NIC incentives entice entrepreneurs
NIC incentives entice entrepreneurs
In the context of Industry 4.0, Vietnam is trying its best to promote a digital economy, with an initiative to promote a national innovation centre. VIR’s Phuong Hao takes a look into which incentives are expected to be offered to investors that wish to be involved in the initiative.
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-d 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.
