Page 2 of
2 Vietnamese IT follows Taiwan's
example By David Fullbrook
and universities - which,
similarly, was a key factor in Taiwan's high-tech
takeoff in the 1980s. Information technology,
especially software, has grabbed the imagination
of many young Vietnamese eager to leapfrog over
the drudgery of factory work and into what to them
represents a more modern livelihood.
Though government policy has swung
decidedly behind promoting a national IT industry,
there is still a frequent lag in putting official
rhetoric into working action,
some industry experts contend. "A range of
policies exist to promote IT activities," said
Scott Cheshier, deputy director of Bristol
University's Mekong Program in Britain. "However,
although several plans and strategies exist,
coordination and implementation remain the key
issues."
One frequent criticism is that
the government still cossets big state-owned
firms, which not only drag on the public purse but
also crowd out innovation.
"The tendency
to protect public enterprises is much stronger in
Vietnam than in China. There is more reluctance to
let hybrid [public-private] forms of organization
develop," said Dieter Ernst, senior fellow at the
EastWest Center in Hawaii. "In Taiwan there was a
great acceptance of this, despite being a severe
authoritarian regime at the time."
Comparative advantages Yet for
every drawback, Vietnam seems to have several
advantages working in its favor. Unlike Taiwan,
where much investment was sourced locally,
including through the government, Vietnam is
drawing significant capital inflows earmarked for
IT ventures from across East Asia, including big
outlays from Japan, South Korea and even Taiwan.
That is quickly plugging the country into
multinational global supply chains and
export-oriented operations at the earliest stages
of Vietnam's IT development.
Complementing
hardware-related manufacturing is an innovative
and growing software sector, which is surprisingly
thriving given Vietnam's overall low level of
economic development. Since the late 1990s,
Vietnam's homegrown software houses, especially in
Ho Chi Minh City, have picked up a growing amount
of US outsourcing work in developing computer
games, digital cartoon graphics, and other
high-end software, such as Orient, a
business-solutions specialist.
While many
firms are small, employing dozens rather than
thousands, some local IT giants are already
emerging. For instance, FPT, a Vietnamese-owned
software-services firm that employs about 6,000 in
Hanoi, provides back-end services and counts big
Japanese firms among its customers. The company
scored a $36 million investment from Intel and
Texas Pacific Group, a leading private-equity
fund, in October.
Still, there is plenty
of room for Vietnam's software industry to grow.
"Vietnam's outsourcing business is still
immature, with many companies focusing only on a
small part of the software development cycle (such
as data-entry; testing and coding), but very few
indicate capabilities in application development,
project management, system architecture, system
integration, database administration or business
process analysis, which are a major portion of the
current outsourcing business," wrote John Vu, a
fellow at Carnegie Mellon University's Software
Engineering Institute, in a recent white paper on
the Vietnamese industry.
Industry trends
suggest that software is where most IT business
growth will be concentrated, especially as
so-called "software as a service", in which
applications traditionally stored on a personal
computer are instead delivered over the Web, and
"network-based solutions", software-based tools
that allow people to cooperate on projects over
the Internet, grow as expected in global
popularity. And with Vietnam's growing pool of
low-cost, yet well-qualified, engineers and
programmers, the fast-growing country seems
increasingly well positioned to win a greater
proportion of these emerging market niches.
As of 2003, only 38% of Vietnam's 570
software houses, which then employed more than
12,000 people, were locally owned. There are now
more than 700 software-oriented Vietnamese firms,
according to the Viet Nam Software Association.
That compares favorably with the 1,200 software
companies in more established Thailand, which
first entered the IT industry in the 1980s but
still lacks any globally recognized, homegrown
designers or producers. Taiwan, by contrast, has
never had a software industry to match its global
prowess in manufacturing and design of components,
chips and devices.
With many multinational
IT investors looking to diversify their recent
over-reliance on China as a production base, yet
also finding India too distant from East Asia's
product design and manufacturing nexus, Vietnam
and its increasingly skilled and always energetic
workforce appears to be in the right place at the
right time for more technology-related foreign
investments.
Indeed, statistics show that
global demand for Vietnamese programmers and
engineers is growing, pushing up local wages for
the most skilled IT personnel. Last year, the
United Nations Development Program's Hanoi office
estimated that Vietnamese programmers were earning
on average $7,200 per year, considerably higher
than the $5,880 average in IT hothouse India.
Perhaps more telling is the fact that Vietnam is
fast emerging as the foreign destination of choice
for Taiwanese IT investors.
"There's a lot
of investment from [other] Asians in Vietnam;
Taiwan was mostly self-made," said Kevin Luong,
chief executive of Everki International, which
manufactures bags in Taiwan but is now developing
manufacturing and software operations in Vietnam.
"There's a whole section outside Ho Chi Min City
that is predominantly Taiwanese. There [are] a lot
of Taiwanese investors thinking ahead, developing
factories. They're always looking for the next big
thing."
(Copyright 2007 Asia Times Online
Ltd. All rights reserved. Please contact us about
sales, syndication and republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
