The doi moi (renovation) carried out in Vietnam over the last 40 years has brought encouraging results. The national economy was valued at $430 billion in 2023, ranking 34th in the world. Vietnam’s average income per capita has reached $4,284. The achievements have laid a firm foundation for the country to develop into a high income country by 2045.

However, Vietnam is now at a time when it needs to focus on developing R&D capability in order to avoid falling into a ‘sandwich’ position, unable to compete with latecomers which have cheaper production costs or with other countries which have advanced technologies.

Vietnam will no longer be able to compete with a cheap labor force, and will have to maintain its competitiveness by using new technologies, automation and AI.

Vietnam has taken daring moves to promote R&D activities so as to develop high technologies, not just do assembling and outsourcing. Many technology giants, including Samsung, Apple and Intel, have set up R&D centers in Vietnam.

However, Vietnam’s domestic R&D is still limited. The country allocates a small budget for R&D, while investment is not concentrated, which results in a lack of momentum and favorable environment for R&D activities.

Modest investment in R&D

Many experts note that Vietnam spends too little money on R&D. By 2023, national spending on R&D was just 0.4 percent of GDP, ranking 66th in the world. The figure was small compared with China’s 2.54 percent in 2022, South Korea’s 4.6 percent, and Japan’s 3.65 percent.

Reports show modest human resources for R&D with a low ratio of R&D labor force, with fewer than 10 R&D workers per 10,000 people, just equal to 7.6 percent of South Korea, 29.8 percent of Malaysia, and 58 percent of Thailand.

Most of the R&D workforce in Vietnam is from the state owned sector (84 percent), while the figure is just 14 percent for the non-state sector.

Regarding higher education, less than 29 percent of population aged 18-29 are studying at universities, which is much lower than the average level of 50 percent of higher average-income countries.

Meanwhile, there are still many problems in the environment for R&D, which makes it difficult to attract and retain talent. Many R&D experts have left for foreign countries.

Vietnam lacks universities, research institutes and large corporations capable of conducting large R&D projects of global stature. Vietnam’s R&D still lacks momentum and a favorable environment to make a strong rise.

R&D activities 

Vietnam now has a network of 478 state-owned science and technology institutions, including 301 institutions and agencies under ministries and ministerial-level institutions, operating under the government, national universities, general directorates, academies and equivalent units; and 170 institutions under the management of provincial people’s committees.

Most of the institutions are small scale and work perfunctorily. This explains why, despite the rich R&D workforce, there are few valuable research works.

Regarding R&D at universities, except for some national schools, R&D activities are just considered ‘auxiliary’ work, because the schools focus on training activities. 

At institutions, R&D activities aim at creating more international scientific publications, which improve rankings in the world and can attract more students.

Vietnam’s businesses also spend little money on R&D. A CIEM (Central Institute of Economic Management) report showed that five years ago, Vietnamese enterprises spent 0.3 percent of their revenue on R&D, while the figures were 5 percent for India, 10 percent for South Korea and 50 percent for Japan.

The proportion rose to 1 percent a few years later and has increased to 1.6 percent. However, it is still much lower than regional countries (3.6 percent in the Philippines and 2.6 percent in Malaysia).

State-owned enterprises have strong financial capability and a workforce to spend on R&D, but they enjoy a lot of privileges, and therefore R&D is not imperative for them. Meanwhile, private enterprises, most of which are small and medium scale, are not financially capable of conducting R&D.

Pham Manh Hung (Vietnam National University, Hanoi)