Good Morning, High-Tech Vietnam

by Lynn Tan
Business Week April 9

The Indochinese nation is fast emerging as the next Asian country to give China and India a run for global investors' money

India and China may be the current hot favorites of global investors, but Vietnam is fast emerging as the next Asian country to give both countries a run for their money. It will take more time, however, before Vietnam can be on par with the economic powerhouses, according to a market observer.

In an interview with ZDNet Asia, Hicham Abdessamad, vice president for global solutions services at Hitachi Data Systems, said: "There're many multinational suppliers and companies that have invested in Vietnam or are planning to invest in Vietnam to drive the demand, especially in the financial [and] telecommunications industries."

"[Vietnam] is sort of a hybrid between India and China," said Abdessamad, noting that China is more of a manufacturing powerhouse, while India's strength lies in its large pool of IT talent. Vietnam, he said, has "a little of both".

Vietnam's domain lie in areas that include data centers, IT manufacturing such as chips and computers, as well as software development. "[There are] lots of software development activities in Vietnam, not just [the outsourcing of] data center, as well as some manufacturing growth," Abdessamad said.

However, he noted that Vietnam still has a long way to go even though it is an emerging market and growing fast. "If I compare Vietnam to India, it's on the right track but it's definitely not where India is right now," he said.

Vietnam will probably need between five to seven years to be on par with India's standing in the region, Abdessamad said. He added that the country's growth will also "depend on how quickly [foreign] investments [pour] in and how quickly these companies open their plants and manufacturing facilities [in Vietnam]".

Vietnam grew 8.4 percent in 2005, overtaking India as Asia's second fastest-growing economy but trailing closely behind China's 10.2 percent. The Vietnamese tech market was also worth approximately US$800 million last year, and is expected to grow about 20 percent each year.

Intel, for instance, announced in February last year that it would invest US$300 million to build a semiconductor assembly and test facility in Ho Chi Minh City. The chipmaker expanded this investment to US$1 billion in November that same year when the company unveiled plans to increase the size of its plant from 150,000 square feet to 500,000 square feet.

According to Intel, the new Vietnam facility will be the largest single factory within the Intel assembly and test network. Construction of the plant was expected to have commenced in March this year and begin production in 2009. The chip giant added that as many as 4,000 people could be employed eventually to support the new plant.

Abdessamad said: "With Intel's investment, you're going to see some significant growth [in Vietnam] over the next [few] years. It's an emerging alternative to India and China [and] another option for a lot of companies now."

Provided by ZDNet Asia—Where Technology Means Business