Tuesday, 26/9/2017
Continuing to perfect mechanisms and policies to promote science and technology market development in Vietnam
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Results and limitations of science and technology market from policy perspective

In the process of industrialization and modernization of countries, many governments in the world have issued important policies to accelerate the development of the science and technology market. As a result, in some countries, such as China, Korea, Malaysia, the speed and value of technology transactions and trade in recent years have increased dramatically and positively affected their economic growth and quality.

For Vietnam, developing science and technology market is the right policy that our Party has confirmed in the documents of the 9th, 10th, 11th National Party Congresses and reaffirmed in the document of the 12th Party Congress. Recently, Resolution No.11-NQ/TW on 3 June 2017 adopted at the 5th Plenum of the Central Committee of the Communist Party of Vietnam (12th Tenure) on finalizing the socialist-oriented market economy also emphasizes that the finalization of the institution for strong synchronous renewal and development of science and technology market is one of the important solutions to synchronously develop market elements and types of markets, aiming to create a solid premise for the successful construction and smooth and synchronous operation of the socialist-oriented market economy, contributing to the mobilization, allocation and most effective use of all resources to boost fast and sustainable socio-economic development.

Some certain results

The Party line on the formation and development of science and technology market has been strictly studied and institutionalized in a timely manner by policies and laws of the State. Over the past decade, Viet Nam has initially set up a relatively favorable legal environment for science and technology market, such as the Science and Technology Law (2013), the Law on Technology Transfer (in 2006, amended in 2017), the Intellectual Property Law (2005, amended in 2009), the High Technology Law (2008), the Law on Product Quality (2006), The Program on Development of science and technology market to 2020 of which the crucial importance is the progressive institutions to step up research and innovation, intellectual property and transfer. These timely policy interventions have a positive impact on the supply, demand and intermediaries of science and technology market.

Every year, the State has earmarked considerable funds to invest in equipment for laboratories and experimental production facilities of research institutes and universities. Concerning tax and credit policies, science and technology activities have been granted incentives in six taxes (corporate income, personal income, value added, export, import and land taxes). Research and technological renovation have received allocations (entirely or partially with counterpart fund) from the State budget through the National Fund for Science and Technology Development and the National Technological Innovation Fund. In addition, the State has also issued a policy on indirect support through infrastructure development, granting full autonomy to public science and technology units, granting ownership of scientific and technological results to organizations which take lead, training and using scientific and technological human resources, boosting the commercialization of research and encouraging enterprises to deduct taxable incomes to set up their scientific and technological development funds. This mechanism is compulsory for state-owned enterprises (spending 3%-10% of taxable income to set up their scientific and technological development funds) and non-binding for non-state enterprises (entitled to deduct a reasonable percentage of up to 10% of the taxable income subject to enterprise income tax for the establishment of this fund).

Many technologies and equipment designed and manufactured by domestic scientists with good quality, competitive prices have been commercialized, initially meeting the requirements of the market and sectors, such as the Tam Dao 05 drilling rig - the largest jack up rig in Vietnam of a total 18,000 tonnage, capable of operating at a depth of 120 meters below water, and able to drill at a depth of 9,000 meters, the localization rate reached 40%, manufacturing cost reduced by 10%-15%, creating a breakthrough in the oil and gas manufacturing industry and making Vietnam one of the three countries in Asia and 10 countries in the world to master the design and manufacture of drilling rig; equipment for construction and operation of thermal and hydropower plants; engines with a capacity of up to 5MW, turbines with a capacity of up to 6MW, transformers of up to 500KV; high productivity and quality crop varieties; and low-cost popular vaccines for man and animals instead of imported ones.

Domestic enterprises have paid more attention to investing in technological innovation, development and protection of intellectual property in order to maintain competitive advantage in the market. The attitude of enterprises to domestic technology has changed in a positive direction. Many businesses have found right domestically produced technology and equipment to innovate and expand production. Besides being able to buy technology and equipment with competitive quality at much lower costs, enterprises have also received necessary after-sale services and consultancies and upgrading, adaptation, technology improvement upon demand.

Organizations providing consultancy, inspection, evaluation, assessment, nurseries, and intermediary on technology transfer services are encouraged to be set up and develop. The country has boast 8 technology trading floors in Hanoi, Ho Chi Minh City, Da Nang, Quang Ninh, Hai Phong, Bac Giang, Thai Binh, Nghe An, and 50 science and technology nurseries and enterprises. A network of centers for the application and transfer of scientific and technological advances for socio-economic development in 63 provinces and cities has also been upgraded. Technological and equipment markets, technology trading floors, technology supply and demand events, technological start-up days have been organized periodically, attracting the participation of many technological investors, enterprises, research institutes, universities in Vietnam and abroad; the total value of technology trading has increased significantly every year (total value of technology transactions and sales in the period of 2011-2015 reached more than VND13,700 billion, 3 times higher than the previous 5 year). A database of technology and technology experts was initially formed, helping businesses access technology information, connect technology demand with supply and consultants (this database has updated nearly 1,000 types of domestic and foreign technology suppliers, nearly 10,000 manufacturing enterprises and 200 technology specialists).

Limitations and causes

Although the potential of science and technology market is great, but while the socialist-oriented market economy in our country is in the process of formation, the levels of socio-economic development and science-technology of Vietnam are low compared to those of the region and the world; science and technology market has not moved to the full development stage and be completed yet. Resolution No. 11-NQ/TW on 3 June 2017 passed at the 5th Plenum of the Party Central Committee, 12th Tenure on the completion of the socialist-oriented market economy quite frankly points out that some markets (including the science and technology) are "slow to be formed and develop."

The establishment and development of science and technology market in our country have been slow due to many objective and subjective reasons. By nature, as a production market, the development of science and technology market does not go beyond the overall socio-economic development of the country; its size and operation depend on the size and level of development of the economy. Just like many developing countries having low average per capita incomes, Vietnam’s science and technology market is inevitably has had limitations and constraints.

Despites gaining momentum, domestic technology supply is generally in the form of potential; the ability to provide a variety of technology products of good quality and reasonable prices for the market is limited. In 2016, the number of Vietnamese applications for protection of inventions and utility solutions was 886; the number of protection certificates were 190 (76 patents and 114 utility solutions). The main reason is due to inertia in renovation and transformation of public science and technology organizations, lack of market orientation and slow response to the increasing technological demands of the market; research infrastructures and experimental production have not met requirements; the public-private partnership model in research and technological innovation has not been replicated. This leads to the fact that enterprises often choose to import technology and equipment from abroad, although the technology is generally average in the world. Vietnam's largest imported products in 2016 was machinery and equipment (US$28 billion). The origin of machinery and equipment is mainly China (35%); the share of imports from technologically advanced countries were low (Japan 17%, EU 12% and the United States 4.5%).

Businesses are important subjects of technology market, but most of them have not had a long-term vision, lacked highly qualified human resources and financial resources to innovate and upgrade technology. In addition, we have not yet fully exploited the opportunities of international economic integration in the development of science and technology market, failed to attract technologically potential multinational companies that are ready to transfer technology to domestic companies or set up R&D in Vietnam. There is also lack of production linkages between foreign invested enterprises and domestic enterprises, between large enterprises and small- and medium-sized enterprises.

Technology trading floors and technology intermediaries play an increasingly important role in linking technology supply and demand; however, their efficiency and professionalism are low. The channels for raising capital for investment in technology renovation of enterprises are limited; very few science and technology enterprises are listed on the stock market. As technology is a particular kind of commodity, assessment, valuation, or detection of errors in the markets require professional experts and enforcement apparatus, but in practice, these requirements are not met. Lack of information on technology, technology experts or low reliability of information likely pose risks to market stakeholders. This is also a constraint hindering the development of science and technology market in Vietnam.

Continuing to finalize mechanisms and policies for developing the science and technology market

For a young market like the science and technology, from the perspective of state management, we realize that it is not possible to have immediately a synchronized legal platform for market operation, but adjustment and gradual finalization are needed. It is important to properly assess the potential, strengths and limitations of the market to timely adjust policy. In addition, adequate concern must be given to implementation and enforcement of law, capacity building for market monitoring, evaluation, analysis and forecast to have prompt and timely policy responses.

Resolution No.11-NQ/TW outlines the orientation for renewal, vigorous and synchronous development of science and technology market with a strategic approach that fully affects components of the market, technology supply, technology demand, intermediary institution and the legal environment for market operation. In which enterprises are identified as "an important force in the development and application of science and technology," so it is necessary to focus on enhancing enterprises’ technology absorption capacity. Perfect the technology import policy in parallel with stepping up applied research to raise the level of design and manufacture. On the other hand, continue to strongly and synchronously renovate the management mechanism of scientific and technological activities; complete regulations on venture investment, implement public-private partnership mechanism in the implementation of research, development and technology innovation projects. Enhance the protection and enforcement of intellectual property rights; develop national databases on technology, technology experts and consultancy services, evaluation, brokerage and valuation of scientific and industrial products.

This right direction of the Party was institutionalized in time in the Law on Technology Transfer (amended) passed by the National Assembly on 19 June 2017. The law has set aside a separate mechanism (Chapter IV) regulating measures to encourage the transfer of technology and the development of science and technology market, marking a positive innovation in policy thinking on the role of the state and enterprises as important actors in science and technology market. Key innovation orientation include:

First, perfect mechanisms and policies to promote the supply of technology.

Encourage import, decoding and mastering of high, advanced and clean technologies in service of national, regional and local strategic objectives, plannings and plans on socio-economic development. Improve the design and manufacture of machinery and equipment in Vietnam. Prioritize the transfer of technology to create national products, key and major products from domestic scientific and technological research. The State has a mechanism for the purchase of inventions and innovations that have been effectively applied to transfer to enterprises for application and dissemination to the public. Provide financial support or procure scientific and technological results invested by organizations and individuals if these results bring about great benefits to the country and the community. Set up mechanism to provide financial support to scientists from research institutes and universities to conduct applied research and technological innovation in enterprises.

Second, perfect mechanisms and policies to promote technological demand.

Training, building capacity to master technology of enterprises; facilitate exchanges of highly qualified human resources between research institutes, universities and businesses. Enterprises are entitled to their scientific and technological development funds for investment, and to be used as counterpart fund, reception of counterpart capital for investment in technological renewal, technological nursery, creative start-up, and commercialize science and technology results. Enterprises, organizations and individuals investing in or implementing technology decoding activities shall be entitled to capital supports, loan guarantees, and interest rate support loans from the National Technological Renovation Fund and credit institutions. Encourage the use of new technologies and new products made in Vietnam in investment projects funded by the State budget, with priority given to bidding for procurement of goods and provision of public services. Encourage the exploitation and use of scientific and technological results and technological ideas in service of science and technology enterprises and innovation start-ups.

Third, perfect mechanisms and policies for the development of intermediary institutions of science and technology market.

The State invests in the construction of technical infrastructure, database of information on technology and technology experts; support the operation of the national technology transaction center, the national technology start-up center for the first five years of operation; support human resources training for intermediaries; improve the capacity of exploiting information on technology, intellectual property and scientific and technological results for science and technology market intermediaries. Increase the dissemination, demonstration and introduction of technologies through technology fairs and exhibitions, technological supply and demand connection points, technology transaction floors. The State shall support enterprises, organizations and individuals using domestically produced technologies to publicize, demonstrate, introduce technologies and participate in technology fairs in the country and abroad. Publicize the list of State-funded technologies on the electronic portal of the State management agency in charge of science and technology; encourage enterprises, organizations and individuals to publicize their new technologies. Use and provide technology information to enterprises, business associations, professional associations, cooperatives, intellectual property, investment promotion and trade promotion services.

Fourth, perfect the legal environment for science and technology market to operate efficiently.

Recognize property rights, the right to use technology and objects of intellectual property is the right to property. Funds in the field of science and technology and credit institutions are entitled to receive such property rights to secure loans for investment in science and technology projects, creative start-ups, production and business from science and technology results. Step up commercialization of scientific and technological results in the direction of transferring the property of State-funded scientific and technological studies to agencies that lead the studies; ensure the interests of owners, authors, lead organizations, intermediaries and organizations participating in the commercialization of scientific and technological studies. Ensure effective and healthy system of protection and enforcement of intellectual property rights; accelerate the assessment and valuation of intellectual property and capital contribution of enterprises by intellectual property. In addition to the current tax incentives, develop the preferential tax policy to push forward the transfer, application and renewal of technology for new entities, such as organizations and individuals who support investment in creative start-ups, intermediary organizations of science and technology market, organizations and individuals who transfer technology from Vietnam to foreign countries, organizations and individuals who are engaged in scientific and technological activities, technology transfer and technology decoding at enterprises. Encourage the transfer of technical advances in varieties, products, production processes, technical solutions and management solutions in agriculture, technology transfer for rural, mountainous and island areas, areas with difficult or extremely difficult socio-economic conditions.

The completion of mechanisms and policies to promote the development of science and technology market is important, but it is more significant to ensure that mechanisms and policies are effectively implemented in practice. To achieve this objective, from the perspective of state management, it is necessary to strengthen the mechanism of monitoring, supervision, evaluation of policy implementation, listening and understanding the needs and development trends of market stakeholders for timely adjustment. This is also an important factor to ensure the feasibility, visibility and sustainability of policy, effectively influencing the development of science and technology market in our country.

This article was published in the Communist Review No 897 (July 2017)

Chu Ngoc AnhMember of the Party Central Committee, Minister of Science and Technology