SMEs urged to invest more in technological innovation

There are about 535,000 SMEs in Vietnam at present, accounting for 97 percent of the total business number. They contribute some 45% of the national GDP, 31% of total State budget revenue, and 35% of the business circle’s total investment capital.

Pham Ngoc Minh, an official at the Ministry of Science and Technology, said the rapid development of science and technology is shortening the “life cycle” of technology. Therefore, it is an urgent need for enterprises to innovate technology in order to meet production and market demand and ensure their competitiveness.

HCM City has continually taken the lead in Vietnam in terms of export value and GDP. It is also known as a sci-tech hub in the country.

However, 51 percent of the 700 surveyed companies based in 12 industrial parks and export processing zones in HCM City still use outdated technologies, according to the municipal Department of Science and Technology.

Tran Quang Thang from the Association of SMEs in the South said technological and technical obsolescence has resulted products of low value and inconsistent quality products while production costs are 10-30 percent higher than that of imports.

Total social investment in science and technology remains low, and up to two-thirds of that sum is from the State budget. In developed countries, the non-State sector’s investment in science and technology is usually higher than the State budget’s.

Vietnamese companies’ demand for sci-tech innovation is also not strong enough, Thang said, adding that it is necessary to encourage private firms to establish or cooperate with the State to set up venture capital funds for technology research and development.

In the Republic of Korea (RoK), big businesses and groups are ready to invest in science-technology, and they make up 70% of the total funding for science-technology each year. Instead of supporting big companies, the RoK is now prioritising assistance for SMEs in the application of new technologies.

Park Jun Ho, Director of the HCM City office of the Korea Institute of Industrial Technology (Kitech), said Kitech has many projects supporting businesses, especially SMEs, to develop technology.

Many research institutes of Vietnam are working with Kitech, and through this cooperation, Kitech can help local enterprises innovate and transfer technology while improving their competitiveness, he noted.