5.

 The national innovation system

in Vietnam and its relevance for
development
Tran Ngoc Ca

5.1 THE NATIONAL SOCIAL AND ECONOMIC

CONTEXT

After 20 years of radical socio-­economic reforms and international economic

integration, Vietnam has achieved some significant results. The gross domes-
tic product (GDP) growth rate has been quite high and stable at around 6–8
per cent for the last ten years. The country has increased GDP per capita
from USD 440 in 2002 to around USD 700 in 2006 and reached a threshold
of more than USD 1000 in 2009 and 1910 in 2013 (World Bank, 2015). GDP
per capita in purchasing power parity (PPP) increased more than threefold
during 1989–2013, from USD 1097 to USD 3620 in 2013. The inflation rate
has been reined in to under 10 per cent after a high of over 20 per cent in 2008.
In parallel with economic growth, the Vietnamese government has put
significant effort into poverty reduction. This has resulted in an incredible
outcome with the dramatic drop in the poverty rate from 70 per cent in
1986 to 7.8 per cent in 2013. The unemployment rate was at about 6 per
cent on average during 1996–2005, decreasing to 2.6 in 2013 (Table 5.1).
Overall, Vietnam’s poverty alleviation target was completed ten years
earlier than the Millennium Development Goals (MDGs) promoted by the
United Nations in 2015 (discussed in Chapter 2).

5.1.1 Structure of the Economy

The economic structure has shifted from being predominantly agricultural

to industrial based. The recent growth of the Vietnamese GDP is partly the
result of economic restructuring. In the 1990s, the Vietnamese economy
mainly depended on the agricultural sector. But the share of the agricul-
tural sector of GDP decreased gradually from 38.7 per cent in 1990 to 22.1
per cent in 2008 and 19 per cent in 2013. The contribution of the industry

138

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 The national innovation system in Vietnam ­139

Table 5.1 Economic performance of Vietnam, 2000–13

Year 2000 2002 2004 2006 2008 2010 2013

GDP growth 6.79 7.08 7.79 8.23 6.31 6.8 5.4
rate (%)
Inflation (%) −0.6 4.0 9.5 6.6 24.4 8.9 6.6
GDP (USD) 402 441 561 730 1052 1240 1910
Unemployment 6.42 6.01 5.6 4.82 4.65 2.6 2.6
rate (%)
Poverty Index – 28.9 24.1 – – 12.6 7.8
(%)
Human 0.70 0.69 0.71 0.72 0.73 0.63 0.6
Development
Index (HDI)

Source: General Statistics Office of Vietnam, World Bank and United Nations.

and construction sector to the national economy increased from 22.6 per
cent in 1990 to 38.1 per cent in 2013 (Table 5.2).
There has not been much change in the proportion of the service sector
in the Vietnamese economy, which accounts for around 38–42 per cent
of GDP over the last 20 years. Although the structure of the Vietnamese
service sector has become more sophisticated, other services such as
science research, design and market research are less developed. Some
important services like finance, telecommunications and infrastructure
remain less competitive internationally.

5.1.2 Export Activities

Vietnam has pursued a trade-­led growth strategy resulting in a steady

increase in both exports and imports. In 2012, the value of exports reached
USD 114.6 billion of which the main exports included textiles and gar-
ments (USD 15.1 billion), cell phones and accessories (USD 12.7 billion),
footwear (USD 4.7 billion), seafood products (USD 6.1 billion) and agri-
culture products (USD 9.9 billion). The export value of rice also reached
USD 3.7 billion in 2013 (World Bank, 2013).
The export value of crude oil decreased considerably in the period
2006–10 because of an increase in crude oil delivery for Dung Quat oil
refinery. The export value of crude oil in 2012 accounted for only 7.2 per
cent of the total Vietnamese export value (USD 8.2 billion), a significant
decrease compared to 21 per cent in the period 2001–05.

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M4059 GORANSSON_9781783473823_t.indd 140
Table 5.2 Trend of economic structural change in Vietnam 1990–2010

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2013
Share of GDP 100 100 100 100 100 100 100 100 100 100 100 100
(%)
Agriculture, 38.7 33.9 27.4 27.7 25.7 24.5 23.0 21.8 20.4 22.1 20.5 19.0

140
forestry & fishery
Industry & 22.6 27.2 28.8 29.7 32.4 36.7 38.4 40.2 41.5 39.7 41.1 38.1
construction
Service 38.5 38.8 43.7 42.5 41.7 38.7 38.4 37.9 38.0 38.1 38.4 42.9

Source: General Statistics Office of Vietnam and World Bank, various years.

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 The national innovation system in Vietnam ­141

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0
91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10
19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20

20
Source: General Statistics Office of Vietnam.

Figure 5.1 Vietnamese registered FDI 1990–2010 (million USD)

5.1.3 Performance of the Foreign Direct Investment Sector

Among the factors leading to socio-­economic development, foreign direct

investment (FDI) plays a very important role, accounting in 2008, for
instance, for 31 per cent of total investment capital in Vietnam. State and
non-­state investment accounted for 29 per cent and 40 per cent, respectively.
Since the approval of the Law on Foreign Investment in December 1987,
Vietnam has achieved an impressive performance in attracting FDI flows.
FDI reached a peak with 833 projects and USD 10.201 billion in 2006, the
highest numbers since 1987. After 2007, as soon as Vietnam became an
official member of the World Trade Organization (WTO), the total regis-
tered capital reached over USD 20 billion, almost double that of 2006. FDI
in 2008 dramatically increased after Vietnam became a WTO member,
reaching USD 71.73 billion (Figure 5.1). After this time the numbers have
gradually decreased to reach USD 20 billion in 2014.
The remarkable increase of FDI has played an important role in foster-
ing production and business as well as contributing to the growth of the
economy.

Contribution to GDP growth

The share of the foreign-­invested sector (FIS) in GDP has increased rapidly
and this sector has proved to be an integral part of Vietnam’s economy. In

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 142 Innovation systems for development

2008, FIS contributed approximately one-­fifth of GDP. Moreover, FIS has

contributed to the structural change towards industrialization. In recent
years, FIS has been dominant in highly value-­added industries, such as
crude oil, computers, telecommunications, electronic products, spare parts
and steel.

5.1.4 Other Macroeconomic Issues

Vietnam joined the WTO in 2007 with several important commitments like
trade-­related intellectual property rights (TRIPS), trade-­related investment
measures (TRIMs), technical barriers to trade (TBT) and so on. Economic
changes have connected the country to the global economy and opened up
more options for enterprises in finding solutions to their business problems
and helps them connect with the international production networks. The
WTO accession is driving further liberalization of the economy as well as
its global integration. The growth of the private sector has also risen dra-
matically. In 2011, there were 602,300 registered small and medium-­sized
enterprises (SMEs) (Pham Thi Thu Hang, 2011) and the private sector
accounted for some 40 per cent of GDP (50 per cent in 2005), 40 per cent
of total investment (27 per cent in 2005) and 77 per cent of employment
(90 per cent in 2005) (ADB, 2005; BIA, 2011).
Despite the achievements, the challenges faced by Vietnam in sustain-
ing high growth rates through enhanced productivity and competitiveness
are great. Although the poverty rate has been reduced, the gap between
rich and poor has increased. International integration of the economy has
brought benefits, but at the same time, some problems. The biggest chal-
lenge lies in increasing the level of productivity: Vietnam has relied primar-
ily on investment and labour force expansion rather than different forms of
innovation, which have a significant impact on productivity growth. These
conditions have resulted in a low level of Total Factor Productivity (TFP)
contribution in the economy, which underlines the weakness of innovation
inputs. Economic growth appears to rely mainly on capital and labour,
without appropriate attention paid to boost TFP. Despite significant pro-
gress, the contribution of knowledge to economic growth is still limited.
During 1990–2000, TFP, including knowledge/technology, contributed
only 44 per cent of GDP growth. This rate was even lower at 26 per cent
during 2001–08. This is one of lowest among the Association of Southeast
Asian Nations (ASEAN) (Table 5.3)
In the agricultural sector it is clear that Vietnam’s success stems more
from policy reforms that have taken place over the past two decades rather
than the introduction of new technology (for example, seeds, equipment,
practices and so on). TFP growth in Vietnam is low compared with the rest

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 The national innovation system in Vietnam ­143

Table 5.3 Factors contributing to GDP growth in Vietnam and other

Asian countries in 1990–2008

Countries 1990–2000 2000–08

GDP Growth factors GDP Growth factors
growth (%) growth
Capital Labour TFP Capital Labour TFP
Vietnam 7.3 2.5 1.6 3.2 7.3 3.9 1.4 1.9
China 9.9 3.6 0.7 5.5 9.7 4.1 0.6 5
Cambodia 7.3 2.8 2.5 2 9 4.2 3.5 1.3
Indonesia 4.1 2.5 1.1 0.5 5.1 1.4 1.1 2.5
Malaysia 6.9 3.7 2.1 1.1 5.4 1.6 1.1 2.7
Philippines 3 1.3 1.4 0.3 4.7 1 1.9 1.8
Thailand 4.4 2.7 0.3 1.4 4.7 0.8 1.4 2.5

Contributing proportion
Vietnam 100% 34% 22% 44% 100% 53% 19% 26%
China 100% 36% 7% 56% 100% 42% 6% 52%
Cambodia 100% 38% 34% 27% 100% 47% 39% 14%
Indonesia 100% 61% 27% 12% 100% 27% 22% 49%
Malaysia 100% 54% 30% 16% 100% 30% 20% 50%
Philippines 100% 43% 47% 10% 100% 21% 40% 38%
Thailand 100% 61% 7% 32% 100% 17% 30% 53%

Source: CIEM (2010).

of the region and the world. Moreover, there are large differences in pro-
ductivity in Vietnam between formal enterprises within the same industry
and between formal and informal sectors. Lack of resources for investing
in technology innovation tends to prevent private and informal sectors
from becoming more innovative.

5.2 NATIONAL DEVELOPMENT PLAN

Vietnam embarked on a path towards radical social and economic changes

at the beginning of the 1980s, with various types of reforms and experi-
ments. But only by the end of the 1980s did real reforms take place in all
social and economic aspects starting with the Party Congress in 1986.
The reforms were reinforced when Vietnam faced severe difficulties at the
time of the collapse of the Soviet economic bloc in the 1990s. There was a

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 144 Innovation systems for development

great need to open up the economy and generate greater diversification of

international relations that would lead to more trade and foreign inward
investment. With regards to science, technology and innovation, the policy
landscape experienced several periods of change. Early reforms came
during the 1980s, with the autonomy of research and development (R&D)
institutions, when direct contracts with industry were allowed as well as the
ability to operate like an enterprise. Flexibility of R&D organizations was
increased to develop and provide a full range of services such as technol-
ogy transfer, consulting services, experimental and pilot manufacturing.
Financing has been diversified, while these organizations can retain profits
and have legal authority to seek bank credit. There began the process of
privatization of R&D activities accompanied by improvements in the legal
framework on intellectual property rights (IPR).
More recent changes occurred with a number of important milestones
and documents such as: the science and technology (S&T) Strategy to 2010
in 2003; projects to develop the technology market (2005); international
integration in S&T (2007); Law on S&T (2001); Law on IPR (2005); Law
on Technology Transfer (2006); Decree No. 115 on the autonomy of public
R&D organizations (2007); Decree No. 119 on firms’ support programme
(2003); Decree No. 80 on S&T enterprises; creation of funds for S&T
development (2007); the State Agency for Technology Innovation (2007);
and High Tech Law (2008).
The evolution of Vietnam’s institutional framework for S&T develop-
ment is depicted in Figure 5.2.

5.2.1 Strategies and Priorities for Science and Technology Development

The S&T Strategy for Vietnam to 2010 provided several directions and
priorities for S&T development. More recently, in 2012, the prime min-
ister issued a Decision on a new Strategy for S&T development to 2020.
This Strategy has the objectives: to develop in a synchronized manner
social sciences and humanity, natural sciences, technical and technological
science; to make S&T become a key motivating force and meet the basic
requirements of a modern industrial country. By 2020, it is planned
that a number of Vietnam’s S&T fields will have reached the advanced,
modern level of the ASEAN region and the world. Priority areas are
information and communications technology; biotechnology; new mate-
rials technology; machinery and automation technology; environmental
technology; energy S&T; construction S&T; marine S&T; management
S&T; space S&T. The Law of S&T promulgated in 2001 was revised and
approved in 2013.

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 Incubation phase Emergence during Restructuring of S&T Global integration, reform of state Maturation – towards a
(‘fence-breaking’ – pha rao) economic liberalisation (doi moi) system and development of S&T management of S&T, capacity fully fledged and functional
(1979–86) (1987–95) policy framework (1996–2002) building for policy-making (2003–10) innovation system? (2011+)

Systemic efficiency threshold?

Law on Corporate Income Tax Communist Party Congress

Foreign Investment (FDI) and ownership structure State Capital Investment Accession
(2008) adopts the 2011–20
Corporation (2005) to WT O Law on Telecoms (2009)
1600
60,000 GDP structure by ownership (%) (2006) Strategy (2011)
Law on Competition (2005) Decree 56 on support
2000 2009
50,000 Law on
FDI 10.8 13.4 1200 to SMEs (2009) The National Assembly adopts
Law on Education (2005) Investment (2006)
Non-state 48.4 48.8 the 2011–15 Socio-Economic
40,000
State 40.8 37.8 Revised Enterprise Project 30 to cut
Law on Revised law 5-year plan for SME Development Plan
30,000 800 ‘red tape’ (2010)
law (2005) (2011)
Number of projects Registered capital State-Owned on Foreign development (2006)
(right scale) (million USD) Investment (2000)
20,000 Enterprises (1995) Hanoi Stock
(left scale)
400
Exchange (2005)
10,000 Vietnam joins Ho Chi Minh City The Prime Minister approves
the ASEAN Free Stock Exchange the 2011–20 Science and
0 0 US–Vietnam
0 Trade Area (1995) (2000) Technology Development
88 89 90 91 92 93 94 95 96 97 98 99 0 01 02 03 04 05 06 07 008 trade agreement
19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 2 Strategy (April 2012)
Source: General Statistics Of fice of Vietnam.
(2001)
Decree 57 Law on Revised law

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Law on Foreign Creation of extends the (Private) on IPR (2009)
Innovation policy The National National Agency for Technology
investment (1987 ) a two-tier right to export Enterprise
Party Congress Entrepreneurship and
learning curve banking to all domestic (1999) Law on High
launches the The National Start of the firms (1998) Law on IPR (2005) Commercialization Development
Law on system Technologies (2008)
‘pha rao’ Party Congress Privatization (2011)
Bankrupcy (1990) Decree 115 on
strategy launches the Programme
(1988) the autonomy State Agency for
(July 1979) ‘doi moi’ Company (1992)
of public Technology and Decree 80 sets
strategy Land law law (1990)
science Law on Innovation (2007) new rules for foreign
(Dec. 1986) (1988)
Saigon Hi-Tech (2005) Technology cooperation and
Law on Standards
Park (2002) Transfer investment in S&T (2010)
and Technical
Directive 100 on the Decision (2006)
Hoa Lac Regulation (2007)
output-contracting regime Decision 850 to 214 on
in agriculture (1981) Hi-Tech Park National Fund
Decree 35 allows the create 19 national technology
(1998) for Technology
establishement key laboratories market Newly incorporated private enterprises in V ietnam, 1991–2008
Decree 25 on the ‘three-plan
(2005) Transfer (2006)
system’ for state-owned of private R&D (2000) 60,000 600,000
Number of enterprises Registered capital (billion VND)
enterprises (1981) organizations Law on VISTEC (2006)
Decision 782 to

145
Ordinance (1992) S&T
restructure public R&D
on IPR (1989) Decision 171 to reform state 40,000 400,000
Decision 268 organizations (1996) (2000)
management of S&T (2004)
Ordinance on allows R&D
foreign technology organizations S&T Development
Decree 119 creates 20,000 200,000
transfer (1988) to do business Strategy by 2010 (2003)
Decision 175 allows contracts (1990) the Enterprise Support
between public R&D agencies Funding Programme, and
NAFOSTED (2003)
Government decides facilitates renting or using
(1981) IPR protection is put in 0 0
to remove the state of land for S&T activities National Council for
9 00 0 1 02 0 3 04 0 5 0 6 07 0 8
the Civil Code (1995) 99 20 20 20 20 20 20 20 20 20
Decree on Patent monopoly on S&T (1999) Science and Technology -1
91 tal)
(1981) (1987) Policy (2003) 19 (to Source: Enterprise Development Agency, MPI.

Government
Government Government Government Government

Universities Firms Universities Firms Universities Firms Universities Firms Universities

Evolution of
the innovation
system Firms

Public labs Public labs Public labs Public labs

Public labs

Growth A GDP growth per capita of less GDP growth accelerates to reach over 8% Until 2007, steady GDP growth per capita Growth driven by sustainale increase of
than 3% does not allow Vietnam to from 1992, thanks to once-and-for-all increase is driven mainly by factor (capital) accumulation. total factor productivity derived from
performance
achieve its socio-economic objectives of total factor productivity brought about From 2008, slowdown reflects decreasing continuous progress in technology
and drivers
under reformed central planning by economic liberalization social return on capital efficiency and innovation

Source: OECD/World Bank (2014).

Figure 5.2 Evolution of the institutional framework for S&T in Vietnam

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 146 Innovation systems for development

5.2.2 The Government S&T Programmes and Techno-­economic

Programmes

From the 1980s, following the five-­year plan, Vietnam organized the state-­
level S&T programmes in key fields to serve socio-­economic development
(in recent years, about 15 to 20 programmes have been organized every
year). Half of these programmes relate directly to the creation of new tech-
niques and technology for application in production. The ministries and
provinces also have S&T programmes or subject systems about research on
the application of new technology in production and daily life.
For the development of agriculture, rural and mountainous areas, the
government has created the special application programme in order to
transfer new technologies to farmers and rural areas. During this pro-
gramme, the mobilization of financial support has proved effective in the
transfer of new technologies to the local community and farmers.

5.3 INSTITUTIONAL SET-­UP OF THE NATIONAL

INNOVATION SYSTEM

By the Resolution of the eighth Central Committee of the Communist

Party of Vietnam (1996), at least 2 per cent of the annual national budget
is to be used for scientific research and technology development. Besides
state investments, social ones, mostly from enterprises, have been set up,
albeit at a lower level. On an annual average, the non-­state investments are
about 0.1–0.2 per cent of GDP. The supplemental investments from non-­
state sectors partly ensure that the overall annual investment in Vietnam
was about 0.5 per cent of GDP for the first ten years of the millennium,
dropping to 0.4 per cent in 2012 and 2013 (Table 5.2).
In 2002, Vietnam devoted USD 273.5 million (constant 2005 USD in
PPP) to R&D. Expenditure for S&T gradually expanded from 0.2 per cent
to 0.52 per cent of GDP between 1995 and 2004. In 2012 and 2013, the
total state budget for S&T reached USD 627.9 million and USD 673.5

Table 5.4 National budget for S&T activities (percentage of GDP)

Year 2000 2002 2004 2006 2008 2009 2012 2013

National 0.47 0.52 0.52 0.54 0.52 0.54 0.41 0.39
budget for
S&T/GDP

Source: MOST (2014).

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 The national innovation system in Vietnam ­147

million, respectively (OECD/World Bank, 2014). One specific feature to

note is that S&T expenditure is spent not only for R&D, but also construc-
tion of facilities and labs, the salary of staff and organization of various
S&T-­related activities. In 2013, out of 14,144 billion VND (around USD1
673.5 million) of state budget for S&T, 6136 billion VND (around USD
292 million) is for facility construction (43.4 per cent), and 8008 billion
VND (roughly USD 381 million) is for other expenditure (56.6 per cent).
Out of this, 8008 billion VND, only 6088 billion VND from the central
government budget was allocated for various purposes like salaries,
research missions, programmes and projects.
Thus, the share of actual budget for R&D in total GDP is even
lower. R&D expenditure for 2002 was 0.19 per cent of GDP and increased
to 0.21 per cent in 2011, which is still very low compared to many other
countries (MOST, 2014) but quite moderate compared with other coun-
tries in the region. It is the same or higher than the levels in Southeast
Asian countries like Thailand (0.21 per cent in 2007), Indonesia (0.15
per cent in 2007) or the Philippines (0.11 per cent in 2007). Of the total,
approximately 70 per cent was devoted to applied research and techno-
logical development, the rest was spent on basic research. One important
feature is that a major portion (about 80 per cent) of R&D expenditure
came from the state budget while the private sector and other non-­state
government institutions did not spend much on R&D activities.
Overall, S&T human resources have increased, but are still lower than
what development demands. In 2009, Vietnam had about 3,723,500
persons having university degrees and above who might potentially be
engaged in S&T activities (Table 5.5).
More specifically for R&D, in 2011 Vietnam had 134,780 persons
engaged in R&D activities, of which 105,230 were researchers, and the rest
technicians, supporting staff and others (Table 5.6).

Table 5.5 Personnel with degrees from colleges and above (potential

numbers engaged in S&T activities, in thousands)

1999 2009
Total 1477.8 3723.5
PhD 14.2 24.3
Master 23.3 101.0
Bachelor 1004.7 2650.4
College graduates 435.6 947.8

Source: MOST (2014).

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 148 Innovation systems for development

Table 5.6 Researchers working in different organizations (number)

Type of organizations Total PhD Master Bachelor College

graduates
105,230 11,501 34,618 55,116 3995
R&D institutes, centres 15,942 1908 4544 9008 482
Universities 52,997 8027 24,337 19,810 823
Semi-­professional units 10,165 457 2248 6658 802
Management 9941 369 2170 7091 311
Companies 14,990 508 1115 11,873 1494
Non-­governmental 1195 232 204 676 83
organizations (NGOs)

Source: MOST (2014).

The quality of the research in Vietnam has been showing certain weak-
nesses and shortcomings. Because of the unceasing wars and isolation
from the international scientific community (mainly in English-­speaking
countries) for a very long time, the S&T personnel in Vietnam have been
confronted with difficulties in updating new S&T trends. There are consid-
erable barriers in exchange of research and international cooperation to be
overcome, especially language barriers.
The education and training system in Vietnam is now giving more atten-
tion to higher education. But the situation ‘excess lectures, lack of workers’
has resulted in S&T activities creating only academic and general results
which cannot be applied to the realities of production and businesses because
they were not in accordance with the requirements of the enterprises.
In addition, the existing pool of scientists and engineers is structured in
such a way that most are employed by either the national centres for R&D,
universities, ministries or government agencies. Only a small fraction of
R&D staff (around 14 per cent) is attached to business firms in Vietnam
compared with 35 per cent in China, 81 per cent in the USA, 57 per cent in
Japan and Korea (MOST, 2014)

5.3.1 R&D Organizations

Concerning the system of S&T organizations, by the end of 2012 there were
2228 registered S&T organizations (not counting the university system) of
which 1074 were public and 1154 non-­public. As for R&D organizations,
they consist of public organizations, universities and service organizations.

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 The national innovation system in Vietnam ­149

Public organizations
Public R&D organizations belong to academies, ministries and the local
government of provinces and cities as well as state-­owned enterprises.
R&D activities are conducted in most research institutes under line minis-
tries, and there are three national research academies for natural sciences,
engineering sciences and social sciences. As mentioned above, there is very
modest financing for R&D via the state budget. Vietnam spent around
2 per cent of its government expenditure budget or 0.39 per cent of its
GDP on S&T activities in 2013 (MOST, 2014), and its R&D budget was
even lower at 0.21 per cent of GDP in 2011 and most publicly funded R&D
is conducted in government research institutes. The research infrastructure
is below international standards. The research tends to be theoretical,
supply-­driven and weakly connected to the needs of the productive sector.
The national R&D system is still ‘organized, financed and managed in
such a way that technology transfer is difficult and expensive’ (Bezanson
et al., 2000, p. 13). Traditionally, public organizations have been privileged
in receiving funding from central government to carry out the ‘state S&T
missions’. These missions are usually organized as research programmes
aiming to provide a scientific foundation for policy formulation and the
legislative process (social sciences) or to create new S&T outcomes that are
significant for economic and social development, for defence and national
security, and for human resource development. However, in the absence of
an effective mechanism to identify such missions, as well as distribute the
research results, it has been argued that the state S&T programmes lack
effectiveness. During the last few years, the entire process of identifying,
conducting and evaluating state S&T missions has been reviewed in an
attempt to identify more efficient and effective procedures. Of all the R&D
and engineering organizations in the country, the Vietnam Academy of
Science and Technology (VAST) is the largest. By 2012, it had 50 units, of
which 34 were research institutes and centres, with nine regional branches
operating in various fields of science and engineering. VAST has a staff
of more than 4000, including 233 professors and associate professors and
714 wit PhDs. Another state scientific research institution is the Vietnam
Academy of Social Sciences (VASS).
In addition to the above institutions, there are several scientific organiza-
tions that were set up and managed by line ministries and provinces. These
institutions also receive public funding via their ministries/provinces to do
research that addresses the scientific/technical and/or policy problems in
the fields/areas of the relevant line ministries and provinces.

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 150 Innovation systems for development

Non-­public scientific organizations

Non-­ public R&D organizations include: (1) R&D organizations of
non-­ state enterprises; (2) R&D organizations of political, social and
professional organizations; (3) organizations belonging to professional
associations; and (4) foreign R&D organizations, including joint-­venture
R&D organizations.
Given the small scale of domestic private enterprises in Vietnam and
the weak links with public R&D organizations, the limited non-­public
R&D activities are mainly conducted in-­house by own staff, who may,
or may not, have any formal education in scientific or engineering fields.
R&D as an organized activity is not common in this sector. With regard
to the foreign sector, there are relatively few foreign R&D organizations in
Vietnam, and the majority of R&D and engineering work for this sector is
conducted in the headquarters of parent firms.
There are numerous so-­called R&D organizations associated with politi-
cal, social and especially professional organizations. However, their inter-
est is mainly in offering consultancy and intermediary services. Few have
research facilities able to undertake any significant engineering work.

5.3.2 Patents

In recent years, many efforts have been made to complete the legal frame-
work system for protecting IPR, and to stimulate an increase in inventions
and utility solutions (these are the results of research projects that could
address problems but are not yet sufficiently sophisticated to be classi-
fied as an invention). Applications for inventions and utility solutions has
increased threefold in ten years, whereas the number of protection qualifi-
cations has remained stable over the years.
Simultaneous with the increased number of applications for protecting
IPR, other activities in terms of transfering rights of use and licence start
occuring (Table 5.7). In the period 2000–10, contracts for transfering rights

Table 5.7 Contracts for transfering right of use and licence

Contract 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Licence 80 79 132 99 238 353 135 135 241 163 145
contract
Assignment 227 271 266 372 359 168 1200 454 538 648 576
contract

Source: National Office of Intellectual Property of Vietnam (2010).

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 The national innovation system in Vietnam ­151

4000
NN
3500
Foreigner
3000 VN
2500 Vietnamese

2000
1500
1000
500

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: National Office of Intellectual Property of Vietnam (2012).

Figure 5.3 Patent application filed from 2000 to 2010

of use and patent property licence annually increase 20 per cent and 58 per
cent, respectively.
Though patent applications and protecting licences have increased, most
of them are registed by foreign partners, with a small but steadily increas-
ing part held by Vietnamese as seen in Figure 5.3.
Despite the upward trend in patent applications and registrations in the
past decade, Table 5.8 shows the clear continued dominance of foreign reg-
istrations. Industrial design patents,2 on the other hand, are more numer-
ous and mostly obtained by Vietnamese residents, but they usually have a
low technological content. The relatively low number of patents may partly
be due to lack of capacity to innovate, but also unclear and/or unenforce-
able intellectual property regimes that dissuade inventors from applying,
for fear of a loss of IPR.

5.3.3 Scientific Publications

In 2000, the level of international scientific publications in Vietnam was

behind those in Indonesia and the Philippines but since then the level in
Vietnam has risen above these countries and was ranked in fourth position
in the ASEAN region in 2010 (Table 5.9). International publications for
2011, 2012 and 2013 are 1563, 1929 and 2263, respectively.

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M4059 GORANSSON_9781783473823_t.indd 152
Table 5.8 Registration of invention patents in Vietnam

Years 1996–2000 2001–05 2006–10 2011 2012 2013 Total

Registration by 161 482 1183 301 382 408 2917
Vietnamese applicants (2.8%) (6.9%) (8.1%) (8.2%) (9.7%) (10.5%) (7.5%)

152
Registration by foreign 5597 6543 13,514 3387 3577 3494 36,112
applicants (97.2%) (93.1%) (91.9%) (91.8%) (90.3%) (89.5%) (92.5%)
Total 5758 7025 14,697 3688 3959 3902 39,029

Source: MOST (2014).

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Table 5.9 International scientific publication of ASEAN countries in

2000–10

Year Vietnam Thailand Singapore Indonesia Malaysia Philippines

2000 357 1420 4247 515 955 484
2001 393 1614 4621 548 1049 405
2002 411 1970 5030 557 1087 531
2003 543 2397 5721 570 1370 559
2004 497 2562 6587 630 1529 565
2005 640 3085 7346 697 1791 706
2006 717 3837 7860 847 2118 716
2007 877 4443 7924 838 2493 766
2008 1068 5246 8904 974 3456 911
2009 1128 6194 9641 1245 4914 1003
2010 1362 6431 10560 1279 6692 1065

Source: ISI Knowledge (2011).

5.3.4 University Research

As mentioned above, although higher education institutions are consid-

ered an important part of the S&T system, not all of them are registered as
S&T organizations in the statistics. Table 5.10 shows the number of higher
education institutions in the academic years from 2010 to 2013.
Almost all universities and colleges fall under the administration of
the Ministry of Education and Training (MOET). The Ministry is also
responsible for primary and secondary education. In addition, there are
two Vietnam national universities (in Hanoi and Ho Chi Minh City). By
2013 (Table 5.10), there were a total of 421 universities and colleges (207
universities and 214 colleges) employing 82,429 lecturers for both public
and non-­public universities and colleges, of whom 9152 were Doctorates,
36,360 were Masters and 37,243 held university degrees (MOET, 2013).
In general, the government has adopted a policy of creating a selective
number of strong public universities as a basis for the further development
of universities across the country (the establishment of national universi-
ties, regional or community and open universities are just a few examples
of such changes to the university system). This move is aimed at creating
‘centres of excellence’ for university education and research, in an attempt
to achieve national recognition.

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 154 Innovation systems for development

Table 5.10 Universities and colleges in Vietnam

2010–11 2011–12 2012–13

Total 414 419 421
Universities 188 204 207
Public 138 150 153
Non-­public 50 54 54
Colleges 226 215 214
Public 196 187 185
Non-­public 30 28 29

Source: MOET, www.moet.gov.vn.

Traditionally, higher education organizations such as universities and col-

leges did not undertake research. Instead, they concentrated on the provision
of a planned labour force. Recently, although training remains the principal
mandate of universities, research has become a more routine activity, with
attempts to turn universities into more research-­led organizations. Still, only
a limited number of university faculties have adequate resources to carry
out significant R&D. Human resources for R&D at universities are 62,095
persons, or 46.07 per cent of the total, while researchers working in universi-
ties are 52,997 persons (50.36 per cent of total researchers). But finance for
R&D in the university sector is only 760.76 billion VND (USD 36.5 million)
or 14.37 per cent of the total R&D budget of 5,293.95 billion VND (USD
254.7 million). Public sources account for approximately 15.3 per cent of
universities’ R&D expenditure. The remaining funding for R&D expendi-
ture comes from contracts with other organizations, of which 29.2 per cent
is from enterprises, 6.7 per cent from other organizations and 48.8 per cent
from international sources. From 1996 to 2002, universities implemented
some 3800 projects and were involved in 90 pilot production projects. Many
universities have established their own R&D units. By the end of 2002, within
the university sector there were 167 research divisions and 147 centres dealing
with technology development and offering consultancy activities. In 2011,
MOET, under which many universities work, conducted 6402 projects or
43.88 per cent of the total of all R&D projects by ministries (MOST, 2014).
Despite a large share of R&D projects and numerous efforts, there
are several problems with research at universities. Many universities are
far from being considered R&D ‘centres of excellence’. Universities in
Vietnam lack autonomous status. Their staff, especially in public universi-
ties, have to face constraints in terms of salary ceilings, human resource

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 The national innovation system in Vietnam ­155

management regulations, financial incentives and so on. Despite the move

to abolish the separation between teaching and research, there is still a
well-­documented lack of research and weak linkages between research and
teaching (Fatseas, 2010).
The present incentive scheme does not promote a proactive approach
among teaching staff in universities. There are few mechanisms to encour-
age them to interact with other institutions and firms. Cooperation is
usually short term, and relies mainly on personal and informal relationships.
In terms of human resources, the number of professors and lecturers is
relatively small compared with the increased number of students.3 Due to
overload of teaching, the university staff simply does not have sufficient time
left for R&D and/or other learning activities. Ageing staff is another problem,
since the majority of professors and associate professors are over 55 years old,
with few replacements in the pipeline. During previous years, many scientific
and engineering disciplines failed to attract talented young students and as
such a shortage of human resources in the university system is foreseen. The
low basic salary of academic staff is offered as an explanation for this.
Although the system has seen some recent investment for upgrading,
many universities still use equipment and facilities dating from the mid
1960s or mid 1970s. Library systems in many universities are small, and
outdated in both their quality and the scope of coverage. The bulk of foreign
language literature dates back to the mid 1970s. There has been a lack of
electronic links with the national library or investment in centralized infor-
mation and librarian systems. Moreover, the rate of use is often low due to
the poor English capability of the staff and/or their current teaching work-
load. As a result, teaching curricula are often old, repetitive and lack innova-
tive approaches and new knowledge. During the last decade, the Vietnamese
university system has experienced several changes, some more radical than
others. First of all, the government paid much more attention to the drive
to create a new type of university, which some called research universities,
or universities of international level or standard. The government set up a
range of partnerships with various foreign partners (France, Germany, UK)
to form a number of such universities. These projects received a substantial
amount of investment. In addition, a number of private universities come
into the scene, with some of them funded by large corporations.

5.3.5 Role of the Business Sector

By 2012, there were more than 600,000 enterprises in Vietnam, of which

SMEs accounted for approximately 97.6 per cent (MPI, 2012). As men-
tioned above, SMEs have contributed significantly to the economic and
social development of the country with around 40 per cent of GDP (ADB,

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 156 Innovation systems for development

2005; BIA, 2011; Pham Thi Thu Hang, 2011). However, the technology level
of SMEs is still outdated. Even large state-­owned enterprises do not really
pay sufficient attention to the search for updating information, improving
S&T knowledge and investing in technology innovation. The rate of tech-
nology innovation investment is less than 0.5 per cent of revenue (whereas
for India and Korea it is 5 per cent and 10 per cent, respectively).
There are several main causes leading to this situation. Enterprises do
not express long-­term visions, having little interest in technology innova-
tion for sustainable development.4 Most enterprises are SMEs and capaci-
ties for adopting advanced technological equipment are rather limited.
Only a small part of Vietnam’s R&D is conducted in productive enter-
prises. Recent data from a survey of 325,304 companies show that only
1090 (or 0.34 per cent) reported having R&D activities (MOST, 2014).
Innovation in SMEs is concentrated in process development and quality
control. Firms do not have sufficient resources for long-­term investments,
including recruitment of highly skilled labour and equipment to innovate,
and technical services are unavailable. SMEs have a hard time obtaining
credit from banks. In general, private enterprises are at a disadvantage
compared to state-­owned enterprises due to lack of access to both prefer-
ential and non-­preferential government loans.
Findings from several studies (NISTPASS, 1999, 2002) reveal that, in
terms of general business services, Vietnamese firms still prefer to perform
most services in-­house. Firms tend to rely on their internal capacities for
engineering, management and marketing.
These studies also revealed certain demand by firms for technology
support from the R&D institutes and universities. However, when asked
about the sources of innovation ideas, only 10 per cent out of 126 respond-
ents cited R&D institutions and universities as an important source (Nguyen
Vo Hung, 2004). There is a demand for technology and training services to be
provided by supporting organizations such as R&D institutes and universi-
ties. However, the demand has hardly been met; the extent of the relationship
of firms with universities and R&D institutions is less than satisfactory.

5.4 CONTRIBUTION OF SCIENCE, TECHNOLOGY

AND INNOVATION IN SOME SELECTED
SECTORS

5.4.1 Agriculture

According to estimates by the Ministry of Agriculture and Rural

Development (MARD), during 1986–2005, the average production value

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 The national innovation system in Vietnam ­157

of agriculture in Vietnam increased 5.5 per cent per year. It is thanks to

agricultural production that the Vietnam economy can maintain its stabil-
ity despite the disruption in growth and economic crisis in many econo-
mies. In 2013, agriculture contributed nearly 19 per cent of total GDP
and one-­fifth of total export. Before the renovation period, the share of
the population living below the poverty line was 60 per cent, down to 29
per cent in 2003, 19 per cent in 2006, 14 per cent in 2008 and currently less
than 10 per cent. In 1985, exports of agricultural products were USD 400
million, up to USD 18 billion in 2010, and reached almost USD 20 billion
in 2012 (OECD/World Bank, 2014). Most of the agricultural production
has increased productivity and yields due to the application of new crop
and production technologies. By applying new technologies in cropping
and post harvesting, production of rice, for instance, increased steadily:
40 million tons in 2010, up to 41.8 million tons in 2011, 42.5 million tons in
2012, 44.17 million tons in 2013 and approximately 45 million tons in 2014
(Oryza, 2014). Fishery production also reached a high of 5.1 million tons
in 2010 (Nguyen Minh Duc, 2011) and 6.05 million tons in 2013 (VASEP,
2014).
In some large centres of economic development, high technologies have
started to be applied in agricultural production. In Ho Chi Minh City,
since 2000, the growth rate of agriculture has been high at 3.7 per cent
in 2001, 4.7 per cent in 2003 and in 2010 reaching 9.1 per cent. Ho Chi
Minh City began to put a high-­tech focus into agriculture production by
building a 100-­hectare agricultural high-­tech park. The park uses several
new technologies such as hydroponics, deep pond and floating board tech-
nology for planting and new cropping; tissue culture for flowers, plants,
orchids, fruits and ornamental trees; application of plant regulators; gene
technology and enzyme for mushroom production. In the veterinary field,
embryonic technology is being used on milk cows and cattle; new technol-
ogy is being applied to produce bull semen; genetic technologies are being
used to produce a new generation of vaccines and stimulate growth in
animal breeding; the polymerase chain reaction (PCR) technique is being
applied for diagnostic purposes and selection of breeds; information and
communications technology (ICT) is being used in managing new species.
In the seafood business, thanks to new technologies, fish and other types of
seafood have been improved in terms of productivity and quality. In Hanoi,
a number of new technology application models have been introduced to
enlarge the range of products and increase productivity and yields of crops
such as grapefruits, ornamental flowers, organic vegetables. The city has
also made efforts to introduce many high-­tech-­based agricultural parks.
As one of the priorities set up by the Strategy for S&T development,
Vietnam gives particular attention to the application of bioscience and

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 158 Innovation systems for development

biotechnology in the agriculture sector in order to address the social and

economic needs for its large population. In this effort, agricultural scien-
tists have implemented artificial insemination, preservation technology,
embryo transfer and vaccine production technology. Technologies to form
new breeds such as tissue culture and cell generation have been applied
widely in the production of rice, hybrid rice, maize and so on. To date,
the contribution of biotechnology to Vietnamese agriculture has resulted
in self-­sufficiency of 25 per cent in the demand for F1 hybrid rice, gener-
ating economic benefits of USD 30–50 million per year (MOST, 2003).
New rice production has partially contributed to Vietnam’s attainment of
second position in rice exports in the world. New rice varieties produced
by local scientists are used in 70 per cent of rice-­cultivated areas. Another
key achievement in this field is the provision of over 50 million trees of
various types relying on tissue culture technology to meet the demand of
forestry development. In genetic preservation and conservation Vietnam
has worked on the genetic conservation of animals, vegetation and micro-
organism species. These conservation efforts are run by 12 offices and 70
agencies belonging to 8 ministries and branches. Biotechnology has also
begun to generate aquaculture species and has been used in preventing
disease in prawn species.
Overall, one can say that if Vietnam is to become self-­sufficient in food
grains and subsequently a net exporter of many agricultural products, the
development and adoption of new varieties are of great importance. It is
estimated that in the last two decades the introduction of new varieties has
accounted for about one-­third of the growth of rice production. Public
research has played a crucial role. Research in hybrid rice was initiated
back in the late 1970s in Vietnam’s Institute of Agricultural Science. The
development of new rice varieties was later carried out not only in research
institutes such as the Cuu Long Rice Research Institute (CLRRI) in the
Mekong Delta, the Institute of Agriculture for South Vietnam (IAS) and
the Agricultural Genetics Institute in the north, but also in universities
such as the Hanoi University of Agriculture, the Can Tho University
and An Giang University. However, up to now Vietnamese exports of
rice remain, in terms of quality, concentrated at the low end of the inter-
national market. Considerable efforts are needed to upgrade the various
stages of production and marketing, including through technological
innovation.
Vietnam is the biggest exporter of coffee after Brazil and the largest
shipper of the robusta beans that are used to make instant drinks. Coffee
is second only to rice in terms of the value of Vietnamese agri-­product
exports. In spite of the importance of coffee as a source of income for
large communities and the generation of export revenues, limited resources

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 The national innovation system in Vietnam ­159

have been devoted to R&D in Vietnam to improve coffee production and

commercialization. The government has sought for some time to improve
the quality of coffee exports, including more widespread planting of value-­
adding Arabica beans and the development of mixed-­bean coffees.
The restructuring of the agricultural R&D system under the supervision
of MARD has been part of this effort. In September 2005, the number of
agricultural R&D agencies under direct MARD control was reduced from
28 to 12. These mergers helped eliminate duplication of research efforts,
but do not appear to have solved problems such as the extreme geographic
centralization of Vietnamese agricultural R&D (most activities take place
in the immediate vicinity of Hanoi and Ho Chi Minh City), which prevents
R&D from being closely connected with Vietnam’s rural development pro-
grammes, and the low productivity of many research institutes, resulting
from inadequate incentives combined with lack of an adequate level of
human and other resources.
In September 2013, at the National Conference to evaluate the S&T
activities under CP Vietnam Resolution No. 7 on agriculture–rural area–
farmers, the contribution of S&T to agriculture production was highly
praised. It was confirmed that due to R&D activities, 164 new species of
plants have been created and put into production, of which 97 are in the
foodstuff group, 8 are ornamental flowers, 19 are fruits and 40 are trees
of industrial types. Many of the new species have higher productivity and
new features including better climate resistance and pest resistance, such as
rice, maize, peanuts, potatoes, rubber and particularly new plants used to
make furniture.
In one of the studies on innovation system in agriculture (Tran Ngoc
Ca and Nguyen Vo Hung, 2012), the status of innovation functions was
examined in the context of three specific products of Vietnamese agricul-
tural production: tea; fruit and vegetables; and shrimp. These innovation
functions were examined for each product sector along the value chain
of production and business, ranging from R&D for seeds and species to
planting, harvesting, packaging and sales. The innovation system related
to these three products has been mapped and identified two key features:
actors/organizations of the innovation system and issues/problems in
institutions. Actors and organizations in the innovation system under
examination were universities and schools, R&D institutes and centres,
value chain organizations like shops, markets, associations from the private
sector, various government organizations, law firms and other regulators,
enterprise incubators and financial institutions, both public and private.
In spite of the achievements of actors, their incompetence was highlighted
in terms of several institutional issues and problems. First, there is lack
of R&D, testing and training and incubating facilities in many agri-­based

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 160 Innovation systems for development

organizations, reducing their competence. Partly, this is due to limited

financial resources, and partly to weak research and training capacity,
especially shortage of marketing skills and information. Another emerging
issue is lack of will for change and inertia among many actors. In addition,
lack of credibility and trust among financial institutions towards innova-
tion is among the most critical barriers for innovation to take place. In
general, the policy and institutional environment is not sufficiently condu-
cive and innovative linkages are weak among actors and organizations. As
such, several threads points may be raised here. In general, private players
are still weak and public organizations and institutions (government)
have a more important role to play in promoting science, technology and
innovation. Nevertheless, specific features of agri-­based production and
agriculture in general have different kinds of problems to others in indus-
tries and services, such as seasonal specificity of harvesting, productivity
of crops and so on. Globalization processes mean that foreign actors are
important also in agri-­business, be they firms, NGOs or associations.
One interesting observation is that there are differences among various
products in terms of innovative behaviours. The same policies are appli-
cable across the agricultural sector, but they seem to have a different
impact for various product groups such as tea, fruit–­vegetable and shrimp
farming. In this differentiation, market factors (both domestic and, more
importantly, export) and types of technologies that are being used in the
production of these specific products reflect differences – sometimes quite
distinct differences.

5.4.2 Healthcare

In the healthcare sector, the Ministry of Health (MOH) is the govern-

ment organization responsible for all activities concerning taking care of
people’s health, including preventative healthcare, traditional medicines,
drug production and use, cosmetic and food safety and so on. In prov-
inces and cities, the Department of Health (DOH) under the MOH is the
responsible agency. By 2010, Vietnam had 1030 hospitals, 44 rehabilitation
health centres, 622 regional clinics with 246,300 hospital beds. In addition
to the government system, there is a private system of healthcare services
comprising 19,895 medical organizations, 14,048 pharmacy organizations,
7015 traditional medicine organizations and five hospitals with foreign
investment.
In terms of human resources, Vietnam has a system of medical and
pharmacy universities and it produces thousands of medical doctors and
pharmacists every year. In addition, numerous schools train nurses, den-
tists, pharmacists and technicians in the provinces. Currently, there are

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 The national innovation system in Vietnam ­161

250,000 people working in the healthcare sector with 47,000 having higher
education degrees. Most medical and pharmacy universities do various
kinds of scientific research and technological experiments, using their
hospitals as practical experimental organizations. In general, healthcare
S&T activities have contributed to some of the latest achievements of
the sector in addressing the needs of society. A first notable impact is the
ability to control new types of emerging diseases during the last few years.
Vietnam, as a tropical country, faces many types of epidemic diseases that
require strict monitoring, control and treatment procedures. To detect
these new types of disease early and design appropriate measures would
guarantee success in dealing with them. The healthcare sector now, thanks
to research, is able to detect very new ‘strange’ diseases the first time they
occurr in Vietnam, such as foot and mouth infection in both humans and
cattle, avian influenza of H5N1, H1N1 types and so on.
In the treatment of human diseases, many hospitals have been successful
in implementing new technologies for complicated operations to replace or
transplant organs such as liver, marrow, heart and kidney as well as genetic
diagnostic tests. This has saved the lives of many people and increased
the capability of the healthcare sector. One example was in 2012, when 37
doctors and nurses in Cho Ray hospital in Ho Chi Minh City (together
with colleagues from Korea) successfully transplanted a liver. Similar cases
can be observed increasingly in many other hospitals around the country.
More recently, stem cell research has been done on diseases affecting blood
cells, neurons and bones. This has made it possible for many patients to
receive treatment inside the country instead of spending a fortune to travel
overseas for these complicated problems. The same can be said for endo-
scopic operation technology applied to deal with kidney, diaphragmatic
hernia, ureter problems and so on.
Among others, biotechnology is one of the priority areas in the applica-
tion of S&T that has brought a positive outcome to the sector. Over the
last few years, artificial insemination technology has been applied widely
at some clinics in Ho Chi Minh City and Hanoi. Genetic technology using
DNA and protein chips are also being explored in some research institu-
tions and healthcare centres. They have applied fast diagnosis and early
diagnosis technology in dealing with heredity problems in newborn babies
and the prevention of epidemics such as poultry flu and dengue fever.
The research projects in vaccine production have produced the most
significant results in the field of medical biotechnology. Vietnam has mas-
tered the technology and produced nine out of ten kinds of vaccine to offer
a comprehensive vaccination programme. This has contributed to the elim-
ination of polio in 2002. Vietnam has recently succeeded in the research
and technology development of a new type of class B hepatitis vaccine

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 162 Innovation systems for development

based on DNA technology (recombinant vaccine). The production of

class B hepatitis vaccine since 1997 has resulted in turnover of more than
USD 7 million. Four manufacturing enterprises for human vaccines have
produced tens of millions of doses per year to support a comprehensive
vaccination programme and these vaccines have been exported to India,
South Korea and Japan. Two types of vaccines have met with 100 per cent
demand and the remainder 40–60 per cent of demand in Vietnam. This
helps Vietnam to have almost all the vaccines necessary for its immuniza-
tion programme. This is especially due to its international collaborations.
In addition, genetic engineering, transgenic technologies and GeneCard
have been used in the areas of national defence and public security to iden-
tify the remains of the dead from national wars, recognize blood relations
and identify criminals.
On traditional medicines one can say that, similar to other sub-­fields
of healthcare, this area also lacked a needed, organized innovation struc-
ture conducive to addressing the needs of the population to have afford-
able treatment and drugs. In spite of many efforts by the government to
promote traditional medicines and use of herbal drugs in order to provide
more affordable, accessible healthcare, this sub-­sector still suffers from
disorganized actions and under-­resourced programmes (Tran Ngoc Ca,
2012). So far, most S&T activities in the healthcare sector seem to be linked
more to modern medicines.

5.5 ISSUES AND PROBLEMS IN CLOSING THE

LOOP

There are a number of issues related to how the research community

‘closes the loop’, that is, aligns its research activities to the national devel-
opment agenda. To ensure the research activities serve the needs of devel-
opment, it is essential that, first, the research agenda is set in accordance
with development needs. Then, the capability of research organizations to
deliver products for development is another issue.
A study was undertaken to examine in depth the capabilities of R&D
organizations as well as companies in closing the loop. The cases of ten
R&D institutes, universities and firms working in the agriculture and
healthcare sectors provide an illustration of the efforts of the research
community in support of overall developmental goals. This section pro-
vides some experiences of these specific R&D institutes and universities.
First, how these organizations set their research mission and agenda is
presented. Then, their capabilities are described in pursuing these agendas
and achievements so far. Lastly, there is an analysis of the impediments

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 The national innovation system in Vietnam ­163

faced by these organizations in aligning R&D activities to development

goals.

5.5.1 Research Agenda Setting and Mission

As seen above, the MDGs require that many problems related to agri-
culture, healthcare, gender, environment and other areas need to be
addressed with the help of scientific and technology solutions. The closer
the priorities of research projects and programmes to the specific needs
of society, the better they serve these needs when the research results
become available to end users. In activities of many national S&T research
programmes, issues of biotechnology for agriculture and healthcare have
been addressed. More specifically, one national programme of S&T devel-
opment for mountainous and rural areas was designed to solve problems
these difficult areas. The end users of research are usually farmers with low
income, ethnic minority communities, poor women and children.
Many R&D institutes, university faculties and companies were inten-
tionally created with their mission to provide solutions to development
problems. For example, in 1971 the Centre for Maize Research (under
MARD) was created and later became the Institute for Maize Research,
one of the leading organizations in agriculture research in Vietnam. The
institute conducts research on maize and some foodstuffs, ranging from
basic surveys to selection of new crops, improvement and application of
new production technology solutions for maize and foodstuff production.
Most research agendas come from the needs of farmers and at the request
of agricultural organizations.
The National Institute of Hygienic and Epidemiology (NIHE), with
the international cooperation (from the Swedish Karolinska Institute) was
established to develop an appropriate level of research capacity in vaccine
research, among other purposes, following instructions from MOH.
Different teams in NIHE have obtained expertise in the production of dif-
ferent vaccines. Japanese scientists have trained NIHE staff on Japanese
encephalitis vaccine, while Swedish support has focused on a cholera
vaccine. From 1991 to 1995, the Ministry of Science and Technology
provided support for the institute to carry out state-­level research projects
on the application of advanced techniques to complete the process of
producing an oral cholera vaccine and the technology used to produce
Japanese encephalitis vaccine and other vaccines. After publication of the
research results in 1996–98, a pilot project was established to expand pro-
duction of class B hepatitis and oral cholera vaccines with total capital of
2 billion VND (about USD 130,000), giving an investment rate of return
of 80 per cent.

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 164 Innovation systems for development

Another organization, the National Institute for Medicinal (herbal)

Material (NIMM), was created on 13 April 1961 with the function set
out by MOH to do research on herbal medicines, test the toxicology of
these substances, guide the growth of herbal medicinal plants and train
staff working in this area. Its research agenda is a result of a consultation
process between researchers, MOH and healthcare workers. The institute
has numerous projects working on medicinal plants such as ginseng, and
performs research on the localization of imported Chinese species and
adapts them for conditions in the northern areas of Vietnam. The institute
distributes these new successful breeds to farmers.
As for universities, Hanoi Medical University was established in 1902.
The development of HMU led to the formation of two practical hospitals,
and now it has three faculties. Training is the most important activity of
HMU and it has trained 16,507 medical doctors, 1505 doctor special-
ists and 143 with public health Bachelor degrees. Since the mid 1990s, its
research mission has also been acknowledged as key for the university. To
address the needs of society, research activities at HMU are focused on
three main research areas: (1) application of new techniques to improve
the quality of diagnoses and detect diseases at both onset and molecular
level; (2) medical effects of herbs, traditional utilization methods of herbs,
molecular bio-­production for diagnoses and treatment; and (3) improving
public health for workers, poor people, those with genetic abnormalities,
people effected by dioxin or toxic chemicals from the war, educational
interventions for health protection and so on.
Can Tho University (CTU) was founded in 1966 and includes nine
faculties and two research institutes. To support its activities, CTU has
developed strong cooperative ties with many international organizations.
The main mission of CTU is to train the 16,000 students at CTU and the
15,000 students at associate facilities in other provinces of the Mekong
River delta. In addition, there are 1015 postgraduate students in six
Doctoral programmes and 25 Master’s programmes. The second mission
of CTU is research, of which the most notable programmes are applica-
tions of new technology in planting, processing agri-­products and applied
biotechnology research for agriculture. CTU aims primarily to serve the
needs of farmers with very low purchasing power, and thus derives limited
revenues from commercialization of research.
The Institute of Resources, Environment and Biotechnology (IREB),
under Hue University of Agriculture and Forestry, is a subsidiary of Hue
University in the central part of Vietnam. It was created as the Centre
for Resources, Environment and Biotechnology in 1995. The centre was
turned into IREB in 2007, with functions to carry out R&D and tech-
nology transfer in respective fields. IREB has two centres: (1) Centre for

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 The national innovation system in Vietnam ­165

Environmental Monitoring and Sustainable Development and (2) Centre

for Researching and Transferring Biotechnology. In IREB’s research port-
folio a range of notable applied research projects can be found such as on
three varieties of rice that can withstand drought – having a shorter growth
cycle, avoiding the flood season, of better quality compared to previous
generations and which are also suitable to the conditions of the region. It is
transferring the results to users like agricultural cooperatives and farmers
for production on a large scale. The institute also researches the production
of asparagus and orchids by tissue culture.
The Central Centre for Research and Production of Herbal Medicines
under Ho Chi Minh City Pharmacy University was created in 1987 by the
joint efforts of a number of research institutes from Ho Chi Minh City
and local government in Phu Yen, a central province of Vietnam. Starting
by exploiting the abundant natural plants to produce drugs for export
to Eastern Europe, the centre expanded into collaboration with farmers
in growing various types of herbal medicinal plants for both domestic
and export consumption. Scientists from the Pharmacy University came
to work with farmers and provided guidance, teaching and technology
transfer to farmers. Products from the centre can also be used for treating
diseases of aquaculture species such as shrimp and fish. To conduct these
tasks, the centre has expanded its cooperation with a network of other
research institutes on aquaculture, chemistry, tropical biology as well as
with other universities in Ho Chi Minh City.
The initial origins of some companies were to address development
needs. The pharmaceutical company Vimedimex, for example, was formed
in 1984 in HCM under MOH. In 2005 it became a shareholding company
and is now one of the leading suppliers of pharmaceutical products in
Vietnam. In 2002, Vimedimex created a joint venture BV Pharma with the
UK Commerce & Technology Transfer Company. The new company spe-
cializes in research and production of new products from traditional herbal
medicinal plants for both domestic consumption and export. The Future
Generation Co. (FGC) Ltd was set up in 1996 for trading and production
of tea (black and green) in the domestic and export markets of more than
30 countries. In 2003, the trading company decided to invest in new pro-
cessed technology for tea production and export and now has two modern
facilities in Vietnam with technologies imported from Italy. Recognizing
the need for clean production and help needed by farmers in managing
their environment, the company works closely with farmers growing tea
in specialized tea planting areas on clean production without the use of
chemical substances. The aquaculture feed company Tomboy was created
in 2001 in Ho Chi Minh City and produced feed for shrimp production. It
distributes products for aquaculture production like chemicals, additional

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 166 Innovation systems for development

ingredients and materials, water fans, other types of equipment and so on.
Given the great need to deal with shrimp diseases in the Mekong River, the
company has a team of engineers and technicians to help farmers in study-
ing and solving technical problems of shrimp diseases via direct support
programmes, such as guidance, publication and distribution of technical
papers, brochures, organization of technical workshops and seminars,
technology transfer in cooperation with foreign experts, local research
institutes and universities. Over the last five years, the company has organ-
ized more than 2500 training workshops for all shrimp cultivation zones
countrywide for more than 35,000 farmers to learn about technical issues.
Tomboy has become a friendly face in helping farmers produce shrimp in
Vietnam.
The research priorities, orientation and mission of the above organiza-
tions were specifically close to the development agenda. One can say that
they were created to deal with the social and economic development needs
of society.

5.5.2 Research Capability and Achievements

Having development goals as a mission and research orientation, these

organizations also built up capabilities that help them deliver notable
results beneficial to the end users including farmers, patients and disadvan-
taged groups of people.
In 2005, the Maize Reseacrh Institute became a member of the larger
VAAS – 80 per cent of all its research products have been accepted by the
government as national maize crop products. Since 1993, the institute has
supplied around 3500 tons of seeds for other organizations in produc-
tion and seed trading. It has also patented and transferred seven types of
hybrid maize for other Vietnamese and foreign companies. Moreover, it
has provided hybryd maize seeds to Laos and Cambodia. Thanks to this
research activity, the institute has contributed to the stabilization of sales
prices for maize seed crops in the market, and the benefit is estimated at
around 100–120 billion VND yearly (around USD 6 million). Every year,
the institute receives about USD 600,000 for research and produces around
3000 types of maize breeds. Sale prices of domestically made seeds are
30 per cent cheaper than imported ones and the institute now has 40 per
cent of the market share (competing with six foreign companies). As such,
the institute has brought great benefits to farmers by replacing imported
maize seeds with domestic ones.
On the basis of research results, and recognizing the need in Vietnam
for vaccines of various types, NIHE decided to set up a business entity
to deal with mass production of vaccines. The research carried out by the

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 The national innovation system in Vietnam ­167

researchers of the three laboratories within the framework of international

cooperation and later within government research projects was crucial
for the company’s start-­up. The Company for Vaccine and Bio-­product
No. 1 (Vabiotech) was established in March 2000, comprising a research
team from three laboratories. The company’s founder is Professor Nguyen
Thu Van, who was then the head of the Laboratory of Class B Hepatitis
Vaccine. In addition to research results inherited from the institute, start-
­up facilities transferred from the institute to Vabiotech were also crucial
(about 70 per cent of the company’s assets). Thanks to the institute’s
research capabilities and transferred facilities, the results of the research
were applied immediately to the production of vaccines. Up to that time,
most vaccines available in the market were imported. The sales of vaccine
products produced by the company proved that their quality was equal
to those of imported products but cheaper in price. Currently, Vabiotech
produces and sells six main products, including vaccines for plasma class B
hepatitis, recombinant class B hepatitis, inactive class A hepatitis, Japanese
encaphalitis, oral cholera and rabies vaccine and other bio-­products for
diagnosis, treatment and prevention of disease. This helps Vietnam to
partly achieve self-­sufficiency in vaccine production, essential for commu-
nity health protection, and saves a significant amount of foreign currency
based on import substitution.
Among the notable successes of the CTU in research are the project on
rice varieties research (with more than 30 new types of rice having been
approved as national varieties), the project on suitable farming systems,
technology transfer for pig farming, agri-­based food processing, biotech-
nology for agriculture and the production of various types of aquaculture
products like shrimp Artemia and new breeds of fish. Supply of services for
agricultural needs is also a widespread practice of the university. The uni-
versity has implemented projects in technology transfer in agriculture and
rural development. To commercialize and pursue these activities, CTU has
established units like the Company of Plant Protection and Laboratory on
Tissue Culture and is working closely with the Department of Science and
Technology and local government in several provinces. Farmers, with their
small-­scale and family-­based production, are the main users of innovation
and technology transfer from the CTU. These transfers are often done
through farmers’ groups or following the guidance of local government
at the provincial and district levels. The most significant impacts are job
creation and formation of new business opportunities. Also, technology
transfers from CTU have enabled farmers to combine planting and raising
shrimp Artemia together with salt production, and to increase crop and
productivity in catfish production.
As a result of its research, NIMM has been able to localize more than

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 168 Innovation systems for development

200 types of species, of which 37 have been planted on a wider scale.

Some of the plants have become very well-­known products for treating
diseases like malaria (Artemisia annua L.) or for the production of veg-
etable oil (like citronella) for domestic and export markets. The institute
also works closely with farmers to help them grow and commercialize
products such as mushrooms and various medicinal plants, especially
ethnic minorities in the Central Highland or mountainous areas. NIMM
has organized research on Crila by tissue culture technology for cancer
treatment and a number of other projects aimed at promoting local pro-
duction and supply of local herbal medicines for poor farmers living in
mountainous regions. With the more affordable costs, this should help
address the problems of the poor in accessing healthcare services and
necessary drugs.
Some activities of HMU address societal needs. HMU has numerous
studies on domestic medicine herbs for prevention and therapeutic pur-
poses for local communities. A polyphenol product extracted from green
tea leaf is having a restraining effect on lipid metabolism. HMU has also
collaborated with a domestic pharmaceutical manufacturer to produce
the Uphamorin tablet from the extract of a plant grown in south Vietnam
with the effect of strengthening immunity against active chronic hepatitis
and nasopharyngeal cancer patients after radio-­or chemotherapy. In addi-
tion, HMU has been collaborating with a network of hospitals in their
training, particularly in the clinical practice for students, and providing
online advice to communities via a website on preventing and curing some
common diseases.
Among companies, every year BV Pharma (Vimedimex) produces
around 100 tons of artichoke, ginger oil extract and other dried substances
for treating neuron system infection for export to Russia. The company is
also studying how to extract substances from red pine to replace import
products in cancer treatment, which costs more than USD 3 million yearly.
For this, the company is setting up a Research and Production Centre for
growing and harvesting artichoke and red pine, and farmers have been
contracted to do this job, under the technical guidance and support of the
company.

5.5.3 Problems for Pro-­development Research and Related Policies

Despite the fact that many organizations have intentionally set their
missions to serve the needs of development, that they followed suitable
research agendas and at least some of them have sufficient capabilities
to deliver research results, they have not always achieved their objectives.
There are clearly some inappropriate policies and government regulations

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 The national innovation system in Vietnam ­169

preventing the closing of the loop. This highlights the need for strong gov-
ernment support.
The cases mentioned above also reveal several problems. Most com-
mercialization measures in universities like CTU have to be done via
central or local governments, which have budgets for various programmes
to support farmers. Nevertheless, it is widely believed that policy has not
been supportive enough for the university to play a better role in this
agriculture-­based region, whether in training or in technology innovation
and dissemination. Technology transfers from CTU to the region tend to
have immediate but only short-­term effects to date.
At IREB, some research projects have been completed and produced
results, but it has not found partners to which it can transfer the research
result and lacks investment capital for pilot production. There are several
issues that hinder the development of R&D at IREB. First is funding. In
general, total funding available for R&D at the university is quite limited
and MOET provides funding for only five ministerial-­level projects at
Hue University (the funding at this level is around USD 20,000 each on
average). Even worse, at the university level, the funding is only USD 200
per project on average.
The autonomy of R&D institutions is another issue. To date, IREB
has relied mostly on its income from external projects. In the context of
moving R&D institutions towards greater autonomy, new organizations
like IREB may have more problems in facing an uncertain future, without
the support of public funds for operation, given biotechnology research
cannot generate as much income as activities like environmental services
or construction projects.
Within Hue University, there is a lack of structure to deal with the
transfer of technology and commercialization of research results, such
as a Technology Licensing Office or a Technology Transfer Office. This
makes it difficult for research activities to reach the market. University
staff lack market and business management knowledge, and thus, even for
some useful technologies, it is hard to turn them into marketable products.
Universities, such as HMU, also have limited linkage with the private busi-
ness sector.
In pursuing their goals, companies like New Generation Co. have faced
a number of challenges such as lack of application of new technologies
in growing tea, which led to the under-­supply of clean and good quality
raw material for company production. In particular, incentive policies on
quality, food safety and hygiene conditions are not in place. There is no
single agency responsible for the issue of monitoring the use of chemi-
cal fertilizers and insecticides, and lack of related regulations. If there
are some, enforcement of the regulations is very weak; the monitoring

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 170 Innovation systems for development

organizations are in short supply or under capacity. All these considera-

tions point to the need for a better coordinated policy framework enabling
good technology companies to better serve the needs of the farmers.
In the case of Vabiotech, although being a firm, it cannot be fully
responsible for its staffing and salary system due to its government spin-­
off organization status. The salary regime is not appropriate, especially
given the ceiling salary level imposed by several ministries for all state-­
owned organizations. The salary regime remains egalitarian, which does
not provide incentives for talents. According to the company’s director,
it is important for her organization to be treated as a real company. This
kind of technology-­based spin-­off organization requires more specific and
appropriate policy mechanisms and regulatory framework to be developed
by the government.
In Vimedimex, many difficulties are still being faced in manufacturing
and processing of medicinal herbs from cultivation, intensive preservation
and processing activities. Moreover, this type of cross-­sector activity is not
under the management of a single ministry, but related to many agencies
and therefore the management is quite complex and requires good coor-
dination and cooperation of all relevant ministries that to date are not in
place. In addition, there are always issues of policies related to quality and
food safety, the management and use of pesticides, chemical fertilizers,
monitoring functions, as well as unfair competition like infringement of
intellectual property issues and so on. In addition, financial institutions
are not very helpful in bridging the needs of industrial production and
farmers’ needs.

5.5.4 Comments on the Cases

As described above, many organizations, be they R&D institutes, universi-

ties or even companies, are working on the issues of serving the needs of
farmers, poor and disadvantaged people. Organizations from both the
public and private sector (although to a lesser extent) can work on the
closing of the loop in development.
Addressing societal needs became one of the missions of these organiza-
tions, in addition to other more ‘mainstream’ functions. Working closely
with farmers is one of the most notable modes of operation to make sure
needs in agriculture or healthcare are addressed. Still, there are policy
and institutional problems that hinder this process. The organizations
concerned complain mostly about financial policy and specific funding
mechanisms for programmes. To supplement these sources and to avoid
the complexity of disbursement procedures, these organizations have to
promote their other activities, such as cooperative contracts with users in

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 The national innovation system in Vietnam ­171

production sectors; activities to serve the needs of farmers; or increasing

work with those organizations that receive funding for the development
of key economic zones. In some cases, investment by the state for R&D,
technology development and commercialization are not sufficient and
very fragmented. Scientists spend a lot of time dealing with procedures
and financial paperwork rather than on R&D activities. Many policies are
not suitable for the seasonal specificity of agriculture production, which
require a long time period before they can produce substantive tangible
results. The State Treasury, a monitoring organization responsible for
R&D funding, has limited expertise and knowledge on R&D activities and
tends to create extra difficulties for scientists. The whole process of agenda
setting, selection of projects and monitoring research activities needs to be
improved. In general, the gap in knowledge, understanding and miscon-
ception between the R&D community and financial management needs
to be closed.
Apart from funding from provinces and local governments, interna-
tional cooperation is another important source of funding that these
organizations should further develop. However, procedures and prepara-
tion for international cooperation are not always appropriate. The state
via various ministries also needs to have appropriate allocation policies
in funding R&D activities within the university system. The current situ-
ation is considered untenable as the state budget for most university-­level
research projects is almost negligible, making it practically impossible to do
any kind of serious large-­scale research that the country needs.
Overall, most R&D organizations and universities do have awareness
about the need to address the social agenda and attempt various efforts to
pursue these purposes. But in some instances, they are not enough and it
depends strongly on the policy framework of the government to bridge the
gap between demand and supply of research results.

5.6 SURVEY OF S&T ORGANIZATIONS ON S&T

AND R&D ACTIVITIES IN VIETNAM

5.6.1 Introduction

In order to better understand the perception of R&D institutes and uni-

versities on the relationship between R&D activities and development
needs, a survey was undertaken. The survey team sent out questionnaires
in combination with in-­depth interviews and case studies to R&D insti-
tutes, universities (called Organizations below) and enterprises (called
Firms), mainly in the two sectors of agriculture and health. In total, 57

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 172 Innovation systems for development

organizations were surveyed, of which 35 are S&T Organizations (includ-

ing universities) and 22 Firms.

5.6.2 Findings

Most R&D Organizations and Firms, or 91 per cent, were involved in

national S&T programmes and projects funded directly by the government.
To a lesser extent, they also carried out activities under self-organized pro-
jects (69 per cent) or were funded by the foundation mechanisms in a com-
petitive process (37.5 per cent); 59 per cent of respondents were involved in
experimental production activities. However, the scope of activities differs
between Organizations and Firms. Whereas 80 per cent of Organizations
enjoy state-­level programmes and 54 per cent receive support from research
foundations, the corresponding figures for Firms are 59 per cent and 9 per
cent. Conversely, most Firms are involved in in-­house R&D and technical
change services (95 per cent) whereas a smaller percentage (51.4 per cent)
of Organizations engage in this activity.
When assessing the quality of R&D activities within their own area of
expertise, most respondents (66.67 per cent) evaluated the R&D quality
as average. But Organizations tend to assess R&D quality more positively
than firms: 42.86 per cent said it is average, 57.14 per cent considered it
good and none characterized it as bad. For Firms, on the other hand, the
quality of R&D was considered good only by 9.09 per cent, average by
81.82 per cent and bad by 9 per cent.
Some respondents explained more specifically the choice of ‘bad quality
of research’. The reasons offered for this were that research results were
not up to date regarding the needs of firms; or that research can be good
in laboratory conditions but cannot be applied in the reality of the shop
floor. Some cited reasons such as outdated research facilities and that
results were not credible.
All types of respondents tend to have an average appreciation on the
extent to which research results are applied (63 per cent). Much fewer said
that they were either very satisfied (14.8 per cent) or not satisfied at all
(22.2 per cent) with the level of application.
Again, the satisfaction rate is different among Organizations and Firms.
The responses show that R&D Organizations and universities seem to be
more satisfied with the rate of application of research results than Firms –
74.29 per cent of Organizations are satisfied, 17.14 per cent are very satis-
fied and 5.71 per cent not satisfied at all. Meanwhile, 45.46 per cent of
Firms are not satisfied at all, 36.36 per cent are satisfied and only 9.09 per
cent are very satisfied. This shows the tendency for Organizations that are
doing research to value their own research higher than the users – some of

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 The national innovation system in Vietnam ­173

Table 5.11 Assessment on R&D relevance

Overall:
Criteria Relevant Relevant in Not relevant Others
some projects at all
Total 57 57 57 57
Number 9 40 7 1
% 15.79 70.17 12.28 1.76

For R&D organizations and universities only:

Criteria Relevant Relevant in Not relevant Others
some projects at all
Total 35 35 35 35
Number 9 24 1 1
% 25.71 68.57 2.86 2.86

For firms only:

Criteria Relevant Relevant in Not relevant Others
some projects at all
Total 22 22 22 22
Number – 16 6 –
% 0 72.72 27.28 0

Source: Survey by author.

which are Firms – do. It would seem that research performance is not yet
up to the needs of development and business communities.
To clarify how to improve the use of research results, suggestions were
offered such as more discussion on research agendas and needs assessment
of end users (like firms, communities and so on) before doing the research.
Some proposed giving firms/end users the rights to initiate research project
and agenda for academic organizations.
In this context, the relevance of R&D activities or the suitability of
research results in respective areas to the needs of social and economic
development in the country is worth clarifying further. Table 5.11 shows
the overall responses on the relevance of the research: 15.79 per cent
confirm that it indeed is relevant while the majority (70.2 per cent) find it
to be somewhat relevant and a smaller share (12.28 per cent) consider it
as not relevant at all. Again, R&D institutes and universities deem their

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 174 Innovation systems for development

research as relevant or somewhat relevant to a higher degree than Firms do

(94.3 per cent versus 72.2 per cent).
To identify irrelevance of research results, a number of reasons were
given. First, scientists tend to do what they do best, sometimes not very
close to the needs of end users in society. Second, the project implementa-
tion sometimes dragged on for too long and even if the initial purpose of
a project was relevant, when the projects finished, it was too late and the
situation had changed, rendering the results obsolete or irrelevant.
Funding resources for S&T activities of the organizations is one factor that
affected R&D implementation. For Organizations, the overwhelming major-
ity (96.4 per cent) get funding from the government budget via state-­level
projects and programmes; the share of recipients of funding coming from
contracts is also high (82.2 per cent). Some R&D organizations and universi-
ties receive funding from international cooperation or cooperation with local
authorities of provinces, cities or others. Interestingly, only 39.3 per cent
of Organizations got funding via foundation mechanisms, which require a
higher quality project application in an open competitive environment.
As for Firms only, all got self-­funded sources, while only 59.1 per cent
got funding from government programmes or projects.
More specifically on channels for funding allocation, the way budgets
are allocated affects the relevance and performance of research activities.
Although 77 per cent of the respondents hold the view that research-
ers should propose the research agenda and that it should be up to the
Organizations to handle the selection process and competitive bidding
for research funding. Such a procedure would provide input for research
agenda setting based on what researchers can do, and be decided by organ-
izations but not by researchers themselves. This would make the selection
process more objective.
Concerning the relatively new way of allocating state budget via foun-
dation mechanisms (in contrast to direct allocation from the ministerial
budget), the majority (57 per cent) considered that state budget allocation
should be channelled through foundations. This selection process would
follow the whole set of monitoring and management procedures in a fair
manner (peer review and so on).
More specifically for enterprises, in order to increase the relevance of
research results to the needs of firms, 95 per cent of Firm respondents con-
sidered that funds should be allotted to them first, then they would select
researchers to conduct research to address their actual needs. It would
seem that there is some kind of distrust by firms of the R&D capability
of research institutes and universities. At the same time, firms still like to
get funds directly from a special programme under the Ministry of Science
and Technology (MOST) (86.3 per cent), rather than via other channels

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 The national innovation system in Vietnam ­175

Table 5.12 Preferred forms of funding allocation for firms

Forms of Via the National Via channels of Direct grant from

allocation for Innovation relevant ministries MOST
Firms Foundation or localities
Total 22 22 22
Number 1 8 19
% 4.5 36.3 86.3

Source: Survey by author.

of ministries or provinces (36.3 per cent). Very few Firms (4.5 per cent)
wanted to apply for funding from the National Technology Innovation
Foundation (Table 5.12).
In financial terms, there are difficulties faced by Organizations and
Firms in conducting S&T projects. First, concerning the adequacy of the
funding system for research, almost all respondents, regardless if they
come from R&D Organizations and universities or Firms, agreed that it
is not adequate – 99 per cent of R&D and university Organizations and
86 per cent of Firms fall under this category. Some respondents elaborated
more specifically on this inadequacy. They commonly agreed that funding
is not enough for the whole chain of R&D to experimental activities as
well as innovation. The problems in overcoming the difficult gap between
research results and their commercialization that needs a financial and
institutional bridge to cross (‘the Valley of Death’) tend to be very real.
Universities particularly complained that their research funding (either
coming from MOET or MOST) was negligible. Some petty project funding
from MOET has only symbolic meaning (about USD 200 per project).
On the measures to align research and development goals, nearly half of
the respondents (42.11 per cent) said that there were not enough adequate
measures to ensure alignment of research objectives and national develop-
ment goals. However, the reasons for this were quite disparate. In more
close-­up discussions, some said that a number of good measures has been
introduced by MOST in organizing agenda setting meetings, or promot-
ing bottom-­up approaches in proposing research needs. At the same time,
some said they were not aware of these efforts, while yet others complained
that the measures taken were not adequate.
Concerning the links between policy makers and research communities
such as opportunities for researchers to present results to policy makers,
they were characterized as few, regardless of whether the researchers work
at R&D institutes, universities or firms (80.8 per cent did not have any such

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 176 Innovation systems for development

Table 5.13 Financial difficulties in conducting R&D

Difficulties Cannot spend Lack of Difficult to Financial organizations

exactly under receipts as spend in time (Treasury) do not
items of the pre-­ requested as planned understand the specific
planned budget nature of R&D activities
Total 57 57 57 57
Number 43 35 32 38
% 75.4 61.4 56.14 66.66

Source: Survey by the author.

possibilities at all and only in rare cases (13.5 per cent) did such oppor-
tunities exist). Some researchers (5.8 per cent) that have good personal
or close contacts with policy makers (sometimes they are policy makers
themselves) feel they can always interact with policy makers from time to
time. However, no such systematic structure exists for this alignment on a
regular basis.
On more specific financial difficulties faced by organizations in con-
ducting scientific research and technology development (Table 5.13), the
majority of respondents (75.4 per cent) said that they cannot spend project
budget exactly in accordance with items of the pre-­planned budget due
to the fixed rigidity of the pre-­set budget process. Other difficulties were:
financial organizations (Treasury) do not understand the specific nature of
R&D activities (66.66 per cent); lack of spending receipts as requested by
complicated accounting procedures (61.4 per cent); difficulty in spending
the project budget in time as planned (56.14 per cent). All these show a gap
between the flexible and unpredictable nature of R&D activities and the
static and rigid requirement of existing financial procedures.
To address the above financial difficulties, the respondents provided
some suggestions. The highest preference for Organizations (56.14 per cent)
was to have a lump sum contract for R&D activities, or at least the right
to adjust the pre-­approved budget flexibly (47.36 per cent), while 54.38 per
cent preferred project directors to have the right to readjust the expenditure
structure compared to the previously approved total budget line.
Concerning the options to adjust the expenditure structure, the major-
ity among the respondents (35.08 per cent) considered that an appropriate
percentage of change compared to the pre-­approved budget should be
30 per cent, 21.05 per cent say 20 per cent and only 7.01 per cent would
accept less than 10 per cent change.
The survey also provided additional insights related to some specific
issues. To understand the significance of research for the individual

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 The national innovation system in Vietnam ­177

Table 5.14 Time spent on doing research

Total Less than 50% 50–70% 70–90% Above 90% Not applicable
57 30 19 3 0 5
%: 100 52.63 33.33 5.26 0 8.78

Source: Survey by the author.

Table 5.15 Freedom to set the research agenda

Total Always free Most of the time free Rarely free Not free at all
57 3 23 31 0
%: 100 5.27 40.35 54.38 0

Source: Survey by the author.

researcher, one of the indicators was the time that researchers could spend
on their research activities (Table 5.14).
Most Organizations or 52.63 per cent (universities are more occupied
with a heavy teaching workload) spend less than half of their time on
research, while some R&D institutes are more active. Only very few (5.26
per cent) could spend between 70–90 per cent of their time on research.
This shows that Organizations have other things to do than research,
despite the fact that their mandate is research.
To make sure that research meets the needs of socio-­economic develop-
ment, it is important that the research agenda setting needs to be taken
into serious consideration. The freedom in formulating a research agenda
is influenced by many factors, and not always guaranteed. According to
responses provided (Table 5.15), in most of the cases researchers are more
or less free (40.35 per cent) or have some limited freedom (54.38 per cent)
in selecting what kind of research they do. There have always been some
factors influencing their research agenda. Only in a few cases (5.27 per
cent) is there total freedom and none of the researchers felt there was no
freedom at all.
Respondents also provided answers to what factors influenced them the
most while formulating research projects (Table 5.16). Because respond-
ents can have several priorities at the same time to consider, the table
shows only the tendencies of impact by these priority factors. Most
influential factors are priorities of funding agencies (31.6 per cent) and
faculty research priorities (26.3 per cent). National development goals are

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 178 Innovation systems for development

Table 5.16 Factors influencing research agenda setting

Factors National Faculty/department Priorities of Academic

development goals research priorities funding agencies impact
Number 12 15 18 12
% 21.1 26.3 31.6 21.1

Source: Survey by the author.

sometimes more general and less specific, and therefore it is more difficult
for researchers to count them as influential or not (21.1 per cent). These
data reveal the fact that research project agendas are not always influenced
and linked to socio-­economic development issues, but shaped more by the
very specificity of related organizations, departments, faculties and general
academic consideration, which, in turn, depends on the specific orienta-
tion of individual researchers.
For research to better serve social and economic development, dissemi-
nation of research results is important. The majority of respondents (55
out of 57 or 97 per cent) believed that their research produced some results
and had an impact either on the local or national level. This is in resonance
with patterns where respondents considered their research to some extent
relevant to the needs of society. However, one should note that it is diffi-
cult for researchers themselves (either in R&D organizations or firms) to
confirm that their projects or products are not relevant (having no impact
at all). To them, one way or another, they should have some impact, if not
at the national than at the local level.
Concerning the specific impact, a majority of respondents (38 out of 55
responding to the question, or 69.1 per cent) categorized their results as
having social impact. It is not easy to calculate economic impact immedi-
ately on completion of the research. In many cases, it is not possible at all
to estimate economic gains of the research projects. This was true even for
projects that produced very tangible results for industry and agriculture
production – 31 per cent responded that they felt a project had resulted in
an economic impact and the remaining 9 per cent saw an impact on policy.
The links between research projects and policy makers are under­
developed. Only part of the surveyed projects (20 per cent) were known
to policy makers at the time of execution. Moreover, these projects may
be known to officials at lower levels of local government agencies, but not
at the central government level. It was quite difficult for projects in the
natural and engineering sciences to be known to policy makers who tend
to be more familiar with social science projects.

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 The national innovation system in Vietnam ­179

One solution to bring research closer to policy making is to engage more

policy makers. But only in a handful of projects (2 out of 57 responses)
was there a policy maker in the research team. These persons also come
from local policy-­making circles. And again, these tend to be social science
research projects related to some policy-­making process itself (economics,
social studies and so on at the local level).
In answering the question of what the problems are in transmitting
research results to policy makers, most responses highlight lack of chan-
nels for communication (87.72 per cent) and lack of tradition in coopera-
tion (66.67 per cent) (respondents called this a lack of tradition or habit
of translating results to policy makers). When the research is finished, the
main recipients of the results are the ones who manage, monitor or fund
the project and to whom researchers feel obligated to report. There was no
tradition to transfer these results beyond these managers to policy making.
Responses to the question on how to improve the interaction between
the research community and the policy-­making community include:

●● increase communication opportunities between research groups and

potential end users in policy-­making circles
●● create specific channels for translating research results like forums,
workshops, roundtables and so on
●● train researchers on how to turn their research results into policy
products like how to write a policy brief, policy reports, organize
policy dialogues
●● set up some commonly used policy terminology or mutual under-
standing between research groups and policy makers
●● formulate requirements for researchers to turn research results into
policy advice.

5.7 CONCLUSIONS

As demonstrated from the survey results and case material, there are some
discernable patterns in the efforts to make research closer to the needs of
development. Many R&D organizations and universities in Vietnam were
created to serve the needs of development and some were even specifically
set up for the purposes of agriculture, healthcare or other needs. As such,
their research mandate or training specialization is close to the develop-
ment agenda. The cases of selected organizations also reveals that they
were able to deliver what they were expected to do in terms of producing
research results and training on the needs of development in agriculture
and healthcare. In some instances, the achievements were quite remarkable

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 180 Innovation systems for development

like the self-­sufficiency of vaccines for the immunization programme and

new species and crops in rice and maize production.
However, there are a number of problems to be noted. The quality of
research in many research institutes and universities is still poor. There
is a gap between what can be done under laboratory condition and the
application of new research results on a massive scale of production. In
some cases, research results were deemed not credible. Firms as end users
of research results tend to look down on this performance.
How to create a relevant R&D agenda is the next problem. Research
communities are not always free to set up an agenda and many view R&D
relevance as not very high. Some reasons were given in the survey as to lack
of relevance of research results. Scientists tend to do what they can do best,
sometime not very close to the needs of end users in society. Project imple-
mentation sometimes has a long time lag to when the projects finishes, and
the results are no longer relevant in a fast-­changing environment. Due to
the fact that development goals are sometimes too general, R&D agendas
are set up not entirely to meet development goals but by the specificity of
related organizations, especially those who fund the research. This partly
prohibits the freedom of researchers in agenda setting research.
There are several issues concerning the policy framework that contribute
to this situation. First, financing for R&D is seen as inadequate in many
cases as well as from the perspective of organizations participating in the
survey. One of the problems that emerged is lack of suitable funding to
overcome the gap (Valley of Death) from R&D to market commercializa-
tion. Further, financial management mechanisms such as paperwork and
other complicated accounting procedures hinder the process of conduct-
ing R&D. The Treasury, as the organization dealing with financial man-
agement of R&D activities, is named as one of the bottlenecks. Overall,
the view from the cases and the survey also points to a need for specificity
of policy and regulations. To address this problem, many respondents sug-
gested new allocation channels via research foundations and emphasized
the role of the foundation mechanism.
Among issues for closing the loop between R&D and development
goals, alignment of the research agenda with development goals is crucial.
So far, the view from relevant organizations is that there are not enough
measures to close this gap, despite some recent new initiatives such as dia-
logue, conference and forum. There are still few policy links between the
research community and policy makers. There are little contacts between
them, and even if occasionally some are organized, like policy dialogues,
there is still no systematic structure on regular basis in place. Moreover,
there is little direct engagement of policy makers in the research process.
The last problem is the lack of communication channels and cooperation

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 The national innovation system in Vietnam ­181

tradition between researchers and policy-­ making circles. There is still

hesitance about sharing research results among research communities, and
between them and policy-­making organizations. The culture of involve-
ment by policy making in R&D processes does not seems a prevalent mode
of interaction.
This chapter has provided background to the science, technology and
innovation system in Vietnam. It has highlighted that the system has
contributed to many achievements of socio-­economic development of the
country in the last few decades. Many activities have been tried to make
S&T better serve the needs of development. At the outset, the policy
and strategy of Vietnam was to create specific research organizations for
development, especially in agriculture and healthcare, which are among
the MDGs’ priorities. These organizations have indeed done quite a good
job, with some important deliveries of research results, leading to concrete
results in agricultural production, healthcare and social causes overall.
This, to a certain extent, contributed to the achievement of many MDGs
in Vietnam by 2010, such as poverty reduction. S&T activities have been
undertaken to deal with the needs of the poor and disadvantaged people,
in particular, those in mountainous and rural areas. There have also been
attempts to improve the linkage between R&D and development by organ-
izing a number of policy consultancies, or dialogues to improve the setting
of research agendas. But many problems still exist, most of them policy
related such as lack of adequate financial resources and management
mechanisms, or lack of communication and dissemination channels for
research and policy, to name a few.
In this context, there is a need to adjust the policy framework to make
R&D closer to development. A numbers of policy measures could be
explored to improve this situation such as setting up specific agendas for
R&D that answer the concrete needs of development, rather than general
themes. Increased communication and dissemination channels between
research groups and potential end users in policy-­making circles could help
to make research closer to reality. Better facilitation of the commerciali-
zation process could also address the difficulties in conducting the third
mission of research organizations and universities while turning research
results into end products or services for the benefit of society.

NOTES

1. Exchange rate for 2013 is around 1 USD = 20,781.6 VND.

2. An industrial design is a product’s shape that is formed by lines, three-­dimensional form
and colours or a combination thereof, and which is a worldwide novelty and used as the

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 182 Innovation systems for development

pattern of industrial or handicraft products (Article 784 the Civil Code). The protection
title is valid for five years.
3. One professor has to teach about 30 students, while in other countries this ratio is about
one professor for 15 students.
4. According to the Central Institute for Economy Management (CIEM), enterprises are
only interested in tax policy (36 per cent), credit support policy (39 per cent) and pay
much less attention to technology transfer policy (12 per cent).

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