World's biggest chip maker Intel is investing in Vietnam and Microsoft chairman Bill Gates is due to visit this weekend, but the poor Southeast Asian country's IT industry has a long way to go.

Business analysts say that for the second time in a decade an array of foreign industries and services, including IT firms, have an eye on Vietnam's highly literate, young workforce.

"Don't take one announcement or two announcements to suggest Vietnam is there," cautioned Myron Brilliant, a vice president for Asia in the U.S. Chamber of Commerce on a March visit. "There is a lot of competition in the region and globally."

Nevertheless, expectations are growing in the country where a quarter of its 83 million people are 14 years to 25 years old.

Annual per capita income is only $640 according to government figures, but foreign businesses, diplomats and aid groups see potential in an economy that grew 8.4 percent in 2005. The government projects growth over the next five years at 7.5 percent to 8 percent.

Intel announced in February it would build a $605 million microchip assembly and testing plant in the commercial hub of Ho Chi Minh City -- providing Vietnam's biggest technology investment to date.

The capital, Hanoi, brims with small IT businesses, including computer support services companies and Internet cafes. Ho Chi Minh City has the Saigon Software Park.

Microsoft founder Gates, 50, is scheduled to spend a day in Vietnam on Saturday. His itinerary includes an on-line chat with students and a visit to Bac Ninh province near Hanoi to see how IT is applied in the countryside.

The American will be greeted by Vietnam's Prime Minister and the President, even though his visit coincides with the ruling Communist Party's important five-yearly National Congress.

At Tuesday's Congress opening, Party General Secretary Nong Duc Manh spoke of the sector's importance to Vietnam.

Manh, 65, said that "in science and technology, we will strive to bring Vietnam on par with countries in the region by 2010" and "accelerate our technology capability, especially in the IT sector, bio technology and new material technology."

It wants to lure some of the three million overseas Vietnamese to bolster 600 existing software development firms. Those companies employ 15,000 people, mainly in Ho Chi Minh City and Hanoi, compared with 170 firms and 5,000 workers in 1999.

Vietnam trails established players India, China and Taiwan in the sector for lack of programming skills and high-level education, analysts said. It faces competition from the Philippines and Bangladesh, which also have low labor costs.

Government statistics show the total value of Vietnam's software and IT-related services in 2005 was $170 million with annual growth projected at 40 percent. Exports were $45 million last year.

"Vietnam has huge potential in IT development," said Microsoft country manager Christophe Desriac. "The key is how to wake up that potential and realize it in the best ways."