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Investment opportunitiesWednesday, 03/09/2005, 08:39

Opportunities to invest in the software industry

Current situation of the software production sector
OPPORTUNITIES TO INVEST IN THE SOFTWARE INDUSTRYI

OPPORTUNITIES TO INVEST IN THE SOFTWARE INDUSTRY
I.
Current situation of the software production sector:
a. Market:

Software consumption and services (unit: US$ million)                             

Domestic market

Exports

Whole country

HCM City

Ratio

Whole country

HCM City

Ratio

50-60

20-40

40%

7-10

5-7

70%

b. Capacity:

Manpower (unit: people)

Whole country

HCM City

Ratio

3,000

1,200-1,500

40%-50%

Average productivity:
+ Locally-owned enterprises: US$5,000/year
+ Foreign-invested enterprises: more than US$10,000/year

c. Training system:
Vietnam has seven public universities whose information technology faculties are capable of training 2,000 IT engineers a year.
People-founded universities can also train 2,000 IT engineers a year.
There are about 1,000 students in HCM City taking part in IT courses outside universities.
Only 10% of the graduates are involved in making software.

The country�s software industry requires 25,000 employees, with15,000 for HCM City alone.
II. The software production sector�s 2001-2005 targets:

Target

Whole country

HCM City

Ratio

Production value

US$500 mil.

US$300 mil.

60%

Manpower

25,000

15,000

60%

 III. Incentives:
1. Policy:

- Government Resolution 07/2000/NQ-CP dated June 5, 2000, on building and developing Vietnam�s software industry. Priorities are given to turning the software industry into the country�s spearhead economic sector with high growth rate, contributing to the modernization and sustainable development of other social-economic sectors, improving the State�s administrative ability and ensuring  national security.
- Politburo Instruction 58-CT/TW dated October 17, 2000, on promoting the application and development of the information technological sector to serve the  industrialization and modernization effort, targeting investment to catch up with the advanced IT sectors of regional countries by 2010. Of which, State and Party agencies take the lead in applying IT effectively, creating favorable conditions for the IT application and development, perfecting the legal system to protect intellectual property rights and copyrights to software makers; accelerating training, and using human resources for developing the IT industry, speeding up the building of the national information network, and strengthening State management of the IT sector.

2. Incentives:

According to Prime Minister�s Decision 128/2000/QD-TTg dated November 20, 2000, on policies and solutions to encourage investment in the software industry, local and foreign enterprises in charge of producing software or providing software services are eligible to enjoy incentives as follows:

A. Tariffs

      a.       Corporate income tax: 15%-20% (depending on localities).
b.      Exemption from corporate income tax over four years.
c.      Enjoy top incentives on VAT.
d.      Individual income tax � applying the starting level as for foreigners.
e.      Exemption from import tariff on materials used to produce software for export.

B. Credits:
Software businesses are eligible for support from the State Development Assistance Fund in accordance with Government Decree 43/1999/ND-CP dated June 29, 1999, on State credits for investment development.

C. Using and leasing land:

Software businesses enjoy reduction of and exemption of land rent and land use fee in accordance with Government Decree 51/1999/ND-CP dated July 8, 1999.
D. Creating favorable telecommunications infrastructure:

Supplying quality and high-speed telecom and Internet services with charges either lower or the same as regional countries. Allowing concentrated software industrial parks to connect their own Internet gates with the international Internet system so that software businesses in these IPs and other enterprises registering to use these IPs� Internet services can have easy access to the Internet with competitive charges compared with other countries in the region.


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