Thursday, July 24, 2008

Vietnam's $1.2 Billion Software Park to begin construction

Keeping up with the neighbours

Published on July 23, 2008

While Thai political leaders are preoccupied with political survival, our neighbours have moved ahead with their economic development.
Vietnam recently announced construction of the US$1.2 billion (Bt40 billion) Thu Thiem Software Park had begun. Vietnam claims that once completed, it will be the biggest software park in Southeast Asia.

The software park is part of Vietnam's plan to promote economic development by bringing in IT technicians and highly-skilled staff with expertise in software production and microchip design. The project will also have a training centre to develop human resources and provide a skilled workforce from tenants. The park is a sensible step for Vietnam in its move up the technological ladder. Over the past couple of years, Vietnam has managed to catch up with Thailand in terms of industrial development and exports.

Vietnam News reported that when the park - designed to be the biggest of its kind in Asean - becomes operational, it will attract an additional $2.95 billion in foreign direct investment, contribute $4.3 billion in taxes, and create $6.5 billion in annual revenue. The park is expected to create 40,000 new jobs during the construction period and 70,000 jobs for software specialists and IT engineers. The park will contribute significantly to the structural shift towards service-sector development.

This should prompt Thailand to look at its current economic development. Over the past couple of years, governments have shown no clear direction for future development. And the domestic political situation is not solely to blame. In fact, in spite of calls from the private sector for the government to improve the quality of the workforce, no concrete measures or projects have been executed. Instead, over the past several years, Thai governments have announced only short-term political measures to maintain their grip on power.

The latest project in Vietnam should serve as a serious warning that Thailand cannot be complacent if it wants to maintain growth and compete in the global economy.