Barriers bar businesses’ technological renovation

Vietnamese businesses must rely on outdated production technologies, but they sincerely want to improve the situation. The obstacles they face, however, are difficult to overcome.

Deputy Minister of Science and Technology Nguyen Quan explained that, thanks to the application of high technology, a single Hai Phong Painting Company employee can produce a volume of products worth $100,000 (nearly two billion dong) per year, which is much higher than the average level at other enterprises, estimated at $5-7000 dollar per year.

The company, according to Quan, is one of very few enterprises utilizing high technology in production. Meanwhile, other enterprises rely on outdated technologies.

Low investment = outdated technologies

Nguyen Huu Thai Hoa, a Minister of Science and Technology advisor, reported that big production centres are moving to Asia and China proves to be the top choice, because the country attaches special importance sci-tech development.

Multinational corporations that invest in Vietnam do not transfer their modern technologies. Most consider Vietnam as a prefabrication center that can provide cheap labor and preferential investment conditions

Hoa, who is also Quality Director of Asia Pacific of Schneider Electric Group, added that the total revenue of the group for 2009 was $21 billion and only 4 went to research and development (R&D). Vietnam only spends 0.5 percent of its GDP on developing science and technology. This explains why Vietnamese enterprises are still using older energy-consuming and polluting technologies.

According to HCM City Science and Technology Department, only three out of 429 surveyed enterprises in the city have modern production technologies, 10 enterprises have moderately good technologies, while more than half have outdated technologies.

Associate Professor Le Hoai Quoc, Deputy Director of the HCM City Science and Technology Department has conducted research on this issue, concluding that while Vietnam has a high economic growth rate, it lags behind other regional countries in production technology.

Quoc noted that, in 1999-2007, the high-tech labor force decreased from 15 to 12 percent, while investment capital in the high-tech sector decreased from 11 to 9 percent. Thus, Vietnamese enterprises can only make products with low content of added value.

Quoc maintained that an enterprise in Australia purchased preliminarily-treated titan ore from Vietnam at $300 per ton. The company could produce 300 kilograms of refined ore and then sell it at $300 per kilogram. In this case, Vietnam lacked the technology allowing it to refine and sell products at higher prices.

The barriers

Quoc’s research revealed three main barriers to the development of technologies in Vietnam: only 30 percent of laborers have been trained, capital use efficiency is low and economic reform has been going slowly.

Businesses believe that the biggest challenge to developing better technologies is the lack of proper mechanisms and powerful credit sources.

Dr. Le Van Truyen, former Deputy Minister of Health, is now Deputy General Director of Savipharm. He is seeking capital of 1.4 billion dong from the Ministry of Science and Technology’s fund to assist enterprises in research and renovating technology in order to develop a research project for his company. He only received approval for the preferential loan after 18 months and, four months later, his enterprise still has not obtained the funds.

Thoi bao Kinh te Saigon

Tags: Vietnam technology