IT giants explore new Asian frontier

Hanoi brims with small IT businesses, including computer support services companies and internet cafes. Picture / Reuters

HANOI - The world's biggest chip maker, Intel, is investing in Vietnam and Microsoft chairman Bill Gates is due to visit this weekend, but the poor Southeast Asian country's information technology industry has a long way to go.

Business analysts say that for the second time in a decade an array of foreign industries and services, including IT firms, have an eye on Vietnam's highly literate, young workforce.

"Don't take one announcement or two announcements to suggest Vietnam is there," cautioned Myron Brilliant, a vice president for Asia in the US Chamber of Commerce, who visited the country last month.

"There is a lot of competition in the region and globally."

Nevertheless, expectations are growing in the country where a quarter of its 83 million people are 14-25 years old.

Annual per capita income is US$640 ($1010) according to Government figures, but foreign businesses, diplomats and aid groups see potential in an economy that grew 8.4 per cent in 2005. The Government projects growth over the next five years at 7.5-8 per cent.

Intel announced in February it would build a US$605 million microchip assembly and testing plant in the commercial hub of Ho Chi Minh City - providing Vietnam's biggest technology investment to date.

The capital, Hanoi, is brimming with small IT businesses, including computer support services companies and internet cafes. Ho Chi Minh City has the Saigon Software Park.

Microsoft founder Gates, 50, is scheduled to spend a day in Vietnam on Saturday. His itinerary includes an on-line chat with students and a visit to Bac Ninh province near Hanoi to see how IT is applied in the countryside.

Gates will be greeted by Vietnam's Prime Minister and the President, even though his visit coincides with the ruling Communist Party's important five-yearly National Congress.

At Tuesday's Congress opening, Party General Secretary Nong Duc Manh spoke of the sector's importance to Vietnam.

Manh, 65, said that "in science and technology, we will strive to bring Vietnam on par with countries in the region by 2010 [and] accelerate our technology capability, especially in the IT sector, biotechnology and new material technology".

Vietnam wants to lure some of the three million overseas Vietnamese to bolster 600 existing software development firms. Those companies employ 15,000 people, mainly in Ho Chi Minh City and Hanoi, compared with 170 firms and 5000 workers in 1999.

Vietnam trails established players India, China and Taiwan in programming skills and high-level education, and faces competition from the Philippines and Bangladesh, which also have low labour costs, analysts said.

Government statistics show the total value of Vietnam's software and IT-related services in 2005 was US$170 million with annual growth projected at 40 per cent. Exports were US$45 million last year.

"Vietnam has huge potential in IT development," said Microsoft country manager Christophe Desriac. "The key is how to wake up that potential and realize it in the best ways."

Education is seen as key.

"China is accounting for ever larger proportions of research and development financing, but Vietnam is still not in that game yet," said UN Development Programme economist Jonathan Pincus.

"They are going to need to link higher education better to the business community," he said.

Some steps are being taken in that direction.

Vietnam's largest IT company, FPT, said in April it planned a private university for software workers and to develop foreign language skills. This week Cisco Systems and the Hanoi University of Technology opened a networking technology lab.

International Business Machines, Hewlett-Packard, Microsoft and Intel all have Vietnam offices.

- REUTERS