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US$70 Million for the Software Industry
25 | 09 | 2007
The Prime Minister recently released Decision 51/2007/QD-TTg which approves the spending of US$70 million on a program to develop the Vietnamese software industry between now and 2010.
The Vietnam Software Association (VINASA) says that Vietnamese software product and service sales increased fivefold, climbing from US$50 million in 2000 to US$250 million in 2005. That's an average growth rate of 33 percent a year, higher than any other economic sector. Still, a target was set whereby software sales were to be US$500 million in 2005. Just half the target of 2005 was reached. To put that into perspective, in 2005 the Thais sold US$1.25 billion worth and the Chinese, US$8.5 trillion.

Vietnam is a leading country in terms of attracting foreign direct investment (FDI) in the field of software. It is also one of top 15 countries providing software-processing services in the world.

Under Decision 51/2007/QD-TTg, the Vietnamese software industry is to achieve the following by 2010: average growth of software sales of 35-40 percent, total sales of software products and services exceeding US$800 million per year (40 percent coming from exports), a 55,000-60,000 person software industry workforce with each person producing an average of US$15,000 in products per year. The software sector also wants to have more than 10 software companies employing more than 1,000 people each and 200 companies employing more than 100 people each.
Right now, most Vietnamese software products and services are going to North America, Japan, and Europe. The Japan Information and Software Association (JISA) ranks Vietnam fourth (behind China, South Korea and India) among the countries they want to process software products for them. The Kearney organization (USA) ranks Vietnam 20th in the field of software industry and services. American billionaire McGavern, the chairman of IDG, established an investment fund of US$100 million to invest in Vietnamese software and service companies. Billionaire Bill Gates, the chairman of Microsoft, was here in Vietnam, twice, and he has plans to invest in Vietnam. Intel has begun building its largest factory in Vietnam that is to cost US$1 billion. Leading Japanese companies such as Hitachi, NEC and Fujitsu have placed orders with Vietnamese companies to process software products for them and some of these Japanese companies have opened factories in Vietnam. Japan is emerging as a strategic partner of Vietnam in the field of software. Through VINASA, the Japanese Government provides more than 80 percent of the scholarships that the Association for Overseas Technical Scholarship (AOTS) grants to students in Southeast Asian countries every year to train information technology engineers. The export of processed software products to Japan has recently been increasing more than 100 percent a year.

However, the Vietnamese software sector is seriously lacking trained personnel that can process software products. The training that is available in Vietnam cannot meet the needs of the information technology businesses either in quality or quantity. In Vietnam there are still no information technology research institutes, laboratories or facilities related to technology transference.

It was good news for the Vietnamese software sector when the Government approved the program to develop the domestic software industry until 2010. Decision 51/2007/QD-TTg shows that the State has noticed the needs of the software industry. Of the US$70 million total required to pay for the program, 30 percent is to come from the State Budget, 30 percent from localities, and 40 percent from private companies, associations, official development assistance (ODA) and any other source.

The Prime Minister has asked the Ministry of Posts and Telematics to work with other ministries, ministerial-level agencies, governmental agencies and the people's committees of centrally governed cities and provinces to implement the program.

Vietnam Economic News
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