A graphic outlining challenges facing innovation policymakers in Vietnam: more home-grown tech needed; skills-job mismatch; retaining talent and skills; low R&D expenditure; fragmented innovation system

More home-grown technology is needed

Despite the dynamism of the Vietnamese economy, it still very much depends on natural resources and abundant, low-cost, mostly unskilled labour; science and technology infrastructure is lacking and, in many instances, outdated.

Vietnam’s export structure is based too heavily on raw materials such as rice, coffee, and oil. Few firms perform R&D and the level of innovation activity is low overall. A vast majority of companies do not engage in technology adoption or R&D activity, with only 8 per cent of firms undertaking one or both forms of investment in innovation. The Vietnamese manufacturing sector is still highly dependent on investment from foreign-owned enterprises.

A skills/jobs mismatch

The skills supplied through the formal education and training system do not always meet the demands of the labour market. Increases in levels of education have not kept place with economic growth: Vietnam’s labour productivity in 2018 reached US$3,660, only equivalent to 5 per cent of Singapore’s, 20 per cent of Malaysia’s, 35 per cent of Thailand’s, and 50 per cent of that in the Philippines and Indonesia.

The Vietnamese Government has recently made some important efforts to boost the national performance in education – for example, through Project 911, a special programme aimed at supporting university and college lecturers to complete a PhD during the period 2010-2020.

They are also seeking to improve researcher outputs (as there are now a large number of researchers, but they are producing a relatively low level of outputs when viewed on an international level). In 2015, Vietnam had 167,746 researchers, who produced 4,015 international publications.

Retaining talent and skills

The brain drain is also a significant challenge, owing in part to low salaries and limited opportunities at home. Evidence suggests that the loss of talent to overseas organisations among science and technology researchers is a greater problem for Vietnam than for Malaysia, Thailand, China or Indonesia.

R&D expenditure, both public and private, is low in comparison to the OECD average

A substantial portion of public R&D funding is non-competitive and non-merit-based, while allocation of basic funding to (mostly government owned) science and technology institutions is not performance-based but staffing-based. Project funding derived from submitted proposals appears to be a mixed process, with some projects being ‘earmarked’ for selected institutes (non-competitive), while other projects’ funding decisions are competitive in nature.

The state agencies responsible for research are often seen as paying more attention to strict adherence to financial procedures than to the research outcomes. Additionally, enterprises are often not interested in innovation; many businesses in Vietnam are small or very small, and their R&D capacity is limited.

Current science and technology system is fragmented and lacking effective commitment, coordination and implementation of government policies

The policy framework and systems of incentives for innovation are insufficient. While there are a range of laws and regulations relating to science and technology in Vietnam, there is no single coordinating body.

  • R&D statistics and other relevant data and information are often fragmentary, out of date or not internationally comparable.
  • R&D is still a peripheral activity, both in business and the public sector.

There is little collaboration on innovation, either among firms or between business and public research organisations. Among firms that do innovate, few work with other firms and even fewer with universities, and the foreign investment sector does not appear to be connected to the local research system.

Authors

Florence Engasser

Florence Engasser

Florence Engasser

Senior Foresight Analyst

Florence is a Senior Foresight Analyst within Nesta’s Discovery Hub, which aims to create a link between Nesta’s current portfolio and our pipeline of future work.

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Benjamin Reid

Benjamin Reid

Benjamin Reid

Head of International Innovation - Development Programmes

Benjamin is head of the International Innovation team within Nesta's Policy and Research division, examining new global trends and practices in innovation, with an emphasis on emerging…

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Silvia Pau

Silvia Pau

Silvia Pau

Assistant Programme Manager, A Fairer Start mission

Silvia is an Assistant Programme Manager.

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Paulina Gonzalez-Ortega

Paulina Gonzalez-Ortega

Paulina Gonzalez-Ortega

Design Lead, International Innovation

Paulina was the Design Lead for the Global Innovation Policy Accelerator, a 14-country collaborative development programme for senior innovation policymakers.

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Nathan Kably

Nathan Kably

Nathan Kably

Senior Strategy Analyst

Nathan worked on the design and delivery of Nesta's strategy

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Anna Schlimm

Anna Schlimm

Anna Schlimm

Learning Experience Designer, Global Innovation Policy Accelerator

Anna was a Learning Experience Designer for the Global Innovation Policy Accelerator.

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