VietNamNet Bridge – Low investment in research and development is undermining Vietnam’s economic competitiveness.

According to a survey on Vietnam’s hi-tech application released in April 2015 by the Ministry of Science and Technology’s (MoST) Department of Market Development and Scientific and Technology Enterprises, Vietnam has just 134 hi-tech enterprises.

Only 25 of these enterprises have their own research and development units. Of these 25, 56% were “not innovative” and none of them proved to be “very innovative,” a department survey stated.

According to a recently released joint Organization for Economic Cooperation and Development (OECD)-World Bank report on the research and development and innovation in Vietnam, the country’s gross domestic expenditure on research and development (GERD) occupied only 0.2% of gross domestic product, or about US$360 million in 2014.

Meanwhile, the rate was about 3.7% for the Republic of Korea, 3.3% for Japan, 1.8% for China, and 0.8% for Malaysia.

GERD includes expenditure on R&D by business enterprises, higher education institutions, as well as government and private non-profit organizations.

Private companies accounted for just 15% of Vietnam’s total R&D investment, the government was responsible for 70% of investment, with the remaining funding sourced from higher education institutions.

Meanwhile, private R&D investment was nearly 80% in Japan, 75% in the Republic of Korea, 73% in China, 70% in Malaysia, 62% in Singapore, 58% in the Philippines, 45% in Thailand and 38% in Laos.

“Vietnamese enterprises remain very weak in terms of R&D. Their technology is not sufficiently advanced for them to improve product quality and competitiveness,” said the department’s representative Dao Quang Thuy at last week’s conference on Vietnam’s knowledge-based economic development.

MoST Minister Nguyen Quan admitted that the government’s policies on land, tax and credits for enterprises to apply high technology remained “problematic”, and claimed this had failed to encourage enterprises to apply high technology.

“Enterprises are finding it difficult to find sufficient land and preferential bank loans. That’s the reason why few enterprises are interested in developing hi-tech production facilities,” he said.

Vijay Kumar Pandey, financial director of fresh milk maker TH, said “R&D in Vietnam is very limited, affecting the economy’s competitiveness. Vietnam can develop its knowledge-based economy by applying technology. However, for enterprises to apply new technology effectively, the government needs to provide them with sufficient land, preferential credits and tax priorities.”

TH, which is the sole enterprise in the dairy cow sector to be recognized as a hi-tech enterprise by the Ministry of Agriculture and Rural Development, suggested that land from ineffective state-owned farms should be given to private companies, which could use the land more effectively.

“After 20 years of development, we have to rely on our own strength, not on the government’s hi-tech policies. These policies seem good, but hard to be applied for enterprises, which we are often vexed by state agencies. If the policies continued like this, Vietnam can’t develop more hi-tech projects,” said Nguyen Thi Hoe, chairwoman of paint maker KOVA, a recognized hi-tech company.

VIR