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New driver for growth

by NDO24 January 2020 Last updated at 17:00 PM

Visitors at the exhibition of technology products at Techfest 2019, the biggest annual event for Vietnam’s start-up community (Photo: Minh Quyet/VNA)
Visitors at the exhibition of technology products at Techfest 2019, the biggest annual event for Vietnam’s start-up community (Photo: Minh Quyet/VNA)

VTV.vn - Prime Minister Nguyen Xuan Phuc delivered a message disclosing Vietnam’s determination to become a ‘country of renovation and creativity’and a digital economy with globally extensive connectivity at the WEFAM n Davos, Switzerland in 2019.

The journey of breakthrough thinking

Based on the experience gained from many other countries, Vietnam chooses to use innovation centres to promote the application of economic strategies during the industrial revolution 4.0. The Prime Minister's Decision No. 1269/QĐ-TTg issued on October 2, 2019, officially laid down the foundation for the establishment of Vietnam’s National Innovation Centre (NIC).

On that basis, the Ministry of Planning and Investment (MPI) is urgently building a draft decree on preferential mechanisms and policies for the NIC. The first NIC is scheduledtobe launched in 2020with the mission of supporting and developing start-up ecosystems and improving technology innovation capabilities of enterprises. It is also expected to improve labour productivity and the competitiveness of the overall economy, turning Vietnam into a high-income country.

In addition, after the debut of the Vietnam Innovation Network in late 2018 with first 100 members who are overseas intellectuals, the Vietnam-Germany Innovation Network was established in Berlin, Germany in 2019. The network is expected to gather and connect Vietnamese intellectuals and technology experts in Germany as well as German individuals and businesses to contribute their intelligence and knowledge to the breakthrough development and prosperity of the two economies through innovation.

It isscheduled that there will be two more Vietnam Innovation Network offices to be established in Silicon Valley and Boston, in the US. These efforts demonstratethat Vietnam considers innovation as a driving force for economic development. It is also the reason for the MPI to determine that innovation is one of the new and upcoming strategic breakthroughs when building the 10-year Socio-Economic Development Strategy for the 2021 – 2030 period, which is alsoaligned with the Politburo’sResolution No.52 on Vietnam’s participation in the Industry 4.0.

Another important step is the Project to Promote Sharing Economic Model already approved by the Prime Minister. This is a move to realisethe Resolution No.52 on the promulgation of an experimental institutional framework regarding technologies, products, services and business models that are newly formed duringthe Industry 4.0 revolution.

The reproduction of new nuclei

In fact, the term innovation only appears in Vietnam and is included in the Law on Science and Technology in 2013. Therefore, the number of enterprises with innovation activities is severely limited and they are mostly medium and large-sized enterprises.

The first survey in 2018 regarding innovation activities of processing and manufacturing enterprises showed that only 61.63% of surveyed enterprises have conducted innovation activities, 37.18% of enterprises haven’t carried out innovation activities while 1.19% of enterprises did not know whether these activities had been conducted or not.

The fact that the proportion of investment in science and technology from businesses and the society has increased sharply from 30% in the 2011-2015 period to 48% in recent years is a positive sign.However, the proportion of investment in science and technology from the State budget has decreased from 70% to 48% respectively. This figure reflects the changes in the awareness of businesses and the society of science and technology and the effectiveness of policies on encouraging and supporting businesses to invest in science and technology.

It is also beneficial that there are several Vietnamese businesses who have invested heavily in science, technology, and innovation such as Viettel, VNPT and Vingroup.

Innovation in businesses covers many areas, including management innovation, technological process innovation, product innovation, among others. Vietnamese businesses are mostlysmall, so they have just stopped at the initial innovation stage such as purchasing equipment and changing production lines. This process is also facing many difficulties due to the limited resources of enterprises.

In order to advance to the next stage of absorbing technology, enterprises need to have enough potential to develop technology by themselves or buy appropriate technologies to increase labour productivity, innovate production and business processes, and create greater added value.

This depends not only on the capacity of each enterprise, but more importantly on the State's mechanisms and policies, particularly a new management mindset which accepts new ways of operating and not only traditional models.

The leading companies in conducting innovation activities all agree they do not need funding butinstead a favourable business environment to facilitate and encourage their new products, technologies and business models.

The World Bank also recommends that Vietnam need to restructure policies to shift from funding for research and development (R&D) activities to improving enterprise capacity through solutions such as credit incentives for small and medium-sized enterprises to implement innovation activities and supporting projects to connect research institutions with businesses. The State has the role of developing policies to commercialise theproducts from research activities.

Science and technology have made great contributions to the country's socio-economic development over recent years and are considered as leverage for restructuring the economy, renewingthe growth model, and increasing labour productivity and the overall competitiveness of the economy.

It is necessary to remove all barriers and create a smooth business environment for enterprises so that innovation will become a new driver for growth. It is also advisable to devise outstanding incentives for NICs to be able to attract resources globally, thereby contributing to making innovation a nucleus for promoting economic development.

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