The agreement was an acknowledgement of the "outstanding development and performance of the IT industry in Vietnam," said Truong Gia Binh, general director of FPT, the country's largest software and computer manufacturer.

Under the agreement, Microsoft and FPT will cooperate in the integration of the Lotus Notes software application into Microsoft applications in the Southeast Asia region, and provide IT solutions for Government offices in Vietnam. The two firms will also work together on the development of IT infrastructure in Vietnam across the region using Microsoft-based platforms, said FPT.

Microsoft will assist its local partner in compiling the curricula for computer training programmes at FPT's newly-established university and at other training centres, and work on developing localised computer solutions for companies across the region, it said.

The two firms earlier this year agreed to establish a Microsoft Competency Centre, where Microsoft would help train local technicians to use its applications.

FPT last October became the nation's first Microsoft 'gold' partner, the company's highest level of corporate partnership.

The joint-stock firm last year posted earnings of US$517 million, a year-on-year increase of 61 percent. Revenue from software sales accounted for VND698 billion of the total, an 87 percent increase from 2004, while turnover from software exports accounted for another VND135 billion, up 145 percent over the same period, it said.

According to the Ministry of Posts and Telematics, the total value of Vietnam's software and IT-related services in 2005 was US$170 million with annual growth projected at 40 percent. Exports reached US$45 million last year.

The country currently has 600 software development firms, which employ 15,000 people, mainly in HCM City and Hanoi, compared with 170 firms and 5,000 workers in 1999.