Start-ups need more support

In addition, Viet Nam received 92 investment deals into start-ups in 2018 which was equal to that of 2017 and double that of 2016.

The six areas that attracted the highest capital were fintech with $117 million, e-commerce with $104 million, traveltech with $64 million, edtech with $54 million, logistics with $54 million and online real estate services with $47 million.

The good news was that last year, start-ups witnessed the emergence of domestic venture capital funds such as VietCapital Ventures, Startup Viet Partners and Teko Ventures. Vingroup’s investment fund – Vingroup Ventures also announced an investment budget of up to $300 million.

Nguyen Hong Son, deputy chief of the Central Economics Committee, said the number and quality of start-ups had increased, reaching several thousand in number, and there were now 70 co-working spaces and 50 incubation facilities and organisations.

However, Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM), said the country’s start-up ecosystem lacked many things, starting from applying for a business registration.

“It takes six months for a small tourism business to apply for a licence, and that in itself is not straightforward. I think the Government should focus on managing these firms and encouraging their development,” Cung said.

Tran Ngoc Thai Son, CEO of Tiki, said Vietnamese start-ups had faced capital shortages over the past 10 years.

The biggest difficulties for a start-up were calling for investment and providing immediate returns, whilst it was hard to make an initial public offering (IPO). Stock exchanges in Japan, South Korea, the US and China only allow companies to make IPOs that did not post profits provided they showed signs of growth.

“When investors arrive in Viet Nam, they look at market size. Viet Nam is an attractive market but not big enough, not reaching the trillion dollar level. We need to encourage companies to exit Viet Nam towards the Southeast Asia market with a scale of more than $2 trillion. However, bringing capital to invest in foreign market is a sensitive issue that the State must always balance between domestic and overseas investments,” Son said.

The size of the Vietnamese market was not large enough to help start-ups accelerate. Although Viet Nam’s internet economy had potential, Viet Nam market was still not in the most attractive top four in Southeast Asia, according to data from Google and Temasek.

Pham Hong Quat, director of the Department for Market Development under the Ministry of Science and Technology, said start-ups were a new business model.

New business models must create new services, products and methods. The nature of this new model was not based on cheap prices, but on intellectual property, new technology, asserting creativity and applicability of technology, he said.

The question was how to behave with new business models and what are the appropriate policies for them.

Nguyen Thien Nghia, deputy director of the Information Technology Department under the Ministry of Information and Communications, said lessons learned from other countries showed that Viet Nam could use a sandbox. It enabled a safe environment for businesses to test services or products without the risk of being sued for legally unauthorised actions.

Sharing the idea, Jerry Lim, CEO of Grab Viet Nam, said it was necessary to have a sandbox that would create space for new technology platforms and business models to demonstrate their ability to promote socio-economic development.

However, businesses participating in the sandbox needed to be selected carefully, he said.