Going digital

Vietnam plans to develop 15 IT parks as it jockeys to become a high-tech player

New computer products are displayed at an exhibition in Ho Chi Minh City. Vietnam hopes its information and communications industry will comprise 8-10 percent of the gross domestic product in the next ten years
Vietnam plans to develop fifteen information technology parks to support the country’s developing information and communication technology industry through 2020, according to a senior official from the Ministry of Information and Communications.
Deputy Minister Tran Duc Lai said that information and communication technology (ICT) play a key role in the government’s national economic development strategy.
Lai told Thanh Nien Weekly the parks, which will provide office space for investors and producers of software, hardware, digital content and services would help the government implement its strategy.
Like high-tech parks operating in Hai Phong City and Ho Chi Minh City, Lai says the new information technology will offer special preferences to investors in addition to offering specific tax incentives under legislation that took force in September 2009.
Lai said Vietnam already has great advantages in developing software and digital content due to labor skills and its large market size.
The online game market alone has nearly tripled in recent years. The gaming sector took a major hit following a recent government crackdown inspired by concern over youth violence, he said.
Vietnam hopes the industry will comprise 8 to 10 percent of the gross domestic product in the next ten years, according to the government’s ICT Development Strategy, which was released last month.
Under the strategy, Vietnam will strive to become one of the world’s top ten high-tech outsourcing destinations for software and digital content production.
The ICT sector continues to grow in Vietnam, where the number of Internet users exceeds 22 million – a penetration rate of 25 percent.
The digital content industry grew 50 percent last year with revenues totaling US$700 million, while the software industry experienced a 40 percent surge with revenues of $880 million, according to information released at the Technology Business Conference last week in HCMC.
Venturing out of a brain drain
Nguyen Van Lang, deputy minister of Science and Technology, said Vietnam is working on implementing a model that includes the development of high-tech business including ICT, biotechnology and new materials.
Lang said Vietnam should follow models that focus on creating large high-tech corporations like Japan or Korea as opposed to developing small-and medium-sized enterprises like Taiwan.
However, he said what’s important for Vietnam’s ICT industry is the availability of capital.
The sector requires development funds from the government or venture capitalists rather than high-interest loans from commercial banks.
Lang said it was impossible for the government to develop venture funds that would create high risks for state funds.
Vietnam has lured venture funds like IDG Ventures Vietnam, DFJ VinaCapital and Strategic Alliance Vietnamese Ventures International in the industry.
Deputy Minister Lai said the development of human resources was another problem for the industry. While it has attracted a few talented overseas Vietnamese, the nation is suffering something of an ICT brain drain.
He said the government is implementing a plan to improve human resources in the sector, but declined to provide specific details.
The government aims to have 30 percent of Vietnamese students ready to meet the outsourcing demands of foreign markets by 2015. By 2020, it hopes to have 70 percent ready to take on these foreign jobs.
Selling it
Than Trong Phuc, managing director of DFJ VinaCapital, a $30 million venture capital fund, said that the education of Vietnam’s ICT students has improved over the years. However, he said, this first generation of graduates still lacks the creativity necessary for success in the ICT sector.
Phuc said development of the industry has also been slowed by local firms and state-owned enterprises that ought to improve competitiveness instead of fostering unfair competition.
Many state-owned enterprises with their market advantages and monopoly positions have exerted undue pressure on weaker rivals and created difficulties for them, he told Thanh Nien Weekly.
Arthur Trueger, chairman of the California-based Berkeley International Capital Corporation, said the Vietnamese government should work on selling itself harder to venture capitalists abroad. The government should work on building up a cache of interesting “stories” to tell venture capital investors to lure them to the country as Singapore did with Silicon Valley.
Trueger said Singapore has education and money. It is time for Vietnam to capitalize on its central position in Southeast Asia, he said.