_The Global Information and Communications Technology Industry: Where Vietnam Fits in GVCs_ Recognizing that human capital is key to further development in Vietnam’s ICT services industry, FPT started an IT university in 2006 with the aim of training the next generation of IT professionals. The university has 16,000 students that pick from 10-15 different programs and learn either English or Japanese during their studies (Jang, Lee and Ko, 2010). FPT uses the university to meet its own human resource needs. Together, FPT Information Systems and FPT Software hire approximately 60% of graduates. FPT University, along with the other 289 colleges and universities with IT faculties, will be critical if the government is to reach its goal of training 600,000 IT professionals by 2020.

# **Laws Supporting ICT Services and ICT-Enabled Services in Vietnam**

The first five-year ICT plan (1995-2000) focused on computerizing the public sector in order to improve Vietnam’s standing vis-a-vis neighboring countries on the UN’s annual E- Government Survey. However, it was not long before the Vietnamese government began to see ICT as a potential leading economic sector in the country. The 2002-2005 ICT Master Plan reflected the importance of developing ICT outside the public sphere. The 2006 Law on Information Technology and subsequent decrees (Decree No. 71/2007/ND-CP and Decree No. 56/2007/QDTTg) reinforced the state’s emphasis on ICTs, particularly on the development of software and digital content. While Vietnam first exported software in 1997, it was not until 2000 that the government set out to establish a domestic software industry with an outward orientation (Hong 2005). Prime Minister Phan Van Khai put the first five-year plan for software development into effect in June 2000. The plan sought to create the human capital necessary for a viable software industry. Between 2000 and 2005, the Ministry of Science Technology and Environment and Ministry of Education and Training coordinated efforts to train 25,000 IT specialists and computer programmers. Targets have become far more ambitious as of late; the government aims to train 600,000 IT professionals by 2020.

The government has put forth a range of incentives aimed at supporting the growing number of ICT services firms in the country. Software companies benefit from an exemption on VAT, an exemption on export taxes, a reduced corporate income tax rate of 10 percent in accordance with the Law on Domestic Investment Encouragement and the Law on Foreign Investment, an allowance of 10 percent of pre-tax revenue for R&D spending, accelerated visa procedures for foreigners and a reduced personal income tax rate for ICT professionals. Finally, software firms are granted preferential access to credit and land. These incentives have been instrumental to industry growth in both domestic and foreign markets. By 2013, software turnover in Vietnam surpassed $1 billion, half of which was exported (according to VINASA).

Another important factor has been the reduction in the state’s role in the ICT sector. Since 2003, the state’s role in FPT has diminished considerably. According to company executives, the state now owns a negligible share in the company and exercises no nominal control over operations. While FPT remains a dominant player in the market, the state’s retreat has opened up room for more private firms. Last year, Prime Minister Nguyen Tan Dung decreed that government agencies could outsource IT services to the private sector in an effort to cut down on labor costs and increase productivity. This decision could have a profound impact on the domestic ICT services sector, although it remains to be seen whether or not smaller firms will be able to take advantage. Finally, the state has created a number of IT development zones, which have been effective for creating clusters of ICT services and ICT-enabled services providers. A large percentage of Vietnam’s ICT services and ICT-enabled companies are distributed among the country’s eight IT development zones.<sup>21</sup> The 300 companies based in these IT development zones employ 46,000 people. It is clear

> 21 They include: Saigon Hi-Tech Park, Saigon Software Park, Quang Trung Software Park, Hanoi IT Trading Center, Da Nang ICT Infrastructure Development Center, National University of Ho Chi Minh City’s IT Park and Can Tho University Software Center.

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