Economic Sector

Last updated: Monday, April 22, 2019


Facilitating Innovative Start-ups

Posted: Tuesday, September 11, 2018

To learn about the legal corridor that encourages and supports entrepreneurs in Vietnam to start an innovative business, the Vietnam Business Forum Magazine has an interview with Mr Pham Hong Quat, Director of the National Agency for Technology Entrepreneurship and Commercialisation Development under the Ministry of Science and Technology. Le Hien reports.

Could you tell us about the regulatory corridor for innovative start-ups in Vietnam in the past time?
In the past time, supporting innovative start-ups has become an important priority for countries, including Vietnam. Legal documents on support and encouragement of new innovative start-ups are promulgated in recent years to provide guidelines for small and medium-sized enterprises (SMEs) and innovative start-ups.

The Law on SME Support 04/2017/QH14, adopted by the National Assembly in June 2017 and brought into force on January 1, 2018, stipulates principles, contents and resources concerning SME support, including innovative start-ups, and responsibility of agencies, organisations and individuals involved in SME support. Regulations on innovative start-ups are stipulated in Article 17 of this law, with two conditions for determining an innovative start-up: Not operating for more than five years from the date of incorporation, and not offering its shares to the public in case of being a joint stock company.

According to Article 17, there are five types of support available for innovative start-ups, including support for technology transfer and application; support the use of equipment at technical facilities; support for participation in incubators and common workplaces; guides for test and completion of new products, services and business models; support for in-depth training in product construction and development; investment attraction, consultancy on intellectual property; carrying out of procedures on standards, technical specifications, measurement and quality; support for information, communication, trade promotion, networking of innovative start-ups, funding for innovative start-ups; support for commercialisation of scientific research and technological development results, utilisation and development of intellectual property; and interest rate subsidy mechanism for SMEs and innovative start-ups. Interest subsidies are provided through credit institutions.

Decree 38/2018 / ND-CP dated March 11, 2018 provides detailed regulations on investment for SMEs and innovative start-ups. This decree specifies establishment, organisation, management and operation of innovative start-up funds. In addition, Decree 38/2018/ND-CP regulates the use of State budget for investment in innovative start-ups. With this ruling, Vietnam has for the first time shaped the legal basis for the support and investment in innovative start-ups to stakeholders, from investors (businesses, investment funds and companies) to authorities (e.g. the Ministry of Planning and Investment, the Ministry of Finance, Provincial/Municipal People's Committees) and SMEs/innovative start-ups.

Decree 39/2018/ND-CP dated March 11, 2018 details some articles of the Law on SME Support, regulates the establishment, organisation and operation of Credit Guarantee Funds for SMEs (No. 34/2018/ND-CP).

What is the mechanism for promoting science and technology in the Industry 4.0 era?
The Technology Transfer Law of 2017 also provides support for innovative start-up ideas; recognises property ownership and use rights and other rights arising as a result of scientific research and technological development; allows the use of these rights as collateral for loans for investment in innovative start-ups; permits the use of scientific and technological development funds of companies for investment and reciprocal capital for investment in innovative start-ups. Organisations and individuals investing and assisting innovative start-ups are entitled to tax incentives and encouraged to use technological research development results; and build technical infrastructure and support the operation of the national start-up centre.

Decree 76/2018/ND-CP detailing and guiding the implementation of a number of articles of the Law on Technology Transfer adopted on May 15, 2018 stipulates and guides contents relating to technology, management of technology transfer; assessment and appraisal of technology; support and promotion of technology transfer, scientific and technological market development; and formation and mode of technology transfer in agriculture.

Do you have any regulatory proposals to create more favourable conditions for innovative start-ups?
Although we already have mechanisms for innovative start-ups, as well as scientific and technological application, the innovative start-up ecosystem is, in reality, constantly developing, but constrained in that the legal corridor causes components of the ecosystem to develop unequally and unevenly, thus failing to utilise resources and promote their capabilities to develop that ecosystem. Remarkable obstacles include legal restraints that inhibit foreign investors from their funds into innovative start-ups in Vietnam, insufficient fundraising policies, complicated and time-consuming divestment procedures and high tax rates. We lack policies to attract resources, specialists and personnel expert in innovative start-ups, particularly Vietnamese intellectuals abroad.

The regulatory financial mechanism has not really met the needs of innovative start-ups. At present, support for innovative start-ups to develop and expand their production, business (and commercialisation) have been legalised in the Law on Technology Transfer, the Law on SME Support, and instructive regulations for implementation. However, these new laws just took effect in 2018, not long enough to form a legal framework for deployment.

Therefore, it is necessary to set up an appropriate financial mechanism to promote the environment for innovative start-ups, to create favourable conditions for innovative start-ups to operate and develop, including expenditure items suitable for innovative start-ups like expenses for outstanding innovative start-ups to join world-renowned incubators and common workplaces, expenses for innovative start-ups representative of Vietnam in some innovative start-up ecosystems, expenses for air ticket and expert salary to facilitate high-quality innovative start-ups to participate in training programmes and national start-up events. It necessarily allows direct finance important works for innovative start-ups like market research, expert hiring, labour pay and commercialisation of new technologies, products and services.

To simplify paperwork for investors, it is necessary to have a plan to streamline procedures of granting investment registration certificates to foreign investors in Vietnam to save their time and costs in fields not included to international investment treaties to which Vietnam is a contracting party. Besides, there is also a need to set up events to connect overseas Vietnamese investors and intellects with domestic innovative start-ups.

Thank you very much!

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