Tech, science spending too low

Business investment in science and technology (S&T) was less than one per cent of Gross Domestic Product (GDP) this year, far below Government expectations.

Even with the Government’s own high investment in S&T, about 2 per cent of the budget – or 0.45 per cent of GDP – it is still well below that needed for fast and sustainable development.

Under the draft strategy for socio-economic development from 2011-2020, S&T should be a driving force for Viet Nam’s growth.

Deputy Minister of Science and Technology Nguyen Quan said the strategy, to be presented at the 11th national Party Congress next year, was the most important factor in spurring national economies. He said that experience around the world and region backed this view.

Quan said Viet Nam spent about 2 per cent of State budget on S&T, or 0.45 per cent of GDP.

“That is an admirable figure, because it stays around 0.3-0.4 per cent of GDP in developed countries like Japan or the US,” Quan said.

But he admitted investment from businesses, agencies and other organisations was much lower than targeted – less than 0.1 per cent of GDP this year. This was much lower than in other countries in the region and the world.

“Ideally, it must be double or triple what the State spends,” Quan said. “In China, for example, social investment, mainly from enterprises, into S&T is more than 2 per cent of GDP and in South Korea, 5 per cent.”

Quan attributed limited finances was responsible for low S&T investment among Vietnamese enterprises.

He said the State recognised that renewing technology was vital for domestic enterprises because of the preponderance of obsolete technology.

He said Viet Nam businesses were two or three generations behind the world average.

An investigation by a Government working team showed that about 90 per cent of technology used by Vietnamese enterprises was imported from foreign countries.

Only 2 per cent of enterprises applied high technology against 30 per cent in Thailand, 51 per cent in Malaysia and 73 per cent in Singapore.

The report also indicated that only 54 enterprises, comprising 0.03 per cent of the nation’s total, had registered an interest in S&T.

Traphaco, a joint-stock pharmaceutical company, is one of them.

The company’s CEO, Vu Thi Thuan, said from humble beginnings in 1997, the company realised that developing S&T was a prerequisite to building a foothold in the market, where it must compete with domestic firms and foreign giants.

“Our chosen orientation, manufacturing herbal medicine, has proved a sound one so far,” Thuan said.

“New technology and traditional identity,” has become the company’s slogan, well known in the home market – and now the ASEAN market.

The company modernised facilities and equipment, researched consumer demand and invested in human resources. It has opened herbal cultivation zones in different localities, with the help of local farmers.

Last year, the company had more than 200 products on sale, double the number 10 years ago. Most of the products had a herbal origin.

To help enterprises, the State has worked out several policies. In 1999, the Government signed Decree 119 offering incentives for enterprise to invest into S&T.

This enables enterprises to enjoy reduced taxes or exemptions on land rent or use – and on importing equipment.

The State also pays for up to 30 per cent of the total cost of studies on S&T.

The Corporate Income Tax Law, which takes effect from January 1, requires enterprises to invest about 10 per cent of annual pre-tax profits in their S&T fund.

Localities, ministries and sectors are also encouraged to set up similar funds, to lure more business investment in S&T.

Thuan from Traphaco said enterprises could benefit by getting leading science figures involved in assessing the practicability of schemes.

However, the president of the National Institute for Science and Technology Policy and Strategy Studies, Dr Mai Ha, said the shortage of investment in S&T could also be blamed on the lack of competitiveness in the Vietnamese market.

“Frankly, Vietnamese society has yet to be under the real pressure of competition, so enterprises, both State-owned and private ones, haven’t paid due attention to the subject,” he said.

He said although Viet Nam had become a member of the World Traded Organisation, the integration was not deep enough to force enterprises to do their own research for long-term and sustainable growth.

Deputy Minister Quan said investment in key sectors was needed to spur the growth of S&T, but the budget remained limited.

For example, in agriculture, it was essential to invest in breeds, researching epidemics and how to prevent them, and enhancing product quality for the export market.

In industry, it was necessary to invest in mechanics, automation and particularly information technology.

Quan also said that improving the quality of human resources was also vital.

“Our target of luring business investment of 1.5 per cent of GDP into S&T is hopefully achievable within two or three years,” Quan said. — VNS