Technology breakthrough: The 'key' to opening the door to double-digit growth

Technological breakthroughs are the key to realizing the vision of a strong Vietnam in the mid-21st century, bringing the nation to new heights in the international arena.

Dr. Tran Van Khai: Despite its limited starting point, Vietnam has made some impressive achievements in innovation in recent years, creating a foundation for confidence in entering the technological era. According to the WIPO Global Innovation Index (GII) 2023 report, Vietnam ranked 46/132 economies - up 2 places compared to last year.

Notably, we are among the very few countries that have maintained a record of “outstanding innovation” relative to their level of development: Vietnam, along with India and Moldova, are the three countries that have consistently outperformed the expectations of the middle-income group for 13 consecutive years. In other words, Vietnam has effectively utilized its limited resources to achieve better innovation results than many of its peers.

WIPO assessed that Vietnam is among the fastest-growing economies in terms of innovation rankings over the past decade. Highlights include: The proportion of high-tech products in exports is among the highest in the world , the vibrant creative startup ecosystem ranks 3rd in ASEAN, and the technology absorption capacity has significantly improved. This is evidence of Vietnam's potential and determination to rise on the global technology map.

Besides internal achievements, Vietnam is facing many unprecedented favorable opportunities to make breakthroughs in science , technology and innovation.

First of all, the advantage of deep economic integration. By the end of 2024, Vietnam had signed and implemented 17 free trade agreements (FTAs) with more than 60 countries and territories, including leading technology partners such as Japan, Korea, the EU, and the United States.

This dense FTA network opens the door to access to advanced technological resources as well as a large market for Vietnam. Through international cooperation, we can receive knowledge transfer, new technology, and at the same time promote domestic enterprises to participate in the global value chain.

Along with that, Vietnam has established strategic/comprehensive partnerships with more than 20 countries, including most of the technology powers such as the US, Japan, Germany, Australia, etc. These strategic relationships create favorable conditions for enhancing cooperation in science and technology, from exchanging experts, studying abroad to attracting investment in R&D centers. For example, large corporations such as Samsung, Apple, Intel have been investing in building R&D centers in Vietnam, turning our country into a new research base in their supply chain.

In addition, the domestic market size of 100 million people with a high proportion of young people who are quick to adopt technology is an important driving force for innovation. Vietnam's STEM workforce is growing stronger, with tens of thousands of technology engineers graduating from universities at home and abroad each year.

Vietnam’s human capital index in the GII is high thanks to its outstanding literacy rate and general education achievements. In addition, the talented Vietnamese community abroad (especially in the high-tech sector in Silicon Valley, Europe, and Japan) is a valuable resource if connected to serve national development.

International venture capital funds are also paying great attention to the Vietnamese startup market, as evidenced by the increased startup capital flow in recent years.

All of the above factors create “heavenly time and geographical advantages” for Vietnam to accelerate on the path of science and technology. Resolution 57 sets the goal of placing Vietnam among the top 3 ASEAN countries in innovation by 2030 and building at least 5 regional-scale technology enterprises. With a foundation of deep integration and growing internal strength, this goal is feasible if we know how to effectively take advantage of existing opportunities.

Dr. Tran Van Khai: Indeed, despite having a lot of potential, the scale and level of science and technology in our country is still far behind that of the group of developed industrial countries.

According to the Ministry of Science and Technology, the number of Vietnamese research projects published internationally, although increasing rapidly, is still low compared to leading countries in the region. We have not yet mastered many core technologies and important strategic technologies. The innovation capacity of domestic enterprises is still limited: Most enterprises are small and medium-sized, lacking capital and human resources for R&D, leading to low technology content in products.

In fact, Vietnam's economy is still mainly processing and assembling with low added value, and labor productivity is only about 1/3 of the average level of ASEAN-6. The contribution of total factor productivity (TFP) to growth is only about 45%, and needs to increase to over 55% by 2030 according to the target of Resolution 57. Obviously, to catch up with advanced countries, Vietnam must promote productivity improvement through the application of high technology and innovation in governance models.

Another major challenge is that the proportion of the digital economy and technology industry in GDP is still quite modest. In 2022, Vietnam's digital economy is estimated to account for only about 14.26% of GDP - this figure, although up from ~12% in 2021, is still below the global average.

The government has set a very high target: By 2030, the digital economy must account for at least 30% of GDP. That means Vietnam needs to accelerate digital transformation in all areas in the next 5-7 years, from production, services to state management and people's lives.

Currently, only about 14% of Vietnamese enterprises have recorded innovation activities, and the rate of non-cash payments and online public services also needs to be expanded further. The digital infrastructure is not yet synchronized, especially in localities outside large urban areas, causing digital disparities and limiting access to technology for a part of the population. This is a gap that needs to be filled by stronger investment in new generation telecommunications networks (5G/6G), data centers, cloud computing, etc.

Worryingly, Vietnam's investment in R&D is currently very low compared to world standards. Total spending on research and development is only around 0.5% of GDP (0.54% in 2021; about 0.4% in 2023), much lower than the global average (~2.3% of GDP) and far behind regional countries such as China (2.5%), Malaysia (~1%), or Singapore (~1.9%). According to UNESCO's rankings, Vietnam ranks 66th in the world in terms of R&D intensity.

Resolution 57 has set an ambitious target: By 2030, increase R&D spending to 2% of GDP, of which social resources (enterprises and private sector) contribute more than 60%. This requires a strong shift in policies to encourage businesses to invest in science and technology, as well as increase the proportion of the state budget for this field (at least 3% of total annual budget expenditure).

The challenge of high-quality human resources is also urgent. Currently, Vietnam has less than 10 researchers per 10,000 people, less than 8% of South Korea and 30% of Malaysia. The quality of university and vocational education is still inadequate, not providing enough engineers and experts with skills to meet the needs of high-tech industries.

On the other hand, the institutional and legal environment for innovation activities has not kept up with reality. Many new technology models and products are not clearly defined, leading to businesses being afraid to experiment due to legal risks. Administrative procedures in scientific research are still complicated, and the financial mechanism for science funds is not flexible, causing difficulties for scientists.

Social awareness of digital transformation and innovation has improved but is still uneven; many agencies and businesses still do not attach due importance to investment in technology. All these limitations require Vietnam to drastically reform in many aspects, from education and training, policies to attract talent, to perfecting the legal framework to promote innovation.

Narrowing the science and technology gap with the world requires concerted efforts and long-term investment, but this is a task that cannot be delayed if we want to reach the goal of a developed, high-income nation by 2045.

International organizations and experts agree that the most important driving force determining a country's growth prospects is productivity, and technological innovation is the number one factor driving productivity.

The World Bank has warned that Vietnam is at a crossroads: One direction is to continue improving technological capacity to maintain the high growth rate of ~7%/year as in the past two decades, the other direction is to slow down growth due to hitting the ceiling of the old model. The deciding factor in choosing which direction is the level of investment in innovation. In other words, if not relying on science and technology, Vietnam will find it difficult to escape the middle-income trap and the risk of falling behind is increasing.

Dr. Tran Van Khai: Resolution 57 has outlined the vision of turning Vietnam into a technologically advanced, high-income country by 2045. This goal is challenging but completely feasible if the whole society unites to transform.

In the immediate future, to achieve a double-digit GDP growth rate in the coming years - which is necessary to realize the aspiration of becoming a strong nation, we have no other way but to maximize the driving force of science and technology. This requires a strong change in thinking: Consider investment in R&D and digital transformation not as a cost but as a strategic investment for the future.

Both the public and private sectors need to work together to build an innovation ecosystem, in which businesses, research institutes and universities are closely linked to turn ideas into products and research into material wealth.

Prime Minister Pham Minh Chinh emphasized that science and technology, innovation and digital transformation play a key role and are a strong driving force for Vietnam to develop rapidly, sustainably and sustainably. The implementation of Resolution 57 with a strong and effective spirit will create a turning point in turning strategic orientations into concrete actions in life. From there, an innovation ecosystem will be formed, promoting “Made in Vietnam” technological breakthroughs that directly contribute to growth.

International experience shows that countries that maintain high growth are all based on a solid foundation of science and technology - Vietnam is no exception. Therefore, to achieve a sustainable double-digit growth rate for the economy, we must focus all our efforts on the domestic technological revolution, turning aspirations into concrete actions.

Technological breakthroughs are the key to realizing the vision of a strong Vietnam in the mid-21st century, bringing the nation to new heights in the international arena.

Thank you!

Quynh Nga - Hong Thinh

Source: https://congthuong.vn/but-pha-cong-nghe-chia-khoa-mo-canh-cua-tang-truong-hai-con-so-418374.html