Software For Hard Times

How

far has the information revolution spread? Ask Tran Coi, 27, a resident of Ho Chi Minh City in Vietnam, who says the only difficult thing about the New Economy is trying to explain it to his mother. Coi's father, a soldier, was killed in the Vietnam War a few months before Coi was born, and Coi's mom had to raise a family of five by farming a small piece of land near Danang in central Vietnam. But her youngest son is now a senior programmer at FPT-Soft, a state-owned software-development company at which he designs websites. "My mother doesn't really know what I do," he confesses, "except that it has something to do with computers." But she isn't complaining. Coi makes $300 a month--more than 10 times the national average in one of the poorest countries in Asia--and his family, at last, is doing fine.

Vietnam, long the paradigm of a backward and bureaucratic nation in a region that is moving ahead at warp speed, is counting on people like Coi as it tries to leap from subsistence farming into the information age. So far, it has been creeping more than leaping, but what is new and important is that the will is there. A tiny computer-based industry has managed to export $9 million worth of software last year, about half of it financial-services applications. But that industrial base is growing sturdily, with exports projected to reach $500 million by 2005. Last June the communist government in Hanoi unveiled a five-year plan to support a budding high-tech sector, which includes two large industrial parks for foreign and local software companies. The first of the parks opened Sept. 1.

Investors say the efficiency, diligence and creativity of Vietnamese programmers are impressive, and their wages are among the lowest in the world. Those factors have some industry insiders thinking that Vietnam could one day replicate India's success in information technology, building on a base of highly qualified computer programmers and then producing higher-level technicians and entrepreneurs. Says SilkRoad Systems managing director David Appleton: "We're on the edge of a huge success story here."

So far, the edge is pretty thin. In Ho Chi Minh City, British-owned SilkRoad has hired 17 local programmers to write software for financial giants Jardine Fleming and Merrill Lynch. That wouldn't even be worth mentioning anywhere else, but in Vietnam it is a new opportunity that simply did not exist five years ago. Universities in Ho Chi Minh City are churning out 2,000 IT graduates each year, and Vietnamese youths--half the population of 79 million--regularly win prizes in international mathematics and computing competitions. "It seems our brains are not bad," says Nguyen Thien Nhan, vice chairman of the Ho Chi Minh City People's Committee, the civic administration.

The trick is to add money and stir, and that is beginning to happen. John Shrimpton is director of Dragon Capital, a British-owned venture firm that backed SilkRoad and another local software firm. "Software is perhaps the area of greatest comparative advantage for Vietnam," says Shrimpton, because it is intellect-intensive and doesn't require a lot of capital. A Vietnamese programmer works for just $200 a month--at least 30% less than his counterpart in the Indian high-tech hub of Bangalore.

But for Vietnam to develop its potential, Hanoi needs to remove a few obstacles--starting with inadequate Internet access. Connections are slow, partly because of government efforts to block sites considered politically harmful and partly because of the narrow bandwidth of international lines. High taxes even on meager wages also push up costs. "To get $4,000 in someone's pocket, you have to pay $20,000," notes Frederick Burke, a lawyer with Baker & McKenzie in Ho Chi Minh City.

Hanoi is working on changes. Its new software parks will offer Internet access via dedicated gateways and thus keep politically sensitive technology out of general use. Park tenants are being offered incentives that include lower personal-tax rates for programmers.

If all that happens, Hanoi's efforts may push one of the world's last communist countries that much closer to a free-market economy. Says Nhan of the People's Committee: "If we can't make the whole society happy at once, why shouldn't we do it step by step?" Or one click at a time.