Unlocking Private Investment for S&T Development

Vietnam's public and private investment in science and technology (S&T) is relatively low compared to the global average. At 0.5% of GDP, Vietnam's investment rate is nearly 5 times lower than the world average investment rate in science and technology of 2.23%.

Vietnam has had more than three decades of continuous economic growth to become the choice destination for private investors. However, the socio-economic challenges and the impact of the COVID-19 pandemic have slowed this process down. Private capital and mixed financial investment will continue to be an important component of Vietnam's sustainable development.

In that context, the Government of Vietnam has made a strong commitment to the implementation of the Sustainable Development Goals (SDGs) with the National Action Plan to implement the 2030 Agenda. As shown in many legal documents, science, technology and innovation are one of the main drivers of socio-economic development in Vietnam, and a key factor to support the achievement of the SDGs.

However, Vietnam's public and private investment in science and technology is relatively low compared to the global average. According to Deputy Minister of Science and Technology Tran Van Tung, private investment in science, technology and innovation is increasing compared to public investment and the legal framework is also gradually improving. However, the number of enterprises investing in research, development and innovation activities is relatively low, and the use of funds for scientific and technological development in enterprises is still modest.

According to statistics, the rate of investment in science and technology of Vietnam is only 0.5% of GDP, nearly five times lower than the world average rate of 2.23%.

Therefore, according to Deputy Minister Tran Van Tung, increasing private investment in science and technology development and innovation toward sustainable development goals is a vital factor to promote socioeconomic development in Vietnam.

Ms. Ramla Khalidi, UNDP Resident Representative in Vietnam, said it was important to develop the business sector by promoting reform of state-owned enterprises to strengthen the overall business investment climate in competition, access to finance and administrative requirements. A tailored public-private partnership pilot program for research and development (R&D) and innovation can help centralize and leverage resources and improve collaboration among public and corporate research entities, including foreign companies. In particular, to encourage enterprises of all ownership types to invest in science and technology, especially in high-tech, creative and supporting industries, it is necessary to use a range of incentives and tax incentives to attract investment, both from domestic and foreign sources, into these priority areas.

The recent launch of the Investment Opportunity Map toward SDGs in Vietnam in Hanoi is considered a contribution to the efforts of the Government of Vietnam in increasing financial resources for science and technology development and innovation.

Accordingly, the map provides policymakers, investors and stakeholders with market information to orient capital flows and activities according to investment themes and business models suitable to SDG, known as a field with potential investment opportunities. This is the basis for Vietnam to invest in prioritized SDG areas to realize the dual goals of generating profits and achieving environmental and social results. The map was made with the support of the Center for Impact Investment and Practice (CIIP), SDG Impact's main partner in the ASEAN region.

The map will help orient the private sector to the areas that are most in need of investment in the country, while encouraging the application of science and technology innovation and efforts to realize areas of investment opportunities. Using SDG Impact's rigorous methodology, the map has identified 14 areas with investment opportunities across six sectors that need to prioritize SDG investment and are consistent with Government policies, including Education, Healthcare, Food & Beverage, Infrastructure, Renewable Energy and Financial Services.

By Quynh Chi, Vietnam Business Forum