Current Status and Challenges

Ms. Nguyen Thi Phuong

National Technology Innovation Fund (NATIF)

Ministry of Science and Technology

Bangkok 12.2018

Outline of the presentation

1. The Vietnam Legal framework for R&D in

Frontier technologies

2. Current status of R&D investment in Vietnam

3. Priority sectors in basic research, R&D and

innovation activities from the State Budget

4. Challenges of the Vietnamese Government in

Investing in Frontier Technologies

1. The Vietnam Legal framework for

R&D in Frontier Technologies

1. Legal Framework Overview:

S&T has been considered a primarily national policy and a driver for social and

economic development. The Party and the Government of Vietnam set the goal that

Vietnam will basically become a modernization - industrialization oriented country by

2020.

This is clearly reflected in Laws and Resolutions of the National Assembly and the

Government of Vietnam such as:

The Resolution No. 142/2016/QH13 dated 12/04/2016 of the National Assembly

on socio-economic development plan up to 2020 "... Study and promulgue the

breakthrough mechanisms to encourage Basic research, R&D and innovation;

Apply the science and technology to produce the valuable products and to

increase labor productivity»;

The Law on Technology Transfer 2017 and the Government's Decree No.

76/2018 / ND-CP dated 15 May, 2018 detailing and guiding the implementation

of a number of articles «...The National Technology Innovation Fund assists

enterprises to carry out research, innovation and perfect technologies; To

support the transfer of technologies in service of agricultural development in

rural, mountainous, socio-economic difficulty-stricken or exceptionally difficult

areas; supporting technology incubation, the training of humain resourses in

service of the transfer, renewal and perfection of technology. “

1. Legal Framework (cont.)

The Law on Supporting of SMEs in 2017 focus on Supporting SME and

Start-up «...The State shall adopt policies to support small - and medium-

sized enterprises and start-up to carry out research, to innovate the

technologies, transfer of technology; Exploiting and developing the

intellectual property of enterprises...»

The Decret No. 35/NQ-CP dated 16/5/2016 of the Government on

supporting and developing enterprises by 2020 "... Propose specific

measures to assist enterprises in accessing and utilizing effectively the

financial support from the National Technological Innovation Fund and

other assisting programs of the State to propmote the technological

renovation and competitiveness enhancement of Vietnamese enterpirises»

Other Decrees and Circulars were issued to concretize the Law.

2. Current status of R&D investment in

Frontier Technologies in Vietnam

Presently, the S&T activities are dominantly invested

by the state budget.

On average, the state budget for S&T is spent at

about 1.4-1.85% of total state budget expenditure,

accounting for 0.4-0.6% of GDP

1. Current status of R&D investment in

Frontier Technologies in Vietnam (cont.)

Year Total

expenditure

for S&T from

State budget

(bil. dong)

Total

expenditure

for S&T from

State budget

(mil. USD)

Ratio of S&T

expenditure out

of total state

budget

expenditure (%)

Ratio of S&T

expenditure

out of GDP (%)

2006 5,429 232.70 1.85 0.51

2007 6,310 270.47 1.81 0.51

2006 6,585 282.25 1.69 0.41

2009 7,867 337.21 1.62 0.43

2010 9,178 393.40 1.60 0.43

2011 11,499 492.88 1.58 0.41

2012 13,168 564.42 1.46 041

2013 13,869 594.47 1.44 0.39

2014 13,666 585.77 136 0.35

2015 17,390 745.39 1.52 0.41

TABLE 1: TOTAL EXPENDITURE FOR S&T FROM STATE BUDGET BY YEARS

Source: Report of the Ministry of

Science and Technology

Source: Report of the Ministry of Science and Technology

TABLE 2: NATIONAL INVESTMENT FOR R&D BY YEARS

Investment Total national

expenditure for

R&D

(bil. dong)

Total national

expenditure for

R&D

(mil. USD)

Ratio of investment

structure for R&D by

sources (%)

Total 13,390.6 573.96 100.0

State budget 7,591.6 325.40 56.7

Enterprise 5,597.3 239.92 41.8

Foreign

capital

204.7 8.77 1.5

Source: Report of the Ministry of Science and Technology

Country, Territory (year data) Total expenditure for

R&D/GDP (%)

28 EU countries (2013) 2.01

United States (2012) 2.81

Russia (2013) 1.13

China (2013) 2.01

Japan (2013) 3.47

Korea (2013) 4.15

Singapore (2013) 2.10

Malaysia (2011) 1.07

TABLE 3: INVESTMENT FOR R&D IN SCIENCE AND TECHNOLOGY/GDP

OF CERTAIN COUNTRIES IN THE REGION AND IN THE WORLD

Source: World Bank: Science and Technology in ASEAN Countries

(Tentative edition)

In general, the investment from the state budget for S&T plays a very important role.

The investment from state budget for science and technology from 2006 to 2015 is on the upward trend: in 2006, it is 5,429 bil. VND, by 2015, it is 17,390 bil. VND;

The total national investment in research and development of S&T is 13,390.6 bil. VND, state investment accounts: 7,591.6 bil. VND (equivalent to 56.7%), while investment from enterprises was 5,597.3 bil. VND, equivalent to 41.8% and 201.7 bil. VND (equivalent to 1.5%) from foreign source.

The investment from state budget for S&T development

achieved certain results, hence, there are still many

inadequacies:

- First of all, although the state budget investment in S&T has

increased, it has not met the demand for development,

promoting research and technologies activities. Compared

with other countries, financial resources from state budget

for investment in S&T in Vietnam is still limited. Vietnam

state budget investment in S&T accounts for only 0.6 % of

GDP, while Europe in 2013 is 2.01%, Japan in 2013 is

3.47%, the US 2012 is 2,81%, etc.

- The investment of 2% of state budget for science and

technology is not too modest, but with Vietnam's GDP, this

investment is low compared to other countries in the region

and in the world.

3. Priority areas in basic research, R&D and

innovation activities from the State Budget

The Government of Vietnam has approved the Program for

Basic Science Development in the fields of Chemistry, Life

Sciences, Earth Science and Marine Science for the 2017-

2025 period.

The specific objective of the program is to build a team of

highly qualified scientists, contributing to improving the

quality of human resources according to international

standards; to develop potential young researchers in tertiary

institutions, contributing to the formation of research

universities, strive to form 15-20 strong research groups by

2025.

Priority directions for basic research

The mission and implementation of the Program are to prioritize fundamental research and basic research into the application of four basic sciences by 2025, vision by 2030, including Main directions:

Field Chemistry (organic chemistry, pharmacy-chemistry, inorganic chemistry, theoretical chemistry and chemistry, chemistry and chemistry);

Life Sciences (living at the molecular level, studying tissue and tissue life, studying life at the bodily level, studying life at the population and birth level);

Fields of Earth Sciences (geology, geophysics and geo-physics, geography, meteorology, climate, hydrology and water resources);

Fields of marine science (oceanography and ocean-atmosphere interaction, continental chemistry, marine biology and ecology, geology, geology, marine geophysics, marine engineering).

Priority directions for applied research, innovation

activities, implemented by the National Technological

Innovation Fund (NATIF)

Agriculture: High-tech agriculture, Breeding of

plants and animals, production of animal feeds,

fertilizers for plants, processing and preserving

technologies

Industry: Supporting industries, Biotechnologies, ,

Safety, network security, AI, large data analysis and

processing, open source, e-commerce, promoting

key products for domestic and export markets, etc.);

Medicine: Production of vaccines, medicinal herbs,

treatment of diseases, etc.

4. Challenges of the Vietnam’s Government for

Investing in Frontier Technologies

The legal framework has been relatively sufficient but still not completed, leading to a number of issues in the implementation on research and technological renovation;

Investment in S&T is still modest. Financial support for S&T is still focused on quantity rather than quality;

Finance for scientific research and technological development is mainly focused on public research institutions. Only few recent years, the support from state budget is oriented to enterprises;

Vietnam’s enterprises are not sufficiently aware of the importance of science and technology. The investment for research or buying of new technology is very weak.

There is incoherent linkage between industry and universities to put research results into application

The financial mechanism is still too tight; Overlapping and strict regulations do not allow for any flexibility in comparison with the original estimate. The implementation of scientific research tasks have many challenges, estimations can not predict all the problems.

Question: Buy or Make, Basic or applied R&D? Economic,

social or environmental investment?

Vietnam’s situation

In Vietnam, we have to invest in parallel: Investing for basic research, applied R&D and Purchasing technology in case of necessary to solve the immediate and urgent problems, (Big issues can not wait for the research)

+ Fundamental research is needed to enhance national capacity and sustainable development of each country for future compatitiveness;

+ Basic research is a costly field, often considered a “platform" of countries with strong economic and scientific potential. The experience of S&T development in the world from the beginning of the 20th century shows that a country with a high S&T development has a basic science that is well invested and developed.

In Vietnam, Buying of new technology or its license is also necessary, but to solve the immediate and urgent problems of life;

However, buying or application of new technology depends on the capacity of each country and its business capacity. (For SMEs in Vietnam, it is not easy to buy technology except for large companies.

Currently, only few large enterprises in Vietnam invest in science and technology development.

For SMEs, if there is a demand for technology innovation, their solution is to buy from the market. However, even if enterprises are aware of the importance of technology to business processes and the need for technological innovation, the decision whether to buy new technology in the market or not. It depends on whether they have enough human resources and expertise to take new technologies

2. Funding from NAFOSTED https://nafosted.vn

2. Funding from NAFOSTED

General information

• Established by the Government of Vietnam as a funding

agency in 2003

• Administratively belonged to MOST

• Providing fund from 2009

• Annual budget:

From 2009-2014: ~ USD10M

From 2015: ~ USD 25M

08 Scientific Committees in Natural Science and Engineering

& 07 Scientific Committees in Social Science and Humanities

Board of Trustees

Scientific Committees

Internal Auditors

Executive Office

Ministry of Science & Technology

2. Funding from NAFOSTED

General information

• Funding objects:

Vietnamese scientific and technological organizations;

foreign organizations operating in Vietnam having the

function of conducting scientific research; foreign

organizations engaged in research cooperation with

Vietnamese S&T organizations

Individual scientist is a Vietnamese citizen; foreign

scientists participating in research cooperation with

S&T organizations and Vietnamese individual

scientists.

2. Funding from NAFOSTED

Funding and Support Programs

• Basic Research Projects

All fields in Natural Sciences, Health & Medical, and Engineering,

Social Sciences & Humanities

• Applied Research Projects

• Emergent / Breakthrough Projects

Funding Mechanism: bottom-up

Grantees: researchers in universities, research institutions

Evaluation: Peer-Review based process

2. Funding from NAFOSTED

Funding and Support Programs (cont.)

• Scientific Activity Support Programs:

Participation in international conferences;

Oversea short term research;

Organization of specialized international conferences in Vietnam;

International researchers doing post-doc in Vietnam;

Publishing research results in domestic and international scientific journals;

Improving quality of domestic scientific journals;

Applying intellectual property;

Talented young scientist to use laboratory for conducting research;

Encourage individuals and organizations with excellent contributions in S&T research and activities funded/supported by NAFOSTED.

2. Funding from NAFOSTED

Results (up to 2017)

• Provide funding to

• > 10,000 scientists

• > 300 scientific institutions

• > 2,500 research projects

• Support

• > 800 scientific activities

• 700 - 800 ISI scientific articles / year

3. Funding from NATIF http://natif.vn

3. Funding from NATIF

• Established by the Government of Vietnam as a funding agency,

primarily going to operation from 2015.

• Administratively belonged to MOST, NATIF is a financial institution of

MOST, operating for non-profit purpose.

• Provides grants, preferential loans, loan interests grants, and lending

guarantees to carry out empirical research, technology transfer and

technology innovation, to support organizations and enterprises for

technology innovation.

• Chartered capital: 1,000 billion VND (~$45 million) from the State

budget for S&T activities and annually added for its conservation of

charter capital.

3. Funding from NATIF

Supports for S&T projects

Funding mechanism: bottom-up

Grantees: innovative organizations and enterprises

• Granting S&T projects

Studying and developing new, advanced and high technologies to create new products and services

Incubating technology; pilot production of new products

Training S&T human resources for technology transfer and application

Transferring, improving and innovating technologies for key, dominant and national products.

3. Funding from NATIF Supports for S&T projects

• Granting R&D projects

Studying on pre-feasibility & feasibility research of projects in

developing new and advanced technology for enterprises and

organizations

Studying on technology searching, decoding, patents exploitation

and technical improvement for developing new and advanced

technology

Replicating and popularizing to recommend and transfer

technology for socio-economic development in rural and

mountainous areas (Article 35, Law on technology transfer)

Training and improving S&T knowledge, outsourcing S&T domestic

and foreign specialists for developing advanced tech., technology

innovation.

3. Funding from NATIF

Supports for S&T projects

• Providing preferential loans, loan interest rate grants, credit

guarantee

Transferring encouraged technologies

Incubating S&T enterprises

Developing and expanding production and business plan of S&T enterprises

Transferring technology for agricultural development in rural areas.

3. Funding from NATIF

Supports for technology transfer

• Max funding 30% of the total budget of technology transfer

contract for the followings:

Patents, industrial copy rights, information, technical know-how;

Know-how of transferred technology in the form of technological measures, technological process, technical solutions, formula, technical specifications, drawings, technical diagrams, computer programs, data information;

Solutions to rationalize production, technological innovation;

Purchasing and importation of specialized machinery and equipment which can not be locally produced for technology transfer;

Consultancy, technical support, training.

3. Funding from NATIF

Supports for technology transfer

• Max funding 50% of the total budget of technology transfer

contract for the high - tech projects

• Max funding 70% % of the total budget of technology

transfer contract for the projects:

Projects on technology transfer for human health protection and natural disaster prevention and control

Projects on technology transfer in agriculture deploying in areas with difficult and remote socio-economic conditions.