Creating space for innovative enterprises

The recently passed Law on Science, Technology and Innovation identifies enterprises as the core of the innovation system, accompanied by various preferential policies on finance, tax, land, etc., aimed at encouraging enterprises to invest in research, technology development, and competitiveness enhancement. This new legal framework is expected to empower businesses to confidently make breakthroughs and lead the national innovation ecosystem.

Empowering enterprises

The Law on Science, Technology and Innovation dedicates a separate chapter to policies promoting research, development, and innovation activities within enterprises.

Accordingly, enterprises are granted authority and encouraged to invest in research and development not only with their own resources but also through financial “seed” policies from the state budget, based on the principle: “For every 1 dong from the state, 3–4 dong are mobilised from businesses.”

In addition, the Law allows enterprises to account for research and development expenses as business and production costs without an upper limit (previously capped at about 1% of revenue and only applicable to profitable businesses). These expenses are also eligible for tax deductions with a preferential coefficient of 150%, and up to 200% for investment in strategic technologies. Moreover, profitable enterprises may allocate up to 5% of pre-tax profits to establish funds for investment in innovative start-ups.

This policy aims to encourage businesses, especially large ones, to support innovative start-ups in developing new technologies and business models. Furthermore, the state is prioritising the procurement of domestic scientific and technological products.

Substantive innovation always involves potential risks and requires mechanisms to safeguard unprecedented initiatives so that businesses dare to explore new paths. The Law on Science, Technology and Innovation provides enterprises with greater assurance in the process of researching and applying new technologies, thereby fostering breakthrough products and enhancing national competitiveness.

Mai Thi Thanh Oanh, Deputy General Director of Coc Coc Co., Ltd.

Mai Thi Thanh Oanh, Deputy General Director of Coc Coc Co., Ltd., remarked that this is a shift in management thinking from “risk control” to “creating space for innovation” — marking a very positive signal. Substantive innovation always involves potential risks and requires mechanisms to safeguard unprecedented initiatives so that businesses dare to explore new paths. The Law on Science, Technology and Innovation provides enterprises with greater assurance in the process of researching and applying new technologies, thereby fostering breakthrough products and enhancing national competitiveness.

One point of interest for the business community is the principle of non-liability if procedures and regulations are properly followed. Oanh believes this offers a legal foundation for companies like Coc Coc to confidently invest in long-term projects experimenting with Vietnamese artificial intelligence (AI), smart search, or domestic big data platforms.

Sharing the same view, Tao Duc Thang, Chairman and General Director of Viettel Group, stated that the National Assembly’s adoption of the Law on Science, Technology and Innovation and related laws has introduced many breakthrough mechanisms and policies to create space for enterprises to develop science, technology and innovation. These include raising the science and technology development fund to 20% of taxable corporate income and expanding the fund’s usage scope to include investment in innovative start-ups, research organisations, and commissioning overseas research.

Additionally, strategic technology development is supported through technology acquisition via mergers and acquisitions, designation of suppliers, and price negotiations for technologies, products, and equipment; supporting enterprises in attracting high-quality human resources; and protecting individuals and organisations to confidently undertake science and technology tasks.

With the new legal framework, enterprises will fully unleash their role as pioneers of innovation, creating breakthrough technologies and products, vigorously promoting digital transformation, and enhancing national competitiveness in the coming period.

Dr Tran Van Khai

According to Dr Tran Van Khai, Deputy Chairman of the National Assembly's Committee on Science, Technology and Environment, these progressive policies have legalised many funding channels for innovation. National and local venture capital funds will provide financial resources for innovative start-up projects.

At the same time, the controlled experimental mechanism allows enterprises to test new technologies and business models under state supervision, enabling tech firms to boldly pioneer in new fields such as AI, blockchain, and fintech.

The law even provides legal immunity for enterprises that fail in testing new technologies due to objective factors, thus encouraging a spirit of bold thinking, action, and risk-taking in innovation.

Expressing his hope, Dr Tran Van Khai stated: “With the new legal framework, enterprises will fully unleash their role as pioneers of innovation, creating breakthrough technologies and products, vigorously promoting digital transformation, and enhancing national competitiveness in the coming period.”

Clear guidance needed for implementation

To ensure these new policies are put into practice, many enterprises believe that more specific and flexible implementation guidelines are needed.

As a company engaged in multiple projects and topics related to science, technology, and innovation, Le Van Phuong, General Director of Lam Son Sugar Joint Stock Company, said the new policy will enable the company to register and participate in science, technology, and innovation topics more easily, especially in sustainable green agriculture and deep processing industries.

However, enterprises need to be relieved of certain procedural burdens to save time and encourage more effective innovation investment.

For example, in licensing or renewing operational permits, authorities could instead conduct on-site inspections of compliance conditions, rather than requiring businesses to resubmit numerous documents already filed previously.

The Law on Science, Technology and Innovation stipulates that individuals directly creating results from science and technology tasks hold copyright, while the organisations or individuals making financial contributions hold ownership rights.

To attract top global experts to work in Viet Nam, a representative of Viettel Group suggested that the state should issue mechanisms and policies to attract high-quality human resources. These would allow experts to own or co-own research outcomes, inventions, and patents; and to hold equity or shares in businesses established from those research results.

In addition, a model in which the state invests and businesses operate key laboratories, measurement and testing facilities should be applied to assess strategic technological products.

For small and medium-sized enterprises, allowing all innovation-related expenses to be deductible from corporate income tax will ease financial burdens and encourage investment in digital transformation and technological innovation.

According to experts, this is a prime opportunity for enterprises to take initiative, seize the moment, and innovate to enhance their competitiveness and confidently make breakthroughs.

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