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Vietnam has been actively pursuing a strong startup sector for over a decade. In doing so it has enacted several policies and initiatives to stimulate growth and entrepreneurship. Here are eight of those policies and initiatives.
Recognizing the country’s need to diversify its economy outside of the manufacturing sector, Vietnam has for some years been striving to drive investment in high-tech industries. This has manifested as a number of key policies and initiatives supporting startups and appears to be working.
During the COVID-19 pandemic, when industries like tourism and hospitality were suffering under the weight of prolonged shutdowns, Vietnam’s startups sector was thriving. In 2021, Vietnam received over US$1.4 billion in funding for its startups, four times what it received in 2020.
This has come from both domestic investors and international firms.
Investment in Vietnamese startups by country, number of projects
It has also gone into a range of sectors including real estate and gaming. The big draw cards, however, have been payments and retail. In 2021, US$450 million was invested in digital payments startups and US$469 million was invested in retail startups.
Chief among the recipients of these cash inflows have been Vietnamese startups like Sky Mavis (gaming) and VNPay (fintech). Sky Mavis collected US$152 million in Series B funding in 2021 and VNPay received US$300 million in 2020.He
So, what are the key policies and initiatives driving investment into Vietnam’s startup sector?
1. Assistance Policies for the National Innovative Startup Ecosystem
- Setting up a national startup ecosystem portal; and
- Providing US$42 million for 800 startup projects and 200 startups, including 50 enterprises financed with venture capital.
It also outlines targets for the sector to be met by 2025, including:
- A total of 2,000 startup projects; and
- 100 startups under the scheme to be financed by venture capital to the tune of an estimated US$85 million.
Details for the implementation of Decision No. 844/QD-TTg are contained in:
- Circular 01/2018/TT-BKHCN issued April 12, 2018 by the Minister of Science and Technology; and
- Circular No. 45/2019/TT-BTC issued July 19, 2019 of the Ministry of Finance.
2. Establishment of a National Innovation Center
Decision No. 1269/QD-TTg was issued October 2, 2019, and forms the framework for the establishment of the National Innovation Center (NIC). The NIC provides training and support for young enterprises and partners with international technology companies like Amazon and Google.
The NIC is further supported by Decree No. 94/2020/ND-CP, which was issued August 24, 2020. Its focus is to provide support mechanisms for the NIC. These include:
- The NIC can lease land for up to 50 years in high-tech zones and will be exempted from paying land rent for the term of the lease;
- Its premises at Hoa Lac Hi-tech Park will receive: a 10 percent corporate income tax rate for 30 years from the first year in which it generates revenue, a tax exemption for four years and a 50 percent tax discount for the following nine years; and
- An exemption from duties on raw materials, supplies and components under certain circumstances.
3. Assistance Policies for Female Entrepreneurship
Decision 939/QD-TTg was issued June 30, 2017 and provides for a number of initiatives to encourage women to engage in entrepreneurship This Decision sets out several objectives, including:
- Supporting 20,000 women to start new businesses;
- Coordinate and support the establishment of 1,200 women-led cooperatives; and
- Establish 100,000 new women-owned enterprises.
4. Assistance Policies for Student Entrepreneurship
Decision 1665/QD-TTg, issued October 30, 2017, approves policies to encourage students to engage in entrepreneurship. This includes, but is not limited to:
- Communications support through mobilizing the media to provide coverage of student entrepreneurs;
- Startup training support;
- Establishing ‘startup clubs’ at universities; and
- Establishing a fund to finance student-led startups.
Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, Russia & the Silk Road.
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