Vietnam needs to overcome challenges to become an innovation hub

Video of Dr. Nguyen Khanh Linh, National Innovation Center, Ministry of Planning and Investment sharing about the reality of startups of Vietnamese youth:

On the afternoon of September 15, on the sidelines of the thematic discussion session 2 "Innovation and entrepreneurship" of the 9th Global Conference of Young Parliamentarians, Tin Tuc reporter had an interview with Dr. Nguyen Khanh Linh, National Innovation Center, Ministry of Planning and Investment - one of 20 outstanding young faces of the Vietnamese delegation participating in this conference.

What is your assessment of the current situation and forecast for the next 5 years of the startup ecosystem as well as technology startups in Vietnam? According to the Vietnam Innovation Report 2023 developed by the National Innovation Center in collaboration with Forbes and Do Venture (a venture capital fund supporting startups and investors), after a strong recovery in 2021, venture capital investment in Vietnam decreased sharply by 56% due to the impact of global economic fluctuations. This impact was especially evident in the second half of 2022 with investment value decreasing by 65% ​​due to the growing crisis in the technology industry. However, the number of deals increased in the second half of 2022. This shows that investment activities are still taking place regularly despite the decrease in investment value. The Financial Services sector received the most investment capital with a strong increase of 248%. Investment capital in the Fintech sector remains abundant, accounting for 39% of the total investment value, up 4 percentage points compared to 2021. In the midst of the "capital calling winter", investors continue to express interest in Vietnamese startups. Vietnam is considered one of the countries with a dynamic innovation ecosystem thanks to the rapid development of the digital economy and the strong growth of the technology sector. However, Vietnam still needs to overcome certain challenges to truly become a new innovation and technology center of the region. Vietnam has remarkable growth in the internet index: 72.1 million users; 12th in the world in terms of internet users; 94% of internet users access the internet daily; 94.1 million smartphone users and many other impressive indicators. Vietnam has made significant strides in improving its innovation indexes, leveraging its strengths to quickly catch up with the world in the field of technology: developed infrastructure, people proficient in technology, innovation and startups have many bright spots.

Overview of the 2nd thematic discussion session on Innovation and Entrepreneurship. Photo: MD

In addition to its strengths, Vietnam needs to overcome certain challenges to truly create a turning point for the development of the country's innovation ecosystem: Lack of policies to promote sustainable innovation and startup development; lack of large divestments; lack of capital from large corporations. The situation of Vietnam's startup ecosystem in the next 5 years is forecasted to continue to develop strongly and attract much attention from domestic and foreign investors. The number of startups is expected to continue to increase in the next 5 years, while the quality of these companies will also improve; Domestic and foreign investors will continue to invest in startups in Vietnam, especially those with growth potential and the ability to compete in the international market; The government and relevant organizations will continue to support startups by providing policies and support programs, helping startups to develop and compete in the market. The government and relevant organizations will continue to promote supportive policies to improve the business environment. Startups will increasingly cooperate with each other to create breakthrough values, while helping to reduce risks and costs for companies. In summary, the situation of Vietnam's startup ecosystem in the next 5 years is forecasted to continue to develop strongly and attract attention from domestic and foreign investors. Startups will continue to focus on the fields of technology, communications, education, health, agriculture and sustainability. What are the biggest challenges facing technology startups in Vietnam? What are their opportunities in the near and long term, sir? The first thing to mention is limited access to capital: Many technology startups in Vietnam have difficulty securing capital, especially in the early stages of development. This could be due to a lack of local venture capital firms and angel investors, as well as difficulties in securing loans from traditional financial institutions. Second, lack of talent: Vietnam is lacking skilled workers, especially in areas such as software development, data science, and engineering. This can make it difficult for startups to find and hire the talent they need to grow and succeed. Next, limited market size: Vietnam is a relatively small market compared to other countries in the region, which can limit the potential customer base for startups. This can make it difficult for startups to achieve economies of scale and generate significant revenue. Fourth, legal and regulatory challenges: Startups in Vietnam also face challenges when it comes to navigating the legal and regulatory environment. But we have opportunities such as: Growing tech ecosystem: Despite the challenges, Vietnam’s tech ecosystem is growing rapidly, with many new startups emerging every year. This has led to the development of a supportive entrepreneurial community, as well as increased interest from investors and accelerators. Vietnam has a young, tech-savvy population that is increasingly connected to the internet. This presents significant opportunities for startups focusing on areas such as e-commerce, mobile apps and digital content. Increased government support: The Vietnamese government has recognised the importance of the tech sector to the country’s economic growth and has introduced a number of initiatives to support startups. These include tax incentives, funding programmes and the establishment of innovation centres and incubators.

Another strength of Vietnam is its strong regional connectivity: Vietnam’s location in Southeast Asia gives startups access to a large and rapidly growing regional market. This can create opportunities for startups to expand both domestically and internationally.

While tech startups in Vietnam face challenges, they also have significant opportunities to grow and succeed. By addressing these challenges and capitalizing on existing opportunities, startups in Vietnam that are resilient, adaptable, and proactive can still compete on the global stage.

What policies has the Vietnamese government implemented to promote the country's digital transformation plan and the growth of the technology startup industry in Vietnam?

The 12th National Party Congress pointed out tasks and solutions for socio-economic development, including: Strengthening science and technology potential and building a national innovation system, promoting the creative capacity of all individuals, businesses and organizations; building a number of modern science and technology application research institutes, developing innovation centers and technology incubators; increasing assistance to strongly develop small and medium enterprises, supporting start-up businesses.

Following the Congress, a number of laws, resolutions and policies of the Politburo, the Government and the Prime Minister aimed at developing strategies and realizing the goal of developing a prosperous country, including: Resolution No. 52-NQ/TW dated September 27, 2019 of the Politburo on a number of policies and strategies to proactively participate in the Fourth Industrial Revolution; Decision No. 749/QD-TTg dated June 3, 2020 of the Prime Minister approving the national digital transformation program to 2025, with a vision to 2030; Decision No. 2289/QD-TTg dated December 31, 2020 of the Prime Minister promulgating the National Strategy on the Fourth Industrial Revolution to 2030; Decision No. 569/QD-TTg dated May 11, 2022 of the Prime Minister promulgating the Strategy for Science, Technology and Innovation Development to 2030.

The specific goal by 2025 is to maintain the Global Innovation Index (GII) ranking among the top 3 ASEAN countries, and by 2030 to maintain the Global Innovation Index (GII) ranking among the top 40 countries in the world. The Resolution also sets out a vision goal by 2045 to turn Vietnam into one of the leading centers of smart manufacturing and services, startup and innovation centers in Asia; with high labor productivity, capable of mastering and applying modern technology in all fields of economy, society, environment, national defense and security.

To achieve the set goals, the Prime Minister signed Decision No. 2289/QD-TTg dated December 31, 2020 promulgating the National Strategy on the Fourth Industrial Revolution to 2030. Developing the national innovation system in the direction of taking enterprises as the center, with higher education institutions and research institutes as research subjects.

To facilitate and support innovative businesses, the National Assembly has a legal framework to support startups specifically in the Law on Support for Small and Medium Enterprises 2017 (Law No. 04/2017/QH14), or the Government has also issued Decree No. 31/2022/ND-CP dated May 20, 2022 of the Government on interest rate support from the state budget for loans of enterprises, cooperatives, and business households.

The Government has also issued many specific guiding Decrees to initially create a solid legal framework for the Innovation ecosystem, specifically Decree No. 38/2018/ND-CP dated March 11, 2018 of the Government detailing investment for small and medium-sized enterprises and innovative startups and Decree No. 80/2021/ND-CP dated August 26, 2021 of the Government detailing and guiding the implementation of a number of articles of the Law on Support for Small and Medium Enterprises.

In the context of the world economy just recovering from the pandemic, a series of geopolitical instabilities continue to appear, opening up institutions for innovation and startups plays an increasingly important role in ensuring the country's economy develops sustainably and prospers in the future.

Thank you very much!

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