The draft Urban Development Law establishes mechanisms to connect research, technology, capital, enterprises, and markets, enabling Ho Chi Minh City (HCMC) to form a more synchronized innovation ecosystem. This initiative addresses major municipal challenges and accelerates the transition of the city's growth model.
HCMC possesses nearly all the components required for a vibrant innovation ecosystem, ranging from universities, research institutes, and high-tech zones to enterprises, startup communities, banks, investment funds, and high-quality human resources.
However, these components remain fragmented. Many research results struggle to reach businesses, startup projects lack capital and testing environments, and links between domestic enterprises and the foreign direct investment (FDI) sector remain limited.
The draft law seeks to overcome these bottlenecks through policies supporting research, incubation, testing, capital mobilization, commercialization, and market development. Through these measures, it aims to propel HCMC toward a growth model driven more heavily by science, technology, innovation, and productivity.
Complete chain from research to commercialization
The draft law establishes a direct foundation for the innovation ecosystem by granting HCMC the proactive authority to build mechanisms supporting scientific research, technology development and transfer, intellectual property creation, exploitation and protection, entrepreneurship, incubation, product commercialization, and research outcomes.
A notable new point allows the People's Council of the city to regulate the participation of public higher education institutions, public vocational education institutions, and other public science and technology organizations under municipal management in establishing, managing, operating, or contributing capital to enterprises to commercialize research results.
This mechanism can shorten the distance between laboratories and production or business operations, generating additional momentum to bring research outcomes to market.
During the incubation stage, innovative startup projects can receive support for hiring experts, utilizing technical facilities, incubation units, innovation centers, and co-working spaces, while accessing funds, grants, and public-private partnerships. Subsequently, another legal provision paves the way for new technologies, products, services, and business models to undergo controlled testing.
The city will regulate selection criteria and conditions, guidance mechanisms, participant protection, testing support, and permission to use state agency databases, infrastructure, and public assets. Highly effective projects may also receive priority procurement, investment from the budget, and market development support.
Another provision expands space for high-tech activities. Combined with mechanisms for investment, procurement, asset exploitation, equipment, and shared physical facilities outlined in the draft, this can help enterprises reduce initial investment costs.
The innovation chain is further reinforced by mechanisms attracting strategic investors, research and development centers, experts, scientists, and technology enterprises, alongside incentives regarding premises, taxes, and bidding in several draft articles.
Regarding capital mobilization, one article allows the establishment of connection, financing, and value chain support mechanisms between the International Financial Center in Vietnam and the science, technology and innovation urban area, free trade zone, logistics zone, and other functional areas, potentially diversifying capital sources. Another article permits the city to assign tasks, place orders, or tender training and professional development services to develop high-quality human resources.
Overall, these mechanisms initially form a relatively complete chain running from research, incubation, and testing to capital mobilization, commercialization, and market expansion. The greatest value lies in the capacity to connect universities, research institutes, enterprises, the FDI sector, investment funds, and the market.
When knowledge meets demand, projects secure access to capital, technologies find testing environments, and products discover customers, the innovation ecosystem can truly function.
Selection of major challenges to guide the ecosystem
While the new mechanism provides the framework, transforming it into practical innovation capability requires HCMC to select several major challenges to guide the ecosystem, such as smart traffic, flood prevention, logistics, healthcare, clean energy, financial technology, smart manufacturing, and data-driven urban governance.
Each challenge will clearly define demands, technical requirements, data sources, testing budgets, and scalability. The city should establish a capable single point of contact to coordinate and monitor projects continuously from research, incubation, and testing to commercialization.
Simultaneously, a joint data platform should be built regarding technological needs, research results, experts, laboratories, shared equipment, investment funds, and support programs.
Capital sources should be structured by stage. The state budget will focus on supporting research, incubation, and testing during high-risk phases, while venture capital funds enter after projects prove their technology and market demand. Private capital and bank loans will be mobilized more robustly as enterprises expand.
The State acts as a guide, sharing initial risks without replacing the market. Project selection must be competitive, public, evaluated by independent experts, and governed by clear assessment criteria.
Innovation always carries a probability of failure. Therefore, failures caused by technological or market risks must be distinguished from those stemming from poor selection, misuse of funds, or weak management. Accepting risk does not mean lowering requirements for transparency and accountability.
Regarding controlled testing, the draft grants broad authority to the city. During implementation, responsibilities for damage handling and protection mechanisms in sensitive fields such as personal data, finance, healthcare, and urban safety should be explicitly clarified. Utilizing public data, infrastructure, and assets for testing must be accompanied by security requirements, impact assessments, and participant protection.
The proposed mechanism prioritizing procurement and budgetary investment for effective trial projects should be utilized substantively to create an initial market for new products. Bidding conditions should be appropriately tailored to give startups and small businesses opportunities to participate.
For large enterprises, FDI companies, and strategic investors, attraction policies must encourage the establishment of research and development centers, workforce training, cooperation with universities and institutes, the development of domestic suppliers, and technology transfer compliant with the law, thereby creating spillover effects for domestic enterprises.
Policy effectiveness must be measured by outputs: the number of technologies transferred, products commercialized, contracts signed between universities, institutes, and enterprises, private capital mobilized, domestic enterprises participating in supply chains, and productivity growth. Ineffective funds, centers, or programs must be adjusted, merged, or terminated.
HCMC already possesses foundations in markets, enterprises, knowledge, finance, and human resources. The draft Urban Development Law introduces additional mechanisms to link these resources into a more unified ecosystem.
When universities and research institutes closely align with market demand, enterprises access technology and capital, startup projects secure testing environments, FDI companies forge deeper ties with domestic firms, and new products find customers, genuine synergistic strength will emerge.
This serves as the foundation for HCMC to shift more rapidly from growth heavily reliant on capital, land, and labor to growth driven by knowledge, technology, innovation, and productivity.
