Viet Nam News
Deputy Minister of Science and Technology Trần Văn Tùng talks to Tia Sáng (Ray of Light) Magazine about the support the Government has offered Vietnamese start-ups over the past four years.
Supporting the start-up ecosystem has been a major focus for the Government. How did the Ministry of Science and Technology become the pioneer in boosting such support?
In 2003, former ministers of science and technology, Hoàng Văn Phong and Nguyễn Quân, together with some others working in the private sector, held the first seminar in Vũng Tàu Province to talk about innovative start-ups. After that, Quân, Thạch Lê Anh – co-founder of the Vietnam Silicon Valley Accelerator, and I visited Silicon Valley in the US to study the start-ups there. In 2014, when attending a not-for-profit start-up and tech event in Finland, I learnt more about the importance of innovative start-ups and how they were being supported.
The event was attended by 14,000 people from all over the world, among whom were high ranking officials like China’s deputy prime minister, Estonia’s Prime Minister and Finland’s Prime Minister. I was very impressed with the initiatives presented at the event. We all thought that initiatives like that could make huge changes in one country’s production and trade and positively impact other sectors of society.
In 2015, the Ministry of Science and Technology organised an event called Techfest – a festival for supporting innovative start-ups. In 2016, the ministry submitted a proposal for the National Innovative Start-up Ecosystem Programme.
In 2016, the Government approved another project on supporting students as well as a National Women-led Business Start-up Programme.
What have been the most impressive achievements over the past four years?
The first thing is that we have better connected with the world. In previous years, we have invited investors and venture capital funds from abroad to attend Techfest, but last year they took part in more specific and effective activities.
Last year, the Ministry of Science and Technology also for the first time invited the Global Entrepreneurship Network (GEN) to Techfest. After the festival, many corporations and investment funds have worked with the ministry and offered future co-operation such as Plug and Play (a start-up accelerator system in Silicon Valley) and Qualcomm, one of the world’s largest corporations in chip manufacturing.
Secondly, I also felt that entrepreneurship support has now received more attention from the Party and the State. For example, the 2017 Techfest event was organised by the Ministry of Science and Technology in collaboration with the Central Economic Committee, Youth Union, Vietnam Chamber of Commerce and Industry. Last year is also the first time that the Prime Minister came to the event, sharing expectations for the entrepreneurial ecosystem, which is great encouragement for us. Supporting start-ups is not only the responsibility of the Ministry of Science and Technology but now also many Government agencies.
Despite such positive results, the Prime Minister acknowledged that Việt Nam’s start-up ecosystem is not attractive enough, so many potential start-ups choose Singapore to register their business. So what do we need to do to attract more start-ups?
The way we manage our economy has some factors that don’t really encourage venture capitalists. For example, foreign investors have to go through a lot of complicated procedures to transfer money out of the country. The Vietnamese Government perspective is that this cash flow has to be managed strictly to avoid money laundering, which can cause difficulties for the development of Việt Nam’s entrepreneurial ecosystem. Many start-ups said that was the reason they register their businesses in Singapore or other Southeast Asian countries.
Tax with investors is also a problem. With a corporate income tax rate of more than 20 per cent, the tax payment may be even higher than the profit these investors make. That is a very discouraging factor for investors.
Our laws currently do not allow the Government to invest in start-ups. The reason is that start-up projects often fail, but according to our laws, State agencies that manage projects and fail will be considered as violating regulations on State budget and be subject to criminal proceedings.
So in the near future, what is the Government’s view on investing in start-ups?
The Government can support incubators, private start-up acceleration courses in terms of facilities, information technology systems or operating costs. In this way, we can still support start-ups without having to invest directly in their business and do not violate the current regulations of the State.
Of course, we still need to change the current financial regulations. The Ministry of Finance should consider all relevant opinions to build new mechanisms that would facilitate start-ups. However, we should also understand that State support is only "initial capital" and it should be reserved only for the first stage of developing the country’s entrepreneurial ecosystem.
Later, when the start-up ecosystem is more developed, there should be stronger participation of other resources from society such as angel investors, venture capital funds, and start-up funds from successful corporations and businesses.
In the past two years, the Government has also supported the entrepreneurial ecosystem of many localities. Some say that we should focus on just Hà Nội and HCM City. What is your opinion on this?
It is true that Hà Nội and HCM City are clearly the best sources of resources, but the entrepreneurial spirit is not only found here. I was very surprised when I talked to an official from Đồng Tháp Province, who was very excited and enthusiastic about start-ups in the province. Once the leaders of any localities are concerned and think that innovative start-ups should be the driving force for development, all agencies and departments there would create favourable conditions for businesses and for innovation. Therefore, I do not think that we should only focus on Hà Nội and HCM City.
There are areas where knowledge on start-ups is still not common, but I see a lot of potential. For example, when technology is applied in preserving Bắc Giang litchi, the revenue from selling the products increased from VNĐ2 trillion to VNĐ5.5 trillion (US$222 million). The Mekong Delta region also has huge potential because exporting agriculture products is a strength of the area. Farmers will be willing and open to welcome new innovative solutions and advanced technology, which means start-ups will have more opportunities here. — VNS