Viet Nam should offer tax incentives for R&D

Wednesday, Oct 22, 2014 18:34

Lee Ju-Ho, former Minister of Education, Science and Technology during the 2010-13 period, shared South Korea's experience in boosting the science and technology at a confrence in HCM City on October 17. — VNS Photo

During the past three decades, South Korea has made strong and efficient policies on financing science and technology, making it one of the leading countries in the sector.

On a recent visit to Viet Nam, Lee Ju-Ho, South Korea's Minister of Education, Science and Technology during the 2010-13 period, shared the Korean experience on financing mechanisms and policies that have implications for Viet Nam at a forum on October 17 in HCM City. Biz Hub reporter Lan Dung spoke to Lee about what Viet Nam can learn from South Korea to boost science and technology in the country.

South Korea has experienced rapid development in the past 30 years thanks to innovations in science and technology. What were the policies and strategies of the government to boost science and technology in the country?

In 1966, the government established the Korea Institute of Science and Technology (KIST), a public research centre. It issued a law for the development of science and technology and issued policies to boost competitiveness. The government picked priority sectors such as information technology, car making and steel making.

Probably after the mid-1980s, private enterprises recognised that cheap products from China and other developing countries were likely to catch up with their own cheap products. Large companies such as Daewoo and Samsung sensed the crisis. They tried to globalise and focused more on research and development (R&D) activities. The government supported the companies to establish research centres through tax subsidies.

In the 1990s, the government started a so-called G-7 project [G7 comprises the seven wealthiest and developed countries] and set up a plan to join the group in the year 2000.

The government not only focused on developing science and technology, but also put it in the context of economic development.

Domestic firms could not survive without competitiveness, so we opened up imports to let local enterprises compete with international companies.

Workers at the Samsung complex in the northern province of Bac Ninh. Samsung, the South Korean corporation, sets a plan to globalise in a long-term period and invests much on research and development activities. — Photo

Viet Nam has experienced the same period of promotion of science and technology as South Korea did. Which stage do you think Viet Nam is in now?

It is very hard to tell because we do not know if Viet Nam is following South Korea step by step. If I have to give an answer, then Viet Nam may be in the period between 1980 and 1990.

In the 1980s, Korean companies started to globalise and invest more in R&D. In 1990, the Korean government tried to assist large companies through G7 projects, and tried to make its universities be more like research bases.

South Korea has had clear objectives, and tried to open up industries and research activities. Viet Nam should have a clear direction too.

Regarding R&D, there are opportunities for Viet Nam to leave other countries behind. R&D is a kind of innovation. Viet Nam can create new industries and new opportunities. Vietnamese companies, through R&D, can become world leaders. I think Viet Nam has already experienced a high growth rate, and is ready to take off for the next stage of development.

What is the current situation of investment in science and technology in South Korea?

South Korea now ranks fifth in the list of countries with fast R&D development, leaving the United Kingdom and France behind. It is placed behind the United States, Japan, China and Germany. The private sector spends much more on research at 75 per cent, compared with the government at 25 per cent.

When we built KIST, there was no private R&D activity. It has expanded gradually. As I said, you should look at why Korean companies happily invest in R&D. They are open to global competition and try to move forward from low technology to high-end technology.

Other countries are following us, especially the ones with cheap labour. So our advantage comes from R&D only. The market comes first. The government's support comes later.

In your opinion, what should Viet Nam do to boost science and technology?

I think that Viet Nam should make universities and research centres more open so that they are able to invite experts working in other countries. Otherwise, you will not have world-class research centres, and research universities.

Private businesses should be open to competing in the global market. It is bad if they cannot survive the competition; but without challenges, companies will never be able to change.

Why don't Vietnamese companies do research? It is not because the government does not support them, but they themselves are not open to global competition. If they really want to compete with others, they have to invest more money in research. When they make efforts, they can get support from the government.

South Korea gives tax subsidies to those investing more in R&D activities. Viet Nam should boost R&D by issuing policies to offer subsidies for R&D.

Viet Nam is setting up the Vietnam-Korea Institute of Science and Technology (V-KIST) with support from Korea. What is the most suitable operation mechanism for V-KIST? What are some of the lessons that we can learn from research centres in Korea?

I think V-KIST is a good chance for opening up the research system. Through V-KIST, you can invite the best scholars, not just from Korea, but from other countries as well. You should make them collaborate with Vietnamese scientists and technology companies. VKIST should be some kind of a hub of R&D activities, not just domestically but globally. The institute should collaborate more actively with Vietnamese industries.

KIST is already well-connected with research centres in the developed countries. KAIST (Korea Advanced Institute of Science and Technology), our most well-known research centre, has welcomed American experts. Nobel physics laureate Robert Betts Laughlin worked as the president of KAIST in the 2004-06 period.

Viet Nam should let the president of V-KIST do what he wants to do. If the government tries to control the research centres, they cannot develop. — VNS

Comments (0)