VietNamNet Bridge - The average expenditure for science and technology of Vietnamese enterprises is only 0.02% of their total annual spending. 

So how can they compete in the global arena as the world has entered phase four of the industrial revolution?

This is the concern of Dr. Le Dang Doanh, a well-known economist, former director of the Central Institute for Economic Management (CIEM) at a recent workshop on the development of the private economy in Hanoi.

"In Vietnam, the development of the private sector must be set in the context of the 4th stage of the industrial revolution, which focuses on added value created by science and technology. Vietnam should no longer rely on land and low-cost resources," Doanh said.

He pointed out that while Vietnamese enterprises spend 0.02% of their annual expenditures on science and technology, the figure is up to 40% in Korea.

Doanh also mentioned that some enterprises rely on relations with officials to get early information about changes in policies. They consider this as their competitiveness.

"Many businesses of this kind earn more profits and faster than those who invest in human resources and science and technology," Doanh said.

Experts said that Vietnam must solve the problem of inequality in the provision of information to create fairness and motivation in business, which can urge small and super-small enterprises to become large ones.

Doanh said under the Enterprises Law, the households that hire more than 10 workers have to register, but in fact many households employ hundreds of workers but don’t register as enterprises. 

The expert emphasized that the household-sized economy is the transitional period of the private sector.

In fact, not only businesses but also the state budget spends little on science and technology. According to the State Audit Agency, investment on sci-tech at 9 ministries and 31 provinces and cities in 2014 accounted for only 1.36% of total expenditures.

This figure is even lower than the National Assembly-approved rate, which stood at 2% of total budget spending in 2014. Spending on sci-tech this year was equivalent to one eighth of spending on administrative activities.

Under Vietnam’s sci-tech development strategy to 2020, after every 5 years, Vietnamese firms have to move to a new generation of technology.

The Science and Technology Law 2013 stipulates that businesses must spend a minimum of 3% and up to 10% of the profit to invest in science and technology. 

But in fact, not many firms can do this because 10% profit of smallfirms is not enough to renew technology or create new products.

Lan Phuong