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Intel, Vietnam sign pact

Intel signs a memorandum of understanding with the government of Vietnam, aimed at encouraging the growth of PC technology in the communist country.

Intel (INTC) today signed a memorandum of understanding with the government of Vietnam aimed at encouraging the spread of PC technology in a country many believe presents a boon opportunity and yet significant risk.

Intel will provide Vietnam's government and key information technology (IT) personnel with information on industry trends, and hold training seminars for computer systems engineers. The company will further establish a "user's group" for "all interested parties" and advise the government on establishing standards and processes to aid the growth of an IT industry.

Khanh Ho, a native of Vietnam who worked for a time at the company's Santa Clara, California, headquarters, will head the program from Vietnam.

Vietnam is seen by some as an attractive market despite its poor infrastructure, unaccountable government, and state-run economy. Since trade relations were normalized in 1994, it has drawn a few large American companies and more than 60 firms overall, placing the U.S. within the top ten investor countries.

But U.S. investment has recently been declining. One reason is conflict of interest. Because industry has been nationalized, investors often find that Vietnamese business partners and rivals also have the state's regulatory powers.

The conditions of Intel's entry appear to steer around those pitfalls. Trying to seed a market rather manufacture computer chips, the company won't be competing with domestic firms and will be working directly with the government.

Intel's investment is also relatively small, which limits the overall risk.

"We going to try to to grow the market for [IT] products, including our own," said an Intel spokesman. "That includes an indigenous capacity to build [PCs]."

Intel isn't soon likely to build a plant in Vietnam. The company has had facilities in Malaysia and the Philippines since the 1970s, and will bring two Chinese plants (one for assembly and testing, and one for flash memory) online in the coming year.

The memorandum runs through 2000.

Intel is an investor in CNET: The Computer Network.

Reuters contributed to this report.