Brian Jeffrey
Growth influenced by conventional factors is nearing its threshold. While these traditional drivers have facilitated Vietnam’s growth of up to 7 percent, achieving 10 percent will require fresh sources of growth. This additional percentage is anticipated to stem from advancements in science and technology (S&T), innovation, and digital transformation (DT).
Agricultural advancements have significantly contributed to alleviating poverty in Vietnam. Meanwhile, foreign direct investment (FDI), outsourcing, and assembly sectors have positioned the country as a lower middle-income entity. However, to evolve into a high-income, developed nation, Vietnam needs to leverage S&T, innovation, and DT.
S&T, innovation, and DT are pivotal in steering national development in this new age, empowering the private sector to take the forefront as the most influential force in driving national growth.
The newly enacted S&T and Innovation Law represents a crucial paradigm shift: emphasis is placed on innovating within the realms of S&T to bolster national competitiveness, stimulate socioeconomic progress, and enhance quality of life.
This law positions innovation on equal footing with S&T for the first time, signaling a significant transformation in Vietnam’s developmental perspective. It prioritizes technology transfer, advancements in technology, and practical S&T applications intended to elevate socioeconomic value and operational efficiency.
The government has laid out a strategic blueprint aimed at transitioning Vietnam from a technology-using nation to one that masters technology. This marks a historic initiative to identify and dominate essential technologies that greatly affect economic development and national security.
The state budget will allocate approximately 40-50 percent of its resources to initiatives targeting the mastering of key technologies and products, directed at national companies and local research institutions, whether public or private.
A comprehensive list of strategic technologies and products is set to be released by the Government shortly.
For businesses to stay competitive, they must embrace technological innovations, and to excel, investments in R&D are crucial. The S&T and Innovation Law, expected to be approved by the National Assembly in June 2025, introduces vital reforms.
Each year, 1 percent of the state budget, estimated at VND25,000 billion, will back companies in technological advancement, mainly via a 50 percent loan interest subsidy (for instance, a loan at 6 percent would have a 3 percent subsidy). A dedicated national technology innovation fund will support this initiative.
The state promotes R&D investments through favorable tax policies; for every VND10 dedicated to R&D, VND4 is reimbursed via tax allowances—a robust initiative compared to many other nations, which often provide a VND2 rebate.
Historically, state funding for enterprises’ R&D was minimal, predominantly benefitting research institutions and universities. Now, 70-80 percent of S&T budgets will be allotted to enterprises’ R&D, typically with the state contributing VND1 for every VND3-4 from the companies.
For small and medium enterprises (SMEs), embracing technological innovation and DT is often hindered by financial limitations and a lack of tech-savvy workforce. A viable solution is the establishment of state-supported national digital platforms, allowing SMEs to access services at manageable costs with government assistance. This approach is poised to stimulate rapid technological advancement and DT in SMEs.
The Ministry of Science and Technology (MST), in partnership with the Ministry of Education and Technology (MOET), has enlisted the help of the Posts and Telecommunications Institute of Technology (PTIT) and key tech universities to deploy 10,000 final-year IT students to assist 10,000 SMEs in utilizing digital transformation platforms. Each student will engage with the businesses for 1-2 weeks.
The government is directive toward the MST to enhance digital platforms tailored for accounting, tax obligations, online marketing, inventory management, and HR services, facilitating the transition of business households to fully-fledged companies without the need for specialized staff.
With approximately 5 million business households, which represent a vibrant economic contributor, facilitating their transition into fully operating enterprises using technology could significantly amplify economic growth.
To nurture substantial Vietnamese enterprises, the government plans to assign major national projects to domestic firms with the condition of mastering relevant technologies and fostering local industries, as demonstrated in the high-speed railway initiative. These projects represent significant ‘challenges.’
The government aims for public services to undergo administrative overhauls, transitioning to a fully digital format by 2025, with over 70 percent of applications being processed online and 100 percent for enterprise-related services.
To formalize DT efforts, Steering Committee 57 along with the government has tasked the MST with drafting a Digital Transformation Law for submission to the National Assembly this year. Vietnam stands out among a few countries having a dedicated DT law, indicative of the Party and State’s strong political resolve for comprehensive, nationwide digital transformation. DT is envisioned as a catalyst for creating fresh opportunities and avenues for socioeconomic advancement, governance reform, and the growth of S&T and innovation.
Minister of Science and Technology
