Source: New York Times

Nearly four decades ago, South Vietnamese leaders mapped out their battle plans inside the presidential palace here. When they lost the war, the palace became the base for the Ho Chi Minh City People’s Committee, which worked to impose tight Communist control.

But in September it was the scene of a very different gathering: a board meeting of the Hongkong and Shanghai Bank.

In the three decades since Vietnam has gone from communism to a form of capitalism, it has begun surpassing many neighbors. It has Asia’s second-fastest-growing economy, with 8.4 percent growth last year, trailing only China’s, and the pace of exports to the United States is rising faster than even China’s.

American companies like Intel and Nike, and investors across the region, are pouring billions of dollars into the country; overseas Vietnamese are returning to run the ventures.

In the latest sign of Vietnam’s economic vitality, trade negotiators from around the world are preparing, after more than a decade of talks, to put the finishing touches on an agreement, possibly by Oct. 26, for Vietnam to join the World Trade Organization. President Bush, President Hu Jintao of China, President Vladimir V. Putin of Russia and other heads of state plan to come to Hanoi in mid-November for an Asia-Pacific Economic Cooperation summit meeting.

For Vietnam, the meeting will be a coming-out party, critical to its pride in much the way the 2008 Olympics in Beijing are for China.

“I think they are the next China,” said Michael R. P. Smith, chief executive of the Hongkong and Shanghai Banking Corporation. “It’s not the scale of China, but it’s a significant economy.”

Through the end of last year; Vietnam’s growth rate exceeded that of Thailand, Malaysia, Taiwan, South Korea and even India, its closest rival.

The latest Asian economic tiger, Vietnam now produces and uses more cement than France, its former colonial ruler. The main index for the Ho Chi Minh City stock market and a smaller exchange in Hanoi have nearly doubled in value this year. Vietnam has become the talk of investment bankers and investors across Asia.

Vietnam’s Roaring Economy Is Set for World Stage

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Source: Martyn Williams, IDG News Service

Vietnam launched its first satellite over the weekend to provide telecommunications, broadcasting and Internet links across the country.

Vinasat-1 was carried into space aboard an Ariane 5 rocket from the European spaceport in French Guiana at 7:17pm local time (10:17pm GMT) Friday evening.

“With transmission capacity equivalent to 10,000 voice, Internet and data channels, or 120 TV channels, Vinasat-1 will help Vietnam bring telecommunications, Internet and television services to all isolated, mountainous and island areas where other means of transmission is not feasible,” said Doan Hop Le, Vietnam’s minister of Information and Communication, in a televised speech shortly after the launch.

The country is expecting economic gains from the telecommunications links that the satellite will support. At the very least it stands to save several million dollars per year in fees currently paid for leasing of transponders on satellites owned by other countries but also expects the services supported by Vinasat-1 will lead to growth in the economy.

“Successfully launching the first satellite is an event of great political, technical and socioeconomic significance and will help raise the image of Vietnam in the international arena,” the minister said. “This is a memorable milestone for Vietnam in its development and integration into the world economy.”

Vinasat-1 was built by Lockheed Martin and will be positioned at 132-degrees East. It carries 12 Ku-band and 8 C-band transponders and has a design lifetime of 15 years. Its footprint will cover all of South East Asia in addition to the eastern part of China, India, Korea, Japan, Australia and Hawaii.

Five other nations in the region already have their own satellites in space: Indonesia, Malaysia, the Philippines, Singapore and Thailand.

Vietnam Launches Its First Satellite

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Source: Asia Pulse

Singaporean businesses are showing interest in the real estate market in Vietnam, considering this to be a promising market.

“As the political situation is stable and the economy has experienced growth for many consecutive years, the Vietnamese people are getting richer and their demand for housing is high. I suppose this is a potential market,” said Edwin Yu Kwok Kam, Director of the
IMC Industrial and property investment company.

Yu said at the Investment Opportunities in Vietnam forum, which opened in Hanoi on January 9, that the demand for housing will continue rising in Viet Nam where the property market is in short supply.

Statistics released at the forum indicated an imbalance between the demand and the supply of apartment and office for rent. In the capital, almost all apartment and office building projects report an occupancy rate of more than 95 per cent.

Singapore companies move on Vietnam

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Source: Asia Pulse

The Malaysian construction company WCT Engineering Berhad was granted an investment license to undertake the US$200 million Platinum Plaza in southern Sai Gon urban area on January 9.

The 9ha complex encompasses a four-star hotel, an office building, a service and trading centre and sports and entertainment areas. The project is a cooperation between WCT and its Vietnamese
partner Minh Thien Construction and Trading Company Ltd.

So far, 55 foreign invested projects with total registered capital of US$1.3 billion were granted licenses in the area. In 2007 alone, the southern Sai Gon new urban area attracted 26 foreign investment projects worth a total 398 million USD.

Malaysian Co reveals VTNM plans

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By Asia Pulse
Singapore group Cattigana plans to build a US$102 million five-star resort at the foot of the Hai Van Pass in Vietnam’s Thua Thien-Hue Province.

The luxury resort, to be built on 100ha on Chuoi Beach in Chan May-Lang Co Economic Zone, will have 170 villas and a complex for cultural and leisure activities. The chairman of the provincial Peoples Committee, Nguyen Ngoc Thien, said the licence for the project would be issued this month.

The company is expected to break ground for the construction in the first quarter.

Singapore company to spend $102m in Vietnam

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Copyright The Financial Times Limited 2007
By Joe Leahy in Mumbai

India’s information technology outsourcing sector is heading for crunch time next year, as a rising currency and increasing wage and real estate costs force the industry to rethink how it does business.

Multinationals continue to view the country as one of the most viable outsourcing destinations, but competitive pressures are making other countries look attractive.

Vineet Nayyar, chief executive of Tech Mahindra, described as “horrible” the impact on IT margins of a 12 per cent appreciation of the rupee against the dollar this year.

“All your emerging sectors are going to have major problems because of the currency adjustment,” Mr Nayyar said.

India’s IT outsourcing companies have been among the worst performing on the stock market this year. The sector has underperformed the MSCI India index by 47 per cent.

Much of the negative sentiment concerns the stronger rupee, which hit Rs39.16 against the dollar last month, its strongest level since March 1998.

Indian IT outsourcing companies earn most of their revenue in foreign currencies, particularly dollars, but they incur most of their costs in rupees.

The leading companies, such as Infosys Technologies and Tata Consultancy Services, have so far largely maintained their margins. Measures they have used to keep margins up include moving more work onshore and hiring cheaper graduates from disciplines other than engineering. They have also employed hedging.

Analysts believe, however, that a longer-term shift in strategy is necessary if India’s IT companies are to prevent more work going overseas to emerging centres such as Vietnam, China and Brazil.

Gartner, the research group, in a study of outsourcing destinations, found that India accounted for 28 per cent of the estimated workforce available globally for offshore work. That makes the country the largest such labour pool in the world.

But the study also found that costs were rising fast. Salaries are climbing an average 14.5 per cent a year, almost double the rate in China and the Philippines, and the rate of attrition is 20 per cent to 25 per cent.

“The attrition [rate] leads to the challenge of consistency and therefore of quality for buyers of these services,” said Ian Marriott, research vice-president at Gartner. “And so the whole appeal of India is starting to just lose a little bit of the gloss.

“It’s still very appealing for a whole variety of reasons but it’s starting to get people thinking: should we investigate other locations as well, probably not as an alternative necessarily but in addition to India.”

Indian companies needed to move away from thinking that more demand meant more hiring and extracting greater productivity out of existing workforces, Mr Marriott said.

While the larger companies were also trying to become more global and were setting up centres in other offshoring locations, this was not an option for the small and medium-sized outsourcers, he said.

These smaller companies had to become more specialised. “They’ve got to be very niche by design and very focused on specific markets, specific services, specific kinds of customers,” Mr Marriott said.

Time for India’s IT outsourcers to take a fresh look at the data

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The survey, made through 305 interviews in Ha Noi and Ho Chi Minh City , also indicated that about 88 percent of professional internet users said internet is indispensable in their daily business.

“We strongly believe that the broadband internet service in Vietnam will see a boom in development,” said Valerie Faudon, vice president in charge of maketing programme at Paris-based Alcatel-Lucent Group.

She said the annual growth rate of broadband internet in Vietnam had already exceeded the government’s forecast as well as service providers’ expectations.

“The survey will help us to make a concrete business plan to provide the service in Vietnam ,” she said.

According to the survey, about 56 percent of professional internet users could afford a 10-20 USD internet bill at their home. Their main applications would involve multimedia content such as online music, video, games and downloads.

Meanwhile, about 95 percent of them have desktop computers at home, and 16 percent of them are planing to buy laptop computers, the survey reported.

The survey, also made in nine other countries worldwide, showed that Vietnam had a very high rate of voice over internet usage, just behind Brazil.

According to the Ministry of Information and Communications, there are currently 16.7 million internet users and 4.8 million internet subscribers out of population of 85 million.

The government recently announced plans to inject 100 trillion VND (6.3 billion USD) to increase the country’s Internet penetration to 35 percent by 2010. It expected the telecoms sector to generate revenues of up to 55 trillion VND (3.5 billion USD) per annum in the same period.

Vietnam to see broadband boom

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The internet has been around in Vietnam for 10 years and has spread to every corner of the country, from large city to the countryside. In the 10 years since the internet arrived in Vietnam the user number has risen to 18.64 per 100 population. In comparison, in Thailand it is 12.65/100, in China 9.4/100, and in the Philippines 9.2/100. In fact, internet services are far cheaper and more convenient here than in many other places in the world.

The price is so low that you only have to pay VND200,000 (US$12.5) a month to play online games frequently. Kids in Ho Chi Minh City sit all day long in Internet cafes paying just their breakfast money. Foreign tourists can easily find a plethora of Internet cafes with a maximum tariff of VND5000 per hour of access.

Internet in Vietnam

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NTT Communications Corp (NTT Com) and Vietnam Posts & Telecommunications Group (VNPT) have announced an agreement to form a joint-venture company, Global Data Service Joint Stock Co, in Hanoi in early January 2008 to provide world-class data-center services. NTT Com and VNPT will be among the first telecom operators to provide such services in Vietnam.

Expansion of the Internet in Vietnam is driving the need for data centers as network infrastructure from the companies that wish to run stable Internet related businesses increases demand for redundant IT facilities and data centers to ensure business continuity from Vietnamese, Japanese and other multinational companies operating in Vietnam.

The joint venture will establish data centers in Hanoi in mid-2008 and Ho Chi Minh City in early 2009 to provide services with support from NTT Com and VNPT. Its data centers will offer collocation and hosting services that ensure complete redundancy for uninterrupted power supply, air conditioning and power generation/distribution. High-security measures will include facility-access control and camera surveillance. In addition, customers will benefit from having direct access to high quality global networks within data centers as this joint-venture company is formed by telecom operators.

NTT Com, its wholly owned subsidiary NTT Com (Vietnam) Ltd, and VNPT will also collaborate in the provision of tailored, one-stop services covering networks, system integration and information security.

NTT Com will take a 40% stake in the joint venture and VNPT will own a 60% share. Capitalization will be about 900 million yen, and the company will start with about 60 employees.

NTT Com, VNPT to Set Up Joint Venture in Vietnam

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Shanghai and Bangalore are well-known international development hotspots, but expert panelists at the CoreNet Global Summit in Atlanta, have identified up-and-coming cities that are expected to be the economic hubs of the future.

In a session called “Around the World in 90 Minutes,” panelists picked dozens of cities in Asia, Europe and the Americas that offer a business climate making them ripe for development by growing companies. Over 300 attendees attended the session, part of the corporate real estate and workplace association’s Global Summit meeting.

A prominent Asia expert, Dennis J. Meseroll, Director of Tractus Asia Limited, a location consulting firm, said companies should look to second and third tier cities that he calls “sleepers,” which include Chengdu, China, Orissa, India as well as Ho Chi Minh City/Hanoi, Vietnam.

Despite the attractiveness of exotic new Asian and Eastern European markets, Dennis Donovan, Principal of Wadley-Donovan-Gutshaw Consulting, said North, Central and South America, “continues to be very strong,” for outsourced call centers and manufacturing centers.

Beyond China and India: Ho Chi Minh City A Future Development Hub?

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