What potential do business start-ups have in Viet Nam?

Minister Nguyen Quan

Viet Nam has huge potential for start-up development as we have a large number of young people who have a passion for sciences. I believe that Viet Nam has young people whose education and knowledge will help start-ups succeed. This is a potential that we should further exploit.

However, the biggest barrier is awareness. A majority of the people at Government agencies do not have knowledge of start-up ecosystem. There are few managers reading about Israel as a famous start-up nation and venture capital funds. It is the reason that policymakers do not have special mechanisms and policies for venture capital funds, thus not providing the momentum for start-up groups to access investors. The country also has a shortage of investment resources.

Normally, investors see the Government's attitude towards a sector and decide whether to invest in it. If the Government does not invest in venture capital funds, how will private investors dare to sink money into start-ups?

Venture capital funds are a new concept and people believe this investment channel is highly risky. Do you agree?

It is true that venture capital funds are strange to Vietnamese. We are not used to venture capital. People at high levels in management often think that investment in scientific research would be successful. People do not think there are risks in scientific research.

However, we should understand that science also has risks and failures. There are many people with misconceptions about venture capital.

The important thing is people's awareness. The Government should be a pioneer in this field to prove that it has paid attention and allocated resources to venture capital.

The right concept of venture capital is that we accept failure of some projects to achieve success in one. The Government will still continue to invest. We would establish a system to control and manage to avoid losses to the Government coffers.

Venture capital has only been seen in science and technology. We have focused on building a start-up eco-system including venture capital funds.

In what sectors have start-ups been encouraged and which areas have potential?

Young Vietnamese are keen on information and communication and electronics technologies and having good skills in these fields. We can also develop services and tourism. We expect the highest number of start-ups in these fields. Other sectors will also develop if we have success in the above-mentioned fields.

We have a pilot Silicon Valley-like project known as Viet Nam Silicon Valley (VSV), which is incubating 10 tech start-ups as the first step in the eco-system. We have carefully studied the start-up experience of leading countries in the field such as Israel and South Korea. In the last two years we have had some early success. Two companies, Lozi and TechElite, received funding from VSV in 2014. The companies' products were ideas in an early stage. After getting access to investors, they become bigger firms. These businesses are now valued at dozens of times more than in the initial period. Some other start-ups funded by VSV have come to the attention of potential investors. This is a positive sign for the start-up community.

What can Government do to stimulate the venture capital funds?

There is no other law on the issue except the Law on High Technology promulgated in 2008. So legislation is needed to regulate the start-up eco-system and venture capital funds. We would strive to co-operate with ministries and agencies to have a chapter on venture capital in the revised law to support small- and medium-sized enterprises or in the amended Law on High Technology.

Specific regulations and decrees on conditions to establish a venture capital fund, its operation mechanism and profits are also needed. These could create an adequate legal environment to support start-ups. — VNS