The world's biggest chip maker Intel is investing in Vietnam and even Microsoft’s chairman Bill Gates is due to visit this weekend, with the Southeast Asian country's IT industry growing by leaps and bounds.

Microsoft founder Gates, 50, is scheduled to spend a day in Vietnam on Friday. His itinerary includes an on-line chat with students and a visit to Bac Ninh province near Hanoi to see how IT is applied in the countryside.

The American will be greeted by Vietnam's Prime Minister and the President, even though his visit coincides with the Communist Party's five-yearly National Congress.

At Tuesday's Congress opening, Party General Secretary Nong Duc Manh spoke of the sector's importance to Vietnam.

Manh, 65, said that "in science and technology, we will strive to bring Vietnam on par with countries in the region by 2010" and "accelerate our technology capability, especially in the IT sector, bio technology and new material technology."

Business analysts say that for the second time in a decade an array of foreign industries and services, including IT firms, have an eye on Vietnam's highly literate, young workforce.

"Don't take one announcement or two announcements to suggest Vietnam is there," cautioned Myron Brilliant, a vice president for Asia in the US Chamber of Commerce on a March visit. "There is a lot of competition in the region and globally."

Trailing established players India, China and Taiwan for lack of programming skills and high-level education, Vietnam also faces low labor competition from the Philippines and Bangladesh in the IT sector, said analysts.

Nevertheless, expectations are growing in the country where a quarter of its 83 million people are 14 to 25 years old.

Annual per capita income is only US$640 according to government figures, but foreign businesses, diplomats and aid groups see potential in an economy that grew 8.4 percent in 2005. The government projects growth over the next five years at 7.5 percent to 8 percent.

Intel announced in February it would build a $605 million microchip assembly and testing plant in the commercial hub of Ho Chi Minh City - providing Vietnam's biggest technology investment to date.

The capital, Hanoi, brims with small IT businesses, including computer support services companies and Internet cafes. Ho Chi Minh City has the Saigon Software Park.

Vietnam wants to lure some of the three million overseas Vietnamese to bolster 600 existing software development firms. Those companies employ 15,000 people, mainly in Ho Chi Minh City and Hanoi, compared with 170 firms and 5,000 workers in 1999.

Government statistics show the total value of Vietnam's software and IT-related services in 2005 was $170 million with annual growth projected at 40 percent. Exports were $45 million last year.

"Vietnam has huge potential in IT development," said Microsoft country manager Christophe Desriac. "The key is how to wake up that potential and realize it in the best ways."

Education is seen as key.

"China accounts for an ever larger proportions of research and development financing, but Vietnam is still not in that game yet," said UN Development Program economist Jonathan Pincus.

"They are going to need to link higher education better to the business community," he said.

Some steps are being taken in that direction.

Vietnam's largest IT company, FPT, said in April it plans a private university for software workers and to develop foreign language skills. This week Cisco Systems and the Hanoi University of Technology opened a networking technology lab.

International Business Machines, Hewlett-Packard, Microsoft and Intel all have Vietnam offices.

"Overall Vietnamese IT sector remains modest in terms of scale and operation with the key challenge being the shortage of skilled software programmers," a FPT report in March said.

Source: Reuters