Raising a house of innovation

How can you assess the role of innovation in digital transformation and the sustainable development of the economy?

Vu Quoc Huy, deputy director of NIC under the Ministry of Planning and Investment

The draft documents of the 13th National Party Congress, which has drawn a great deal of comments, affirms that innovation is one of the most important pillars of Vietnam’s 5-year Socioeconomic Development Plan and 10-year Socioeconomic Development Strategy. Innovation is the only way to develop well and sustainably, as well as narrow the gap with other developing countries.

Innovation and digital transformation are closely related. Digital transformation relies on digital technologies to remake a process by improving its efficiency or effectiveness – not just to replicate an existing service in a digital form but to use technology to transform that service into something significantly better. This could change all the processes, ways of operation, and improve productivity by applying cutting-edge technology.

Similarly, the ties among innovation, green economy, and sustainable development are quite clear. Innovation is the way leading to a green economy, sustainable development, and breakthrough growth. If a locality, authority, or enterprise is to achieve their sustainable development or green growth targets, they need to change their mindset and integrate this determination into their strategies and master plans.

Developing the economy based on innovation is a certain way to enable middle-income countries to level up into high-income countries. The more innovative businesses the economy has, the more competitive and added value it gets.

According to international experiences, in order to support enterprises in innovation, governments usually invest in research and development (R&D) activities, improve technology and management, rise higher in value chains, and create novel products and services. One of the most popular supporting measures is to establish innovation centres.

What do you think of the preferential policies offered by the National Innovation Centre (NIC)? Are they attractive enough to develop an innovation ecosystem and attract investors?

Decree No.94/2020/ND-CP has been in effect since October 5, creating a more favourable environment in Vietnam for R&D, business, and investment activities. The incentives include an exemption from import duty on items used to develop fixed assets; those directly used for R&D, sci-tech development, technology incubation, incubation of high-tech firms, and technology innovations in line with the related import-export regulations.

Tenants at Hoa Lac High-Tech Park will be able to enjoy a corporate income tax of 10 per cent for 30 years from the first year of producing revenue, four years of tax exemption, and a 50 per cent reduction in payable tax in the following nine years from the date of receiving payable income. They will also be exempt from import duty for materials and spare parts used for manufacturing that are not produced domestically from the date of beginning manufacturing.

Additionally, the investment projects of entrepreneurs and startups working or operating at the NIC or its investment projects funded by state credit shall be given preferential treatment if they take up preferential loans from the Vietnam Development Bank.

The NIC itself, entrepreneurs, as well as startups working or operating at the NIC may receive grants, financial aid, support, loans, and loan guarantees from the National Technology Innovation Fund, the National Science and Technology Development Fund, the Small- and Medium-Sized Enterprise Development Fund, and other province or city-based science and technology development funds.

When bidding under the Bidding Law, startups operating at the NIC shall be granted exemption from a number of criteria for prequalification applications, bidding packages, and proof of competence and experience, such as revenue, financial resources, similar past contracts and other requirements, depending on their individual characteristics.

What do you expect the NIC and startups can contribute to Vietnam’s development, as well as its ambitions of industrialisation and modernisation?

With five priority sectors – including smart factory, digital content, network security, smart city, and environmental technology – the NIC is expected to be the core of economic development in the long term. This is a pilot model that will hopefully be able to generate spillover effects and be reciprocated across the nation.

After establishment, the NIC expects to welcome 40 big technology companies, 150 startups and small- and medium-sized enterprises, 15 venture funds, two startup development centres, and 40 supporting service companies, creating 5,000 jobs in the technology sector and offer some benefits for startups like laboratories, product introduction centre, and conference centre. The NIC is expected to be a large-scale and high-quality innovation eco-system, strengthening their business operations to focus on innovation and the development of Industry 4.0 solutions. The NIC will be a place where enterprises can access comprehensive support so that they can accelerate the process of releasing products and services. It will connect and cooperate with other innovation centres across the country to create an innovation eco-system, contributing to improving the technology capacity of the economy, enhancing productivity and the competitiveness of the economy.