NIC incentives entice entrepreneurs

Soon after Prime ­Minister Nguyen Xuan Phuc agreed to speed up the development of the National Innovation Centre (NIC), the Ministry of Planning and Investment has called for investment at an international level through visits to developed countries like Singapore and Germany.

At the first seminar in Singapore to introduce the NIC to the international market, Minister of Planning and Investment Nguyen Chi Dung received questions about policies for investing in the centre.

According to Minister Dung, innovative entrepreneurs operating in the centre will pay just 50 per cent of personal income tax. They will be supported in training, and consultancy on capital mobilisation, trade management, and marketing by the Vietnamese government. For small- and medium-sized enterprises (SMEs), the minister said that those established in five years can register to operate in the centre and be facilitated to commercialise their research results and technology development. They will also enjoy incentives of corporate income tax at the rate of 10 per cent within 30 years. Furthermore, they will also be exempt from import tax for input goods and services in support of research and development activities.

These businesses can register to establish an enterprise without listing business lines and receive a business registration certificate within 24 hours after providing the necessary information for the NIC.

Minister Dung also emphasised that SMEs can receive capital contributions, purchase shares of venture capital funds, foreign angel investors, and be supported by the NIC in administrative procedures related to investment, business, and product and service commercialisation.

Moreover, investors who fund startups operating in the centre will benefit from a 50 per cent tax reduction on transfer of shares and capital contribution if they invest for more than two years.

“With such outstanding incentives, the centre will be a model in which enterprises and startups can bring into full play their creativeness and ability,” Minister Dung said.

Vu Tuyet, principal at Boston Consulting Group, one of the two consultants for the NIC, told VIR that there are two notable factors that would set the centre apart from what currently exists in Vietnam.

“The first is the development of a complete innovative ecosystem, especially with the presence of established big companies and links between those companies with smaller enterprises and startups,” said Tuyet. “The second is the experimental regulatory environment that allows the piloting of nurturing regulations and policies for new sectors to grow.”

According to Nguyen Dinh Cung, director of the Central Institute for Economic Management, the centre is the place to test new institutions, including giving autonomy to the management board with a special governance model. “The centre’s head will be hired and will play a very important role. This person must be truly talented, internationally influential, and be paid an internationally competitive salary,” he said.

Cung also noted that the centre is result of the serious learning of lessons from hundreds of innovation centres across the world. These centres include 17 ones in South Korea, which help startups connect with big international and domestic corporations operating in the region like Lotte, LG, Hyundai, Samsung, and SK to take advantage of their resources and experience. Meanwhile, China has established a network of manufacturing centres, a national technological innovation centre, and a network of areas demonstrating innovative ideas. In the Made in China 2025 plan, the government plans to create a national-level network of innovation centres with 15 centres established in 2020 and up to 40 such facilities in 2025.

As one of Asia’s leading countries in innovation, Singapore has established JTC LaunchPad, a site over six-and-a-half acres which offers a nurturing environment for startups. This environment has helped them have the chance to share and learn from each other through common use of equipment and workshops.

According to Tuyet of Boston Consulting Group, Vietnam’s NIC places a lot of emphasis on talents which will be the core competitive advantage for Vietnam going forward. “There is huge untapped potential of Vietnamese talents who have made their mark in the world,” she said. “We will provide the best working and living environment in a vibrant community around the NIC, with talents at the centre, and will provide what is required for them to prosper here in their home country,” she added.

Being aware of the NIC, foreign groups like German-based Bosch Vietnam and Swedish tech pioneer ABB see new opportunities, confident with their achievements gained over recent years in Vietnam. Bosch Vietnam is now getting to know about the level of foreign investment that could get involved at the centre, while ABB Vietnam’s priorities in smart factories, smart cities, and digital industry provide competitive advantages and so investment in the NIC is being seriously considered.

According to Ho Duc Hoan, CEO of tech startup Edu2Review, capital is a big challenge to Vietnam private companies. “Vietnam hasn’t got a single information gate so that startups can find capital easily. Therefore, the NIC, with its incentives, will be a good place for startups to find capital, and share and develop their ideas.” Hoan also said that the current procedure of granting investment certificates for foreign-invested enterpirses often takes from five to 10 days. When the procedure is shortened to 24 hours as proposed, it will become a great area of support from the government.

Meanwhile Ho Minh Duc, co-founder of Artificial Intelligence solutions firm VBee, said that startups need financial support. “Over the years, due to lack of suitable legislation, we have witnessed a lot of startups move to neighbouring countries. This brain drain wastes Vietnamese talent.” He said the mechanism of capital, tax, and business procedures will help attract and keep talent in Vietnam.

Pham Minh Tuan – CEO, FPT Software

The NIC will be a place for startups to carry out and test their ideas. This is very important because to have any perfect product, we have to try again and again. Particularly in technology, it’s very normal to redo, repair, and improve. Being fearful or refusing responsibility are barriers to innovation. So when the government commits and accompanies startups, their chances will be wider.

The government will understand the difficulties of startups and have quicker, better solutions for them. For example, digital signature will be easier and widely applied with the support of the government. Moreover, the voice of government will help startups and innovative enterprises promote their products.

Vietnam is now attracting many major investors from across the globe. It seems that international financiers are excited with the Vietnamese market. In fact, many investors are overpaying for some of Vietnam’s initiatives. We have witnessed that products with potential are welcomed by funders, and they even compete with each other to own innovative products.

Norihiko Muratake – General director NTT DATA Vietnam

NTT DATA is a company with over 50 years of experience in supporting the social infrastructure in Japan and 45 other countries. Recently, we have begun collaboration with startups in possession of the world’s most advanced technologies, which we aim to utilise for the purposes of creating innovative and sustainable businesses. This is the reason why NTT DATA is interested in the NIC. This model is ideal for Vietnam to improve its IT infrastructure for Industry 4.0 through connecting startups and innovative enterprises, not only within the country but also in the ASEAN, especially Singapore, Thailand, and Malaysia. We will endeavour to understand more about the concept and contents of the NIC and eventually enact our plan to contribute to its progress in the future.

Brian Hull – Country managing director, ABB Vietnam

Operating in Vietnam for 25 years, ABB is proud to be a continuing partner in the country’s sustainability. The technology for utilities and automation, used in both smart cities and Industry 4.0, is changing rapidly and Vietnam is at an ­exciting phase of its ­development.

The establishment of the NIC sends a strong signal for startups, innovative enterprises, and investors. Startups will make use of the convenient infrastructure of the NIC for their innovation while larger companies such as ABB can collaborate and garner benefits from these new ­developments.

We look forward to continuing with clear guidance from the government on the technological and cybersecurity aspects, as well as the appropriate ­financial mechanisms where necessary.