Hanoi Times - The local market for information technology products and services has been unable to match rising demand, industry officials have said.

’The country now has some 7,000 administrative agencies, 6,000 State-run agencies and 260,000 private companies. The IT application rate in business stands at 86.5% and the local software market has fetched US$ 240 million, an increase of 40% year-on-year,’ Nguyen Trong Duong, deputy head of the Ministry of Information and Communications’ Department of Industry and Information Technology, said.

’The local software industry has not developed strongly enough to match the vast potential,’ he said, blaming investment policies and procedures.

He also noted that little attention was given to trade promotion for the local software industry.

Vu Tan Cuong, director of the Hanoi Department of Post and Telecommunications’ Centre for Information, said that a recent survey of IT applications among local companies showed most companies’ investments represented 60% in hardware.

Software use was for office software like Word or Excel and an insignificant percentage was being used in corporate management, he added.

Le Hoang Minh, deputy director of Ho Chi Minh City Department of Post and Telecommunications, said that despite strong demand o­n the local market for software products and services, the country lacked a healthy business environment and a sound legal framework.

’Local software companies have o­nly three years more to prepare for a new but challenging playground as Vietnam has committed to opening its service market by 2010 as part of the WTO entry process,’ he warned.

Vietnam’s software industry could not become a real full-fledged industry if a specific direction had not been chartered, said Pham Tan Cong, general secretary of Vietnam Software Association.

He said that cheap labour cost was the major advantage that Vietnam had, and that human resources, not technology, was the competitive factor in attracting business. ‘People are not skilled engineers by nature but they need to go through a training process. Close coordination between training centres and recruiters is necessary.’

To stimulate local market demand, Duong proposed the State draw up policies that would encourage the use of local made quality software in IT projects, while setting up software quality evaluation centres.

Organisation and association should post information about corporate capability and software products o­n the industry portal, he said.

The State should also plan to develop broadband media infrastructure to meet increased demand of not o­nly local software companies but foreign o­nes that enter into joint ventures with the local software market.

Information technology and communication transaction centres would also be helpful in attracting investment from multi-national groups, he added.

Latest figures released by the Ministry of Information and Communications show that Vietnam has around 750 software companies, 150 of which are involved in software exports.