Bill Gates to visit but early days for Vietnam IT

[Ulhas Joglekar <joglekarulhas@xxxxxxxx>]

Reuters.com

Bill Gates to visit but early days for Vietnam IT
http://today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2006-04-19T052751Z_01_HAN40489_RTRIDST_0_BUSINESSPRO-VIETNAM-DC.XML

Wed Apr 19, 2006

By Grant McCool

HANOI (Reuters) - The world's biggest chip maker Intel (INTC.O: Quote,
Profile, Research) is investing in Vietnam and Microsoft (MSFT.O: Quote,
Profile, Research) chairman Bill Gates is due to visit this weekend, but the
poor Southeast Asian country's IT 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 U.S.
Chamber of Commerce on a March visit. "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 years to 25 years old.

Annual per capita income is only $640 according to government figures, but
foreign businesses, diplomats and aid groups see potential in an economy
that grew 8.4 percent in 2005. The government projects growth over the next
five years at 7.5 percent to 8 percent.

Intel announced in February it would build a $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, brims 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.

The American 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.

AMBITIONS

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, bio technology and new
material technology."

It 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
5,000 workers in 1999.

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

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

EDUCATION KEY

"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 U.N. Development
Program 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 plans a private
university for software workers and to develop foreign language skills. This
week Cisco Systems (CSCO.O: Quote, Profile, Research) and the Hanoi
University of Technology opened a networking technology lab.

International Business Machines (IBM.N: Quote, Profile, Research),
Hewlett-Packard (HPQ.N: Quote, Profile, Research), Microsoft and Intel all
have Vietnam offices.

"Overall Vietnamese IT sector remains modest in term of scale and operation
with the key challenge remaining the shortage of skilled software
programmers," a MPT report in March said.

© Reuters 2006. All Rights Reserved.