation. These distinct but interconnected
dimensions emphasize how governments should envision SCD’s integration with developmental
goals, how policies and initiatives should be evaluated, how governments and policymakers should
be judged for the outcomes of such policies, how governments can use the opportunities presented
by SCD and to redesign policy, and how governments can view the ICT revolution as a broad tool
to transform society and achieve unprecedented progress.

While SCD has been primarily a developed country endeavor, developing countries are poised to
embrace SCD for challenges like congestion and disaster management. SCD is a crucial step in
achieving transformative progress in these and other areas, provided national and urban
governments embrace quality governance. By pursuing SCD, governments can facilitate
coordination through investment in ICT infrastructure, platforms for interconnectivity and
interoperability, and industry-specific issues like green building standards, online payments and e-
commerce, and the adoption of Industry 4.0 technologies such as automation and machine
learning. SCD also prompts governments to formulate focused ICT development strategies, build
measurement capabilities, and learn from international best practices. As such, SCD not only
fosters coordination but also enhances government capabilities to overcome information
constraints. Further, SCD-enabled data collection and analysis improves project monitoring and
governance (e.g. transparency in tendering, finance, and implementation), discouraging rent-
seeking and other types of corruption. In general, this study provides evidence that for SCD and
ICT initiatives in developing countries, hardware is not enough; cities must prepare to leverage
SCD by improving governance. New technology does not excuse governments from reform;
without good governance, returns on ICT investment will lag.

This study has several limitations. First, the respondent pool was intentionally limited on the basis
of personal qualifications. A deeper understanding about SCD preparedness would require a wider
survey pool, with questions more aligned to the understandings and knowledge of a broader cross-
section of the population. Second, despite the analysis of one variable measuring perceptions of
26
change over a three-year period, survey findings reveal only a snapshot of SCD preparedness.
Future studies can conduct a similar survey at regular intervals, developing panel data for use in
econometric analysis. This can be a revealing approach given the rapid evolution of technology
uptake and related governance reforms in developing countries including Vietnam. Finally, as the
study focuses only on Vietnam’s cities, the assumption that similar trends would be identified in
cities outside Vietnam, whether in Southeast Asia or the developing world in general, should be
made cautiously. The study was built around a suite of factors expected to shape SCD in Vietnam;
other contexts will share many of these variables, but not all. If this study were extended into a
comparative cross-country analysis, the variables chosen may need modification to capture
broader and decontextualized trends.

Opportunities for further research emerge from these limitations. First, a survey of the general
public within each of the ten secondary cities should be conducted, on dimensions of the study
where expert-level knowledge is not a qualifying factor. Examples are perceptions about
government effectiveness and the perceived benefits of SCD to the economy and society. Results
could be compared between the two groups to identify which issues are consistently pertinent.
Second, qualitative research should be conducted in a sub-set of the ten cities, focused on specific
projects, their life cycle to delivery and operation, and outcomes. Such a study can be structured
around the core findings of the survey in this article and on the SMART framework. Finally, a
longer-term econometric analysis, using a balanced panel dataset for a period of several years, is
needed. This can be done for Vietnam only, but would also be theoretically valuable if conducted
in a comparative context. As such, this study serves not only as a contribution to literature about
Vietnam, but identifies methodological and theoretical potential for broader cross-national studies.

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31
Appendix 1: An overview of Vietnam’s cities

As of 2015, Vietnam had 94 officially recognized cities divided into three groups (Table A1). The
special cities group includes the two major urban hubs: Hanoi and Ho Chi Minh City (HCMC),
each with a population approaching 10 million. The secondary cities group comprises 58 cities
with populations ranging from 100,000 to 1 million. The third tier group comprises 34 cities with
an average population below 100,000. The secondary cities group is playing an increasingly
important role in driving urbanization and economic growth. For example, average annual growth
of industrial output produced by this group in the preceding three years (2012-2015) was
approximately 8 percent, well above 5.7 percent for Hanoi and 6.8 percent for Ho Chi Minh City21.

Table A1: Selected statistics by city group

Indicator City Groups Total

Special Cities Secondary Third Tier
Cities Cities
Number of cities 2 58 34 94
Population 13,614,773 14,349,196 2,981,086 30,945,055
Average population/city 6,807,387 247,400 87,679 329,203
Share in 94 cities’ total
44% 46% 10% 100%
population
Share in Vietnam’s total
16% 17% 3% 36%
population22
Source: Data (for 2009) drawn from World Bank (2011, Table 2.1.7) and World Bank
Development Indicators database.

21
Data source: General Statistical Office (GSO).
22
Note that the cities are not 100 percent urbanized. For example, approximately 17 percent of HCMC residents
live in rural areas.

32
Appendix 2: Vietnam’s map and the 10 surveyed cities

Source: VAIP

33
Appendix 3: A summary of the questionnaire

Survey Questionnaire

Instruction for Sections A and B: please indicate your agreement or disagreement with each of the
following statements. Circle the appropriate number that best expresses your opinion about the city.

1 means “strongly disagree”

2 means “generally disagree”

3 means “somewhat disagree”

4 means “neither disagree nor agree”

5 means “somewhat agree”

6 means “generally agree”

7 means “strongly agree”

You may circle “N” (not applicable) if you are unable to answer a question using the number system.

34
Part A: Smart City Readiness
A1. Smart Governance
In my city… Disagree Agree Don’t
<============ know
============>
a) In general, people are satisfied with the N
1 2 3 4 5 6 7
services provided by the city government.
b) Law enforcement is effective. 1 2 3 4 5 6 7 N
c) Corruption is not a serious problem. 1 2 3 4 5 6 7 N
d) The city government is responsive to citizens. 1 2 3 4 5 6 7 N
e) People widely use online services provided by N
1 2 3 4 5 6 7
the city government (e.g.., tax filing).
f) Businesses widely use online services
provided by the city government (e.g., 1 2 3 4 5 6 7 N
business registration or permits).
g) The city government websites provide
adequate information about the local 1 2 3 4 5 6 7 N
government’s legal documents.
h) The city government websites provide
adequate information about the local 1 2 3 4 5 6 7 N
government’s policies and plans.
i) The city government websites provide
adequate information about budgets 1 2 3 4 5 6 7 N
(revenues and expenditures).
j) Citizens can use text messages/emails to
communicate with the city government (e.g.,
1 2 3 4 5 6 7 N
complaining, expressing opinions, or
reporting a violation of city codes).
k) Citizens can track the status and progress of
1 2 3 4 5 6 7 N
their service request online.
l) The city government often consults with
citizens through mobile or internet tools in
formulating a policy, making an important 1 2 3 4 5 6 7 N
decision, or seeking to improve public
services.
m) Senior government officials widely use social
media (e.g., Facebook, Twitter) to 1 2 3 4 5 6 7 N
communicate with the public.
n) Mobile and internet technologies have
enabled the city government to significantly 1 2 3 4 5 6 7 N
improve its efficiency and effectiveness.
o) Mobile and internet technologies have
enabled the city government to significantly 1 2 3 4 5 6 7 N
improve their reach to citizens.
p) People can use mobile phones or internet to
1 2 3 4 5 6 7 N
rate the performance of some

35
 departments/agencies of the city
government.
q) E-government is widely used by the city
1 2 3 4 5 6 7 N
government.
r) The city government has an ICT (information
and communications technology) master 1 2 3 4 5 6 7 N
plan.
s) The city government has established a vision
1 2 3 4 5 6 7 N
to transform the city into a smart city.
t) The city government has launched initiatives
1 2 3 4 5 6 7 N
to transform the city into a smart city.

36
A2. Smart Economy
In my city… Disagree Agree Don’t
<============ know
============>
a) The private sector plays an important role in N
1 2 3 4 5 6 7
the local economy.
b) Entrepreneurship is strong. 1 2 3 4 5 6 7 N
c) Business associations and forums are vibrant. 1 2 3 4 5 6 7 N
d) Businesses, in general, are keen to learn from
1 2 3 4 5 6 7 N
best practices in management.
e) Businesses, in general, have made significant
1 2 3 4 5 6 7 N
efforts to upgrade production technology.
f) The local business environment is fair and
1 2 3 4 5 6 7 N
competitive.
g) Businesses, in general, vigorously embrace ICT
to foster performance, learning, and 1 2 3 4 5 6 7 N
networking.
h) People can find jobs on the internet. 1 2 3 4 5 6 7 N
i) The supply of skilled labor is abundant. 1 2 3 4 5 6 7 N
j) E-commerce is widely adopted. 1 2 3 4 5 6 7 N
k) FDI (foreign direct investment) has a strong
1 2 3 4 5 6 7 N
presence in the local economy.
l) International trade (exports and imports) is an
1 2 3 4 5 6 7 N
important component of the local economy.
m) The economy has passed the stage of cheap-
1 2 3 4 5 6 7 N
labor dependence.
n) The business services sector is strong (e.g.,
activities related to legal services, accounting,
business and management consultancy, 1 2 3 4 5 6 7 N
architecture and engineering, and business real
estate)
o) Other, please specify
1 2 3 4 5 6 7 N
__________________________________

37
A3. Smart Human Capital Development
In my city… Disagree Agree Don’t
<============ know
============>
a) Parents pay special attention to and prioritize NA
1 2 3 4 5 6 7
investment in children’s education.
b) The primary education system is good. 1 2 3 4 5 6 7 NA
c) The secondary education system is good. 1 2 3 4 5 6 7 NA
d) The tertiary education system is good. 1 2 3 4 5 6 7 NA
e) The vocational education and training system is
1 2 3 4 5 6 7 NA
good.
f) People embrace life-long learning. 1 2 3 4 5 6 7 NA
g) People widely use mobile phones for
1 2 3 4 5 6 7 NA
communication.
h) People widely use mobile phones for learning. 1 2 3 4 5 6 7 NA
i) People widely use the internet for NA
1 2 3 4 5 6 7
communication.
j) People widely use the internet for learning. 1 2 3 4 5 6 7 NA
k) People are supportive of the country’s open-up
1 2 3 4 5 6 7 NA
policy.
l) People share a strong aspiration to build a
1 2 3 4 5 6 7 NA
prosperous future for the city.
m) English is widely used. 1 2 3 4 5 6 7 NA
n) People make great efforts in cooperation and
1 2 3 4 5 6 7 NA
social cohesion.
o) Cultural facilities (e.g., theaters and libraries)
1 2 3 4 5 6 7 NA
well meet the people’s demand.
p) There are many quality attractions for
1 2 3 4 5 6 7 NA
international tourists.
q) The hospital system is convenient and reliable. 1 2 3 4 5 6 7 NA
r) Slum housing is not a serious problem. 1 2 3 4 5 6 7 NA
s) Poverty is not a serious problem. 1 2 3 4 5 6 7 NA
t) Unemployment is not a serious problem. 1 2 3 4 5 6 7 NA
u) Inequality (e.g. the gap between the rich and
1 2 3 4 5 6 7 NA
poor) is not a serious problem.
v) Crime, social ills (e.g. drug addiction and
prostitution), and violence are not serious 1 2 3 4 5 6 7 NA
problems.
w) Other, please specify
1 2 3 4 5 6 7 NA
__________________________________

38
A4. Smart Infrastructure
In my city… Disagree Agree Don’t
<============ know
============>
a) Urban planning is good. 1 2 3 4 5 6 7 N
b) Traffic congestion is not a problem. 1 2 3 4 5 6 7 N
c) The road system is adequate. 1 2 3 4 5 6 7 N
d) Traffic accidents are not a common problem. 1 2 3 4 5 6 7 N
e) People are satisfied with public transport
1 2 3 4 5 6 7 N
services.
f) The sewage and drainage system is good. 1 2 3 4 5 6 7 N
g) The garbage collection and treatment system is
1 2 3 4 5 6 7 N
good.
h) Mobile phone reception is clear. 1 2 3 4 5 6 7 N
i) All high schools have access to internet. 1 2 3 4 5 6 7 N
j) Internet connectivity speed is fast. 1 2 3 4 5 6 7 N
k) Access to internet is available everywhere in
1 2 3 4 5 6 7 N
the city (e.g., internet cafés, Wi-Fi, mobile).
l) Electricity companies have started to install
1 2 3 4 5 6 7 N
smart meters in homes and businesses.
m) Water companies have started to install smart
1 2 3 4 5 6 7 N
meters in homes and businesses.
n) CCTV has been widely used for traffic
1 2 3 4 5 6 7 N
management.
o) People can use GrabTaxi to get a taxi. 1 2 3 4 5 6 7 N
p) ICTs are used for managing the lighting system. 1 2 3 4 5 6 7 N
q) ICTs are used for parking management. 1 2 3 4 5 6 7 N
r) Mobile and internet technologies have helped
the city improve traffic management and 1 2 3 4 5 6 7 N
reduce traffic congestion.
s) Other, please specify
1 2 3 4 5 6 7 N
__________________________________

39
A5. Environmental Protection and Sustainable Development
In my city… Disagree Agree Don’t
<============ know
============>
a) Greenery coverage is high. 1 2 3 4 5 6 7 N
b) Air quality is good. 1 2 3 4 5 6 7 N
c) There is no problem with water pollution. 1 2 3 4 5 6 7 N
d) Incentives for water conservation are effective. 1 2 3 4 5 6 7 N
e) Incentives for energy conservation are
1 2 3 4 5 6 7 N
effective.
f) Compliance of businesses in pollution control
1 2 3 4 5 6 7 N
and environmental protection is good.
g) Laws and regulations about environmental
1 2 3 4 5 6 7 N
protection are effectively enforced.
h) People have a positive attitude about
environmental protection and sustainable 1 2 3 4 5 6 7 N
development.
i) Other, please specify
1 2 3 4 5 6 7 N
__________________________________

40
Part B: The Dynamics of Transformation
In my city, the following have significantly Disagree Agree Don’t
improved in the past three years… <============ know
============>
Governance
a) Government capability 1 2 3 4 5 6 7 N
b) Government transparency 1 2 3 4 5 6 7 N
c) Control of corruption 1 2 3 4 5 6 7 N
d) E-government 1 2 3 4 5 6 7 N
e) Government-citizen relations 1 2 3 4 5 6 7 N
Economy
f) Private sector development 1 2 3 4 5 6 7 N
g) Attracting FDI 1 2 3 4 5 6 7 N
h) Job creation 1 2 3 4 5 6 7 N
Human capital development
i) Education and training facilities 1 2 3 4 5 6 7 N
j) Use of internet and smart phones 1 2 3 4 5 6 7 N
k) Health care facilities 1 2 3 4 5 6 7 N
l) Housing development 1 2 3 4 5 6 7 N
m) Parks, greenery, and public entertainment
1 2 3 4 5 6 7 N
facilities
n) Safety and social order 1 2 3 4 5 6 7 N
Infrastructure
o) Urban planning and management 1 2 3 4 5 6 7 N
p) Basic infrastructure (roads, electricity, clean
water, drainage systems, and waste 1 2 3 4 5 6 7 N
management)
q) Mobile phone coverage 1 2 3 4 5 6 7 N
r) Internet connectivity speed 1 2 3 4 5 6 7 N
s) Traffic control 1 2 3 4 5 6 7 N
Environment and sustainable development
t) Control of pollution 1 2 3 4 5 6 7 N
u) Efficient use of energy and water 1 2 3 4 5 6 7 N
v) Attitudes of people towards environmental
1 2 3 4 5 6 7 N
protection and sustainable development

41
Part C: Priorities and Barriers for Smart City Development
C1. Priorities
Please select from the list below the top five (5) priorities that your city must address in order to
succeed in smart city development. Rank these priorities from 1 to 5 according to their importance.
Priority Rank
a. Improving basic infrastructure (roads, electricity, water, etc.)
b. Upgrading ICT connectivity (mobile coverage and broadband)
c. Promoting the private sector
d. Attracting FDI
e. Improving job creation
f. Enhancing the competence of the city government
g. Strengthening the fight against corruption
h. Making more government services available online
i. Making the government more transparent
j. Empowering citizens, enabling them to participate in evaluation of the performance
of the local government by mobile phone or the internet on a regular basis
k. Upgrading the education and training system.
l. Making more effective efforts in improving environmental quality and greenery
m. Making the city safer by reducing crime and social ills (e.g., drug addiction,
prostitution, illegal gambling)
n. Other, please specify

_____________________________________

C2. Barriers
Please select from the list below the top five (5) barriers that hinder your city from succeeding in smart
city development. Rank these barriers from 1 to 5 according to their seriousness.
Barrier Rank
a. Lack of a visionary development strategy
b. Lack of funding for investing in smart city projects
c. Outdated institutions and regulatory system
d. Lack of capability to implement and manage change
e. Lack of a clear purpose
f. Lack of implementation strategy
g. Lack of accountability
h. Lack of community support
i. Lack of understanding of smart city development concepts
j. Lack of good solutions to existing problems
k. Other, please specify

_____________________________________

42
Profile Information
1. City name: _____________________

2. Your primary area of profession:

1) ____Government official 2) ____Business management
3) ____Academics/Expert 4) ____Retired
5) ____Student 6) ____Other, please specify ____________________

3. Your work experience: the total number of years you worked in your lifetime is
1) ____Less than 3 years 2) ____3–5 years 3) ____6–10 years
4) ____11–20 years 5) ____More than 20 years

4. Number of years you have lived in the city:

1) ____Less than 3 years 2) ____3–5 years 3) ____6–10 years
4) ____11–20 years 5) ____More than 20 years

5. Your age:
1) ____Below 30 2) ____31–40 3) ____41–50
4) ____51–60 5) ____Above 60

6. Gender:
1) ____Female 2) ____Male

7. You are a frequent user of:

a. Mobile phone: ____Yes ____No
b. Email: ____Yes ____No
c. Smartphone: ____Yes ____No
d. Social media: ____Yes ____No

43
Appendix 4: Checks of internal consistency reliability

Cronbach’s alpha coefficient is useful for checking the reliability of results by evaluating the
interrelatedness of multiple-item measures under an investigated dimension (Cortina 1993). The
alpha coefficient is calculated based on the Spearman-Brown Prophecy Formula (Nunnally and
Bernstein 1994), yielding values between 0 and 1. Concerning the benchmark for judging values
of alpha, Nunnally and Bernstein (1994: 265) suggest that for an exploratory study, a threshold of
0.70 is modest evidence of reliability. Table A2 reports Cronbach’s alpha coefficient for six
constructs, which include the five dimensions of smart cities and perceptions about changing
dynamics. The figure under each construct is the number of questions in the questionnaire in this
category. The alpha coefficient is reported for each city and for the entire sample.

Table A2: Cronbach’s alpha coefficient by construct and city

City Smart Smart Smart Changing

Human Infra- Environ- Dynamics
Smart Smart Capital structure ment
Government Economy Development and (21)
(14) (22) mobility (8)
(20) (18)

Bien-Hoa 0.9038 0.9191 0.9266 0.9312 0.9485 0.9679

Da-Lat 0.9407 0.9117 0.9203 0.8937 0.9122 0.9581
Ha-Long 0.9444 0.9239 0.9326 0.9444 0.9019 0.9569
Ha-Tinh 0.9593 0.9457 0.9216 0.9558 0.9454 0.9715
Hue 0.9439 0.8309 0.8666 0.9016 0.8768 0.9589
Lao-Cai 0.9525 0.9347 0.9303 0.9246 0.9519 0.9751
My-Tho 0.9444 0.9079 0.9258 0.8828 0.8995 0.9301
Nha-Trang 0.9429 0.9167 0.9468 0.9207 0.9419 0.9575
Thanh-Hoa 0.787 0.8572 0.8167 0.7946 0.8704 0.9051
Vinh 0.9436 0.8825 0.9198 0.9132 0.9428 0.9572
All sample 0.9453 0.9274 0.9225 0.9158 0.9254 0.9615
Note: the figure in parentheses is the number of questions related to the particular dimension.

The alpha exceeds 0.70 for every construct and city, evidence that the survey’s results pass the
minimum threshold of internal consistency and reliability. Furthermore, the alpha is above 0.90
for most cities on most constructs, supporting the validity of the survey’s results.

44
 Appendix 5: Upward bias by government respondents in assessing governance-related issues

For a number of questions related to governance issues, regressing scores on the dummy variable
non-government (=1 if respondent is not from government; =0 otherwise) reveals upward bias in
assessments by government respondents. As shown in Table A3, for a given issue, the constant is
the mean score given by government respondents, which is 4.8 for citizen satisfaction (column (1),
4.9 for government responsiveness (column (2), and 3.5 for effectiveness in corruption control
(column (3). The coefficient on the dummy non-government, however, is negative and statistically
significant. Moreover, the magnitude of this coefficient is rather large for government
responsiveness (-0607) and effectiveness of corruption control (-0.448).

Table A3: Regression results for scores on selected governance issues

Dependent variable
Citizens, in general, City government is City government is
Explanatory
satisfy with city responsive to citizens effective in corruption
variable
government control
(1) (2) (3)
Non-government -0.301** -0.607*** -0.448
(0.128) (0.125) (0.155)
Constant 4.779 4.921 3.518
(0.087) (0.084) (0.113)
N 492 492 492
Adj-R2 0.05 0.13 0.14
Note: the regressions are based on model (1) presented in Section 3, using Stata areg command.

45

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