Bumpy path of innovation and start-up - Part 3: New legal framework for innovation

The development of an innovative startup ecosystem aims to create a favorable environment for businesses to form and develop, creating outstanding value. Therefore, the ecosystem needs to have a legal corridor, specific policies, support from the central to local levels, and mobilize domestic and foreign resources.

Institutional breakthrough needed

The country currently has nearly 200 co-working spaces, about 70 business incubators, 30 business promotion organizations and 108 venture capital funds. However, the most important resources supporting innovative startups are favorable legal corridors and preferential policies; appropriate financial resources and close links between the business sector and universities and research institutes...

Mr. Le Duc Vien, Director of the Department of Science and Technology of Da Nang, said that we currently do not have any specific mechanisms or policies strong enough for innovative startups, this is a loophole. According to him, there should be policies to exempt corporate income tax and personal income tax for business activities, capital transfer and purchase related to innovative activities; preferential policies for income from salaries and wages of experts, scientists, people with special talents, and individuals starting innovative startups working at innovative startups and science and technology organizations.

Young people learn about innovative start-up activities, a regular activity organized by the Department of Science and Technology of Ho Chi Minh City. Photo: TAN BA

In fact, the recent innovation startup activities have given rise to practical needs, requiring intervention and support from the State. First of all, it is necessary to complete the legal corridor.

Most importantly, startups need financial support from the budget for the operations of support organizations and innovation startup centers. Especially public sector centers in the initial stages, such as: initial resource support (infrastructure, facilities, technology, tools, data, accounts, etc.), human resources, operations (salaries and apparatus operations), specific tasks (research, testing, organizing conferences, training, capacity building, etc.) according to periods with specific financial mechanisms for innovation startups.

Unconstrained by bureaucracy

Dr. Tran Du Lich, member of the Prime Minister's Economic Advisory Group and head of the project group "Building Da Nang into a national innovation startup center in the Central region", said that the biggest obstacle in startup development today is the mindset of "having a legal framework first before doing anything". Meanwhile, innovation is a matter of thinking and should not be limited by administrative apparatus.

“The Singaporean government uses the “sandbox” method to “lock up grains of sand” - start-ups with completely new products, solutions, and technologies in an experimental framework, with a short-term and breakthrough policy specifically within this framework, in a specific time, space, and subject of application. These “sandboxes” are the premise for policymakers to be able to research, experiment, and gradually adjust policies to suit new developments…”, Dr. Tran Du Lich analyzed.

New business and technology models are emerging in a context where laws have not been adjusted in a timely manner, while countries around the world are implementing new institutions such as legal sandboxes, innovation zones, and open innovation to attract investment and encourage innovative startups.

Sharing the same view, Mr. Pham Hong Quat, Director of the Department of Science and Technology Enterprise and Market Development (Ministry of Science and Technology), proposed: “The Government and large corporations must be the ones to “lead” and “order”, and be the ones to use these products, thereby spreading them throughout the economy and the country. The predecessors are the advisors who encourage the younger generation to constantly innovate, be ready to do it again, and gather together to form a common community strength in the context of both cooperation and international competition”.

Promoting the startup ecosystem according to new requirements, Ho Chi Minh City has implemented the Project "Supporting the national innovation startup ecosystem until 2025" with the goal of supporting 300 projects, 100 enterprises, of which 20 enterprises successfully call for capital from venture capitalists; at the same time, incubating and developing 200 innovation startup projects.

Assessing the innovation startup ecosystem in recent times, Chairman of the Ho Chi Minh City People's Committee Phan Van Mai emphasized that Ho Chi Minh City has identified innovation startups as an important growth driver and has implemented many solutions, such as: supporting access to capital, markets, technology and high-quality human resources; creating a favorable, transparent and healthy competitive business environment; raising public awareness of the importance of innovation startups.

With Resolution 98/2023/QH15 of the National Assembly, Ho Chi Minh City is actively implementing preferential policies for science and technology development, promoting innovation and startups, such as tax exemptions and support policies. Ho Chi Minh City is preparing to launch the Center for Startup and Innovation Support; preparing a project to establish an Institute of Advanced Technology and Innovation; a Center for Revolution 4.0, with the role of a nucleus connecting research and development centers and innovation into a sustainable cooperation network... These preparations are the premise towards developing Ho Chi Minh City into a creative urban area on par with the region in the next 10 years.

* Deputy Minister of Science and Technology HOANG MINH:

Locality develops its own ecosystem

As a state management agency, assigned the responsibility of presiding over the implementation of science and technology and innovation, the Ministry of Science and Technology recognizes the need for a strong legal corridor, policies, and supporting entities, specifically innovation startup support centers as the core to mobilize, exploit, connect and optimize resources in the ecosystem at the local and central levels, from the private sector and from abroad.

In addition, localities also need to develop their own ecosystem development strategies, based on exploiting local resources and strengths, in line with the local socio-economic development strategy. At the same time, efforts should be made to create an open innovation ecosystem with the participation of the government, large enterprises, and domestic and foreign experts to address new economic, social, and environmental challenges of the country and the world.

* Director of Department of Science and Technology of Ho Chi Minh City NGUYEN VIET DUNG:

Attracting resources with tax exemption and reduction policies

This policy has a positive impact on science and technology incubators, start-ups, and especially investment funds and investors in innovative start-ups. Resolution 98 also has a number of policies to remove difficulties and help mobilize social resources to promote science and technology application and innovative start-ups. In particular, attracting social resources with tax exemption and reduction policies for individuals and organizations actively participating in research and development activities and innovative start-ups is of great significance.

The preferential policies for innovative startups of Resolution 98 are valid for 5 years, so it is necessary to speed up the implementation to bring efficiency to enterprises, incubators, and innovative startup activities in Ho Chi Minh City. In particular, interested units and individuals should pay attention to 2 groups of tax exemption policies and non-refundable financial support. After the end of the 5-year pilot period, it is necessary to re-evaluate to see whether the policies promote innovative startups or not.

TRAN LUU - TAN BA - XUAN QUYNH

Source: https://www.sggp.org.vn/gap-ghenh-khoi-nghiep-doi-moi-sang-tao-bai-3-khung-phap-ly-moi-cho-su-sang-tao-post720709.html