VZCZCXRO9274
OO RUEHDT RUEHPB
DE RUEHHM #0696/01 2121026
ZNR UUUUU ZZH
O P 301026Z JUL 08
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4716
INFO RUCPDOC/USDOC WASHDC PRIORITY 0077
RUEHHI/AMEMBASSY HANOI PRIORITY 3176
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHIN/AIT TAIPEI PRIORITY 0042
RUEHHM/AMCONSUL HO CHI MINH CITY 4944

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000696 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, USAID/ANE, EEB/TPP/BTA/ANA 
USAID/ANE/EAA FOR FRANK DONOVAN 
STATE PASS USTR FOR BISBEE 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EIND EINV EINT ETRD KIPR SOCI VM
SUBJECT: TURNING HCMC'S HIGH TECH DREAMS INTO REALITY 
 
REF: HANOI 849 
 
HO CHI MIN 00000696  001.2 OF 002 
 
 
¶1. (U) Summary: Despite ongoing concerns about human resources, 
Vietnam's ICT market, which is now among the fastest growing in 
the world, is beginning to create opportunities for businesses 
and investors alike.  President Nguyen Minh Triet recently 
presided over the groundbreaking ceremony for what Vietnam 
expects will be ASEAN's biggest software park in Ho Chi Minh 
City's Thu Thiem district.  That same week the Asian Electronics 
Industrial Associations met in HCMC and the International Data 
Group (IDG) hosted its annual Vietnam Information and 
Communication Technology (ICT) conference.  Both noted the lure 
of Vietnam's rapidly growing ICT market and opportunities to 
invest in Vietnam, with IDG announcing a US$ 500 million Vietnam 
ICT venture capital fund.  End summary. 
 
Top-level Support for ICT 
------------------------- 
¶2. (U) On July 19, the Saigon Telecommunication & Technologies 
Group, its Singaporean joint-venture partner TA Associates 
International and a group of Taiwanese investors broke ground on 
the new US$ 1.2 billion Thu Thiem Software Park in Ho Chi Minh 
City (HCMC).  When it comes into operation in 2012, the park 
will sprawl over 16 hectares and is expected to generate US$ 6 
billion annually and provide jobs for 50,000 software 
specialists -- making it the biggest in ASEAN.  The 
ground-breaking ceremony was attended by Vietnam's President 
Nguyen Minh Triet and eight deputy ministers from a surprisingly 
wide range of government agencies, including ministries of trade 
and industry, planning and investment, communication and 
information, construction, defense and public security.  The 
high level of representation seemed to convey the message that 
the Hanoi leadership is committed to developing Vietnam's ICT 
sector from its current low base. 
 
Improving the Environment for High Tech Investment 
--------------------------------------------- ----- 
¶3. (U) In percentage terms, Vietnam's ICT market is among the 
fastest growing markets in the world, according to the reports 
by various ICT industry key players speaking the July 15 
"Vietnam ICT Outlook Conference" in Ho Chi Minh City.  While the 
level of technical development is still low, Vietnam's ICT is 
seeing rapid improvement.  A study by the World Bank in March 
2008 scored Vietnam at 3.27 on the Knowledge Index, a ten-point 
scale based measuring innovation, education and ICT, compared to 
below 3.0 in 2007.  Studies this year sponsored by the United 
Nations (E-Government Index) and the World Economic Forum 
(Networked Readiness Index) show improved ratings in Vietnam for 
network readiness, e-readiness, e-government and copyright 
infringement rate. 
 
Growing Markets and Growing Industry 
------------------------------------ 
¶4. (U) At "ICT Outlook 2008", Mr. Truong Hoai Trang, head of 
HCMC-based internet service provider Vietnam Data Communication 
Two (which controls the lion's share of southern Vietnam 
internet connections) said that his company's outlook is rosy, 
with 23 percent of Vietnamese now using the internet, a big leap 
from 16.9 percent early last year.  The fastest growing ICT 
sub-sector, however, lies in the digital content industry, which 
boasted 55 percent growth last year alone with total revenue of 
US$ 182 million.  According to Mr. Nguyen Trong Duong, Deputy 
Chief of the ICT Section, Ministry of Information and 
Telecommunication, the main digital content earners are, in 
order of revenue generation, mobile phone content, mobile phone 
games, advertisement and internet content, and e-commerce.  In 
2007, Vietnam's 100 mobile phone content companies recorded a 
59-per cent year-on-year turnover increase, at US$ 53.6 million, 
while employing 6,400 employees. 
 
¶5. (U) As the GVN promotes software engineering as a priority 
field of development, software parks are beginning to fill up 
and expand.  According to Mr. Chu Tien Dung from the HCMC 
Information Technology Association, investment to build 
infrastructure for software parks throughout Vietnam has 
quadrupled in the past three years to US$ 125 million.  The 
number of companies in HCMC software parks is now nearly 500, a 
four-fold increase in the same period, and there are now five 
times as many companies with more than 100 employees as there 
were in 2005, according to Mr. Dung.  In fact, at the Vietnam 
ICT Outlook conference, the International Data Group (IDG) also 
announced a new US$ 500-million venture capital fund for Vietnam 
ICT sector. 
 
Human Resources Remain an Obstacle 
 
HO CHI MIN 00000696  002.2 OF 002 
 
 
---------------------------------- 
¶6. (U) A survey by the HCMC IT Association (representing 80 ICT 
companies nationwide) revealed that about 80 percent of firms in 
the industry would like to have more say in how Vietnam educates 
IT professionals, including input into an updated curriculum for 
those studying IT.  Last year, Vietnam had 390 educational 
institutions with IT or IT-related faculties and nearly 40,000 
IT students.  The country expects to enroll over 50,000 new 
students this year, the survey noted.  While these numbers look 
good, ICT companies are concerned that their new recruits lack 
English language ability and the practical experience and skills 
to master new technologies. 
 
Comment: 
-------- 
¶7. (U) Despite global economic turmoil, foreign investors in 
Vietnam appear undeterred.  Vietnam's population of 85 million, 
the rapidly-expanding market and the demonstrated commercial 
success of mobile digital content make this a market companies 
want to be invested in.  The surge in internet usage and the 
utter lack of e-commerce services offer opportunities for future 
investment and innovation.  If high tech companies like Intel, 
Applied Micro Circuits Company (AMCC) and Jabil Circuits are any 
indication, Vietnam's growing market and improving investment 
environment for high tech companies will attract more U.S. 
interest in coming years.  End comment. 
 
¶8. (U) This cable was coordinated with Embassy Hanoi. 
FAIRFAX