The local government of Vietnam’s largest city and financial capital, Ho Chi Minh City (also known as Saigon), is going ahead with plans to repurpose a large part of the city into the country’s first technology hub following approval from Prime Minister Nguyen Xuan Phuc.
22,000 hectares of land with a population of 1.1 million will be allocated to the project, removing two of Ho Chi Minh City’s 24 districts. The new area will form a “city within a city,” yet to be formally named, which many are already calling Vietnam’s own “Silicon Valley.”
The new area already includes modern apartment buildings, parts of the city’s financial sector, and a local polytechnic university. However, the comparison with Silicon Valley could be misleading. Sceptics point out that repurposing parts of a city and offering limited incentives alone will not spur on the organic innovation and investment that led to Silicon Valley’s success.
The tech city also lacks support which many would expect of such a project, including high-speed internet infrastructure. But with the backing of the Prime Minister and the local government, people hope the project will reinvigorate tech entrepreneurship in the city.
The plan has also been welcomed by Vietnam’s new generation of tech entrepreneurs who are setting up startups in the city. A core appeal of the city is its lower operational costs and abundant supply of lower-cost developers.
Despite its limited digital infrastructure, Vietnam is already the third-largest startup ecosystem in Asia with over 3,000 startups and one of the fast-growing economies in the world.
Frederick Burke, a partner at Baker McKenzie in the city, said “the fact that they give extra incentives to locate there creates an ecosystem where some employees live in the neighbourhood. Therefore, an engineer can jump from one job to another more easily.”
Lam Nguyen, managing director of tech market research firm IDC Indochina in Ho Chi Minh City, added that a significant difference with Silicon Valley in California is that the government will have to invest significantly to incentivise development, such as by building infrastructure, offering tax breaks to entrepreneurs, and providing the broadband internet bandwidth if the initiative is to succeed.