Further incentivize innovative startups to tap venture capital resurgence: officials

Vietnam needs to adopt a synchronous approach and issue more preferential policies that encourage innovative startups as venture capital investment bounces back after a lackluster 2022, experts say.

At a conference on innovative startups held in the central city of Danang Thursday, Nguyen Viet Long, director of the Department of Science and Technology (DoST) in the southern province of Binh Duong urged the Ministry of Science and Technology to introduce financial mechanisms to match those announced by the Ministry of Planning and Investment.

Long proposed using the state budget for all packages designed to support innovative startups, accompanied with detailed economic and technical criteria.

The lack of a universal legal framework hinders dissemination and emulation of good models nationwide, he argued, citing difficulties faced by several provinces in building something similar to the Binh Duong Innovative Center (BIIC).

Another concern raised by Long was that neighboring Ho Chi Minh City naturally lured strong investment into innovative projects and activities, robbing surrounding localities of opportunities. Furthermore, HCMC will be able to offer more attractive, special incentives in the near future, making it even more difficult for other localities to keep pace.

Le Duc Vien, director of Danang’s DoST, stressed the need for a national center to support innovative startups that is capable in terms of personnel, financing and legal standing. Such center should be a non-profit initiative fully funded by the state, he said.

“We do not have specialized policies substantial enough to bolster the innovative startup movement. This is a loophole,” Vien said.

Nguyen Viet Dung, director of HCMC’s DoST, suggested that a national innovative startup center provides key services including infrastructure, working space, equipment, training venues and so on. Moreover, it should be allowed to invest in startups with revenues from the lease of public assets and services for innovative startups, he said.

Minister of Science and Technology Huynh Thanh Dat agreed that more actions were needed to bolster the innovative startup ecosystem in the country. He also said innovative startup centers play a core role in mobilizing resources from within and outside the country, including the private sector.

Venture capital investment in Vietnam reached $413 million in the first half of 2023, compared to $634 million in 2022. The amount was $1.5 billion in 2021, a record high.

Vietnam has over 3,000 innovative startups now, 94% of them located in Hanoi, Danang and HCMC. Around 20 provinces have established innovative startup support centers. Nearly 100 incubators and entities operate in this field in collaboration with international peers.