SINGAPORE China may be the name on everyone's lips when it comes to the preeminent Asian market and production base, but a growing number of major technology firms are taking notice of a new contender to the throneVietnam.
One of the poorest countries in the region in the aftermath of the Vietnam War, the country now boasts an annual growth rate of over 8 percent, the highest in Southeast Asia, as well as the best performing stock market in the region. The pro-business stance of the nominally communist government and Vietnam's impending accession to the World Trade Organization (WTO) are working to lure companies in droves. While past ventures were largely confined to agriculture or textiles, more recent investments have targeted industries like telecoms and chip design.
Early this year, chip maker Intel Corp. unveiled plans to open a $300 million fab in a high-tech park outside Vietnam's commercial center, Ho Chi Minh City. This was followed by an announcement in October that Intel's venture capital arm had teamed up with private equity firm Texas Pacific Group to take a $36.5 million stake in FPT Corp., the country's main information technology provider. Also in October, local fund manager VinaCapital and Silicon Valley venture capital firm Draper Fisher Jurvetson jointly launched a $50 million fund that will seek out growth opportunities in Vietnam's IT and telecom sectors. Other firms expanding in Vietnam include Hewlett Packard, Japan's Renesas and Nidec, Singapore's Allied Technologies, and Denmark's Sonion.
Authorities at Saigon Hi-Tech Park, where Intel's new facility will be located, recently announced that the zone had already attracted nearly $1 billion in investment, most of it from foreign companiesnot bad for a place that wasn't expected to obtain any commitments at all until mid-2008.
While Vietnam's electronics sector is relatively small, it is expanding at an impressive rate. The Ministry of Trade expects the country to export $1.8 billion worth of electronic goods and computer components this year, up 25 percent from 2005.
Companies active in the country claim its skilled workforce and youthful populationabout half of the population of 80 million is under 25represent an unmatched opportunity. And it is a population that is increasingly tech-savvy, with Internet and mobile phone penetration growing well above global norms.