VietNamNet Bridge - Lacking venture funds and strong service bases, Vietnam is still far from reaching its goal of having 5,000 technology startups by 2020.

Vietnam strives to have 5,000 technology startups by 2020

There were 40 venture funds in Vietnam by the end of 2017, most of which were foreign, such as IDG Ventures, CyberAgent Ventures, DJF-Vina Capital and 500 Start-ups. 

The Vietnamese network of angel investors, co-working spaces, business incubators and investment funds targeting startups have also been taking shape.

However, the effects of investment funds remain modest. Many startups have called for capital, but the capital is mostly from foreign sources, so the startups tend to register their business overseas, including Singapore, Malaysia, Thailand and Hong Kong.

The establishment of venture funds in Vietnam was mentioned in the 2009 High Technology Law and the 2016 Small & Medium Enterprise Law. 

However, the regulations have not been enforced because of conflicts with provisions in existing laws, including the Penal Code and the State Budget Law, and because legal documents guiding the implementation of the law have not been issued.

However, the regulations have not been enforced because of conflicts with provisions in existing laws, including the Penal Code and the State Budget Law, and because legal documents guiding the implementation of the law have not been issued.

In such a context, the regulations of the national plan on supporting a startup ecosystem by 2025, released together with Decision 844 (Plan 844), have brought high hopes to the startup community.

However, the chair of the Vietnam Automation Association, Nguyen Quan, said there has been no considerable progress since Plan 844 was released, while venture investment only exists in theory.

Quan pointed out that in Vietnam, the startup ecosystem lacks venture funds and strong service bases.

Quan, former Minister of Science and Technology, thinks the State needs to ‘take one step ahead’, saying that the US government also contributed money to venture funds to accelerate the startup ecosystem. 

Citing the US, Quan said that Vietnam still must do many things to implement regulations stipulated in Plan 844.

Of these, Quan emphasized the need to issue legal documents and amend related laws to pave the way for contribution of money to venture funds.

He also suggested setting up a state-owned venture fund in which the State Capital Investment Corporation would invest as instructed by the Plan 844’s steering committee.

Vietnam is striving to have 5,000 technology firms by 2020. Quan said if the State dare not make venture investments, the legal basis and operation mechanism of venture funds will never be built. Other economic sectors would not dare contribute capital to the funds.

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Thanh Mai