Nguyễn Đức Dũng, expert on digital transformation. VNA/VNS Photo

The Việt Nam Communist Party in December last year issued a resolution on making breakthroughs in science, technology, innovation, and digital transformation development in the country. It calls for “an open approach, creative thinking, and pilot programmes for emerging real-life issues; accepting risks, venture investment, and time lags in scientific research, technological development, and innovation”.

To explore these themes, the Vietnam News Agency spoke with Nguyễn Đức Dũng, independent expert and chief editor of 17 books on digital transformation.

What do you consider the challenges that Việt Nam faces in implementing regulatory sandboxes?

With the rapid advancement of science and technology and increasingly shorter technology life cycles, innovation and the application of new ideas occur continuously. In this context, the regulatory sandbox model has become an essential tool to encourage the adoption of new technologies in a flexible manner, while mitigating risks, with existing regulations failing to match the pace of innovation.

Việt Nam, however, still faces several challenges in implementing this model.

First, there is an incomplete legal framework. Current regulations on the sandbox mechanism have not been uniformly issued across all sectors, leading to significant implementation difficulties. The approval and licensing processes for pilot programmes remain complex, delaying the practical application of new technologies.

Second, there is limited coordination among ministries and agencies. There are yet to be effective coordination mechanisms between ministries and agencies to propose, test, and evaluate new technologies. This results in overlapping management responsibilities, reducing the flexibility of the sandbox model and causing delays in many pilot projects.

Third, there are funding bottlenecks. Raising capital for pilot projects remains difficult due to inconsistent regulations. Investors are still apprehensive of legal risks and the commercial viability of new technological products in the sandbox. Furthermore, existing investment incentives for tech startups and innovative enterprises are not really attractive.

In general, to maximise the effectiveness of the regulatory sandbox in Việt Nam, a more flexible legal framework, enhanced inter-agency coordination, and financial support from both the public and private sectors are necessary. This will enable businesses and startups to test and apply technology in real-world settings.

Where should the regulatory sandbox be implemented?

The regulatory sandbox should be deployed simultaneously in universities and businesses to create a full-fledged comprehensive innovation ecosystem.

First, in universities: The sandbox can function as an open laboratory or small business model where scientific research, innovations, and startup ideas are tested in real-world conditions. The small businesses can produce tangible products and introduce them to larger enterprises (who can either invest in further research or buy out the small businesses) or to the market. Universities should encourage students and faculties to engage in applied research projects while collaborating with businesses to identify practical problems that need solutions. This approach ensures that research moves beyond theoretical discussions to tangible products and services.

Second, it could be used in businesses. The sandbox can act as a technology testing centre or startup incubator where companies pose real-world challenges for university research teams or startups to solve together. If an idea proves promising, businesses can directly invest in or collaborate with universities to develop the product. However, not all companies have the financial resources for long-term research and development.

Third, websites should be developed to invite new business ideas, allowing large enterprises to directly purchase innovative ideas from individuals (peer-to-peer) or small-scale innovators while assessing their investment potential.

For example, in the Netherlands, small businesses that face similar challenges have banded together and established angel investment funds and venture capital funds to financially support high-potential innovative ideas. Experts from these funds evaluate products, assist in testing, and facilitate the commercialisation of research in real-world environments.

So, for the sandbox model to be effective, a well-connected ecosystem between universities, businesses, and investment funds is needed, ensuring a flexible testing environment where ideas can be nurtured, validated, and transformed into practical products.

What solutions are needed for the effective implementation of the sandbox model in Việt Nam?

To ensure the successful implementation of the sandbox model in Việt Nam, several key solutions must be adopted.

A comprehensive and flexible legal framework should be developed to facilitate experimental models while maintaining transparency and safeguarding economic, national security, and defence interests. Regulations should be designed to allow creative space for businesses, but of course there will still be stringent oversight to minimise risks.

Implementing the sandbox cannot be done in isolation; it requires close coordination between ministries, agencies, and regulatory bodies. A unified set of regulations and pilot implementation processes must be established to ensure consistency and avoid overlapping management. Additionally, government agencies should provide really timely feedback and support to adjust policies according to real-world challenges.

And then, the government should introduce policies to support businesses participating in the sandbox, such as reducing capital barriers, simplifying legal procedures, and creating favourable conditions for startups and innovative enterprises to test new models. Public-private partnerships should also be created to engage venture capital funds and financial institutions willing to invest in high-potential sandbox projects.

For the sandbox model to truly drive innovation and digital economic growth in Việt Nam, a coordinated effort from the government, businesses and financial institutions is required to create an open yet legally sound and secure experimental environment. VNS