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2 Vietnamese IT follows Taiwan's
example By David Fullbrook
Vietnam's burgeoning
information-technology (IT) sector is drawing
favorable parallels with the early phases of
Taiwan's rise as a hardware and software
powerhouse. The potent mix of government
promotion, an energetic and qualified workforce,
and growing flows of foreign capital and expertise
are fast fitting Vietnam's technology industry
into the global IT manufacturing, design and
service supply chain.
Similar to Taiwan,
Vietnam's Communist Party-led government
has
given highest priority to supporting its nascent
IT industries, including through the development
of better IT-related infrastructure. Between 2006
and 2010, Hanoi has budgeted US$5.97 billion to
improve the country's communications. For
instance, Vietnam's teledensity, or the number of
phones per 100 people, is forecast to more than
double to 56.1 by 2010, from 26.2 last August.
Significantly, Vietnam has several natural
comparative advantages to Taiwan, which in the
1970s and 1980s was able to leverage its longtime
first-mover advantage, but nowadays has been
eroded by fierce, fast-moving global competition.
Then, Taiwan's choices were limited by its lack of
minerals and commodities, harried by the security
threat from mainland China, and mostly guided by
huge amounts of foreign - mainly US - aid during
the early stages of its economic takeoff.
Taiwan's entrepreneurs and government
bureaucrats focused on hardware niches, including
components and chips for servers, personal
computers and printers. From those humble
beginnings emerged world-leading manufacturing
giants, including Taiwan Semiconductor
Manufacturing Corp, which specializes in memory
chips, and device-design house High Tech Computer,
whose highly acclaimed smartphones are now sold
under its own brand, Dopod, after scoring success
with global mobile-telecom networks, such as the
United Kingdom's 02.
By contrast, Vietnam
is rich in IT-relevant industrial minerals such as
bauxite and manganese, has a young and growing
IT-literate labor pool, and is attracting ever
higher levels of foreign investment, significantly
at a much earlier stage of development than Taiwan
ever did. US technology giant Intel's decision
last February to build a $300 million
microchip-assembly plant in Ho Chi Minh City, and
its November announcement to up that outlay to
more than $1 billion, promises to lure in big new
IT-related foreign investments from Intel's
suppliers and supporting industries.
"Intel sees Vietnam as one of its key
markets with great opportunity for growth,
innovation and partnership," said Rick Howarth, an
Intel Products executive at its Ho Chi Minh City
facility. "Vietnam has a large population of more
than 80 million, with 50% under 25 years old, and
this younger generation pushes for and drives
technology development, which makes Vietnam an
attractive market for Intel."
Homebound
diaspora Another similarity to Taiwan's
experience is the growing influx of IT-savvy
Vietnamese nationals from abroad. Taiwanese
returned from the West, especially North America,
with cutting-edge engineering qualifications and
an appreciation of where the global technology
industry was headed and the particular needs of
US-based electronics-manufacturing firms.
Similarly, Vietnamese who fled the country
for Western destinations after the 1975 communist
takeover, and their foreign-born children, are in
increasing numbers heading back to Vietnam to
partake in the still-communist-led country's
recent economic opening. Known in Vietnam as the
"Viet Kieu", they have in recent years become a
driving entrepreneurial force behind Vietnam's
impressive IT rise.
Returning Viet Kieu
have not always received such a warm welcome,
however. In the 1990s, returning refugees or
foreign-born Vietnamese were often treated with a
mix of suspicion and derision by communist
officials - though then the xenophobic reception
was not much warmer for most foreign investors.
That was reflected in half-hearted economic
reforms and red-tape-mired investment policies
that after a few short frustrating years in the
early1990s caused many foreign investors to
abandon Vietnam and head for China.
A
decade later, the difference is stark. A "key
driving force for the recent resurgence of Vietnam
is the influx of returnees from her vast overseas
diaspora, especially IT-savvy entrepreneurs and
investors from Silicon Valley, and the growing
links between these overseas diaspora and
Vietnam", said Wong Poh Kam, a specialist in
technology entrepreneurship at the National
University of Singapore's business school, adding,
"the same phenomenon that initially drove the
growth of high-tech development in Taiwan
Hsinchu". (Hsinchu is the heartland of Taiwan's
technology sector.)
Indeed,
Vietnamese-Americans who cut their teeth in the
San Francisco Bay Area are increasingly looking
homeward to set up outfits in IT research,
development and commercialization. "The [Viet
Kieu] are an important factor driving growth,
enriching the bubbling pool of small and
medium-sized firms, driving the sector, as was the
case in Taiwan," noted David Dapice, a specialist
in development economics at Tufts University in
the US, who is now researching and advising on
economic reform in Vietnam.
However,
Vietnam's IT sector would not have grown as
quickly as it has without the legions of
reasonably well-educated engineers and programmers
pouring out of the country's own high
schools
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