Accordingly, the HCMC Department of Science and Technology has developed the “Pilot Project on the Mechanism for Using Businesses’ Science-technology (S&T) Development Funds in HCMC for the 2025-2028 Period”, focusing on researching the current situation of fund allocation, use, and management in HCMC and proposing a mechanism for businesses to use their funds in a way that is suitable for the city’s specific characteristics.
HCMC has always been considered as the nation's most dynamic hub for S&T advancement and innovation. Its contemporary growth paradigms underscore the catalytic role of S&T and innovation – predominantly fuelled by private sector investment. The city nonetheless confronts significant obstacles to realising its full potential, the most troublesome of which is the necessity to dismantle regulatory constraints hampering the effective deployment of corporate S&T Development Funds.
National statistics reveal aggregate allocations to these funds exceeding VND23 trillion (US$904.2 million) across 1,381 enterprises, with disbursements surpassing VND14 trillion ($550 million). Relative to the total number of existing businesses nationwide, the proportion allocating S&T funds remains comparatively modest. Within HCMC specifically, a mere 127 businesses have formally reported establishing such funds, comprising 70 state-owned and 45 private entities.
Businesses frequently encounter difficulties proceeding the stipulated procedures for executing S&T projects (whether through selection or direct assignment, as governed by the Law on S&T and Decree No.08/2014/ND-CP), often stopping their application and necessitating bidding for project implementation.
Furthermore, the existing legal framework lacks robust incentives or explicit provisions to galvanize private sector investment in S&T and innovation. The guidance provided by Circular No. 05/2002/TT-BKH-CN, applicable to all enterprise types, contains certain provisions ill-suited or insufficiently nuanced for state-owned enterprises, and notably, precludes funding for external entities.
Moreover, capital investment in upgrading machinery and equipment for operational purposes necessitates a meticulous, multi-stage process from idea conceptualization and technology selection to investment deployment and operational integration. This process often lasts several years, contingent on a multitude of variables.
To address these systemic challenges, the HCMC Department of Science and Technology has proposed a pilot mechanism designed to unlock the potential of S&T Development Funds.
Regarding the execution of S&T projects, the proposal advocates that state-owned enterprises, corporations, and business groups operating within the city be authorized to use selection, direct assignment, and to grant sponsorship approval without bidding. Full reimbursement for S&T project expenditures would be guaranteed in instances where projects are prematurely terminated or fail to meet pre-defined objectives due to extenuating circumstances.
Furthermore, businesses would be granted autonomy in selecting S&T projects directly related to their core business activities, without sectoral constraints.
Concerning expenditure on technological innovation and digital transformation, the pilot scheme proposes implementing a “sandbox” regulatory environment, enabling businesses utilising the fund for novel projects to procure new machinery and equipment for operational deployment without the prerequisite of replacing existing assets with demonstrably superior technology.
This proposal received significant support from S&T businesses at the formal discussion “Proposing the Pilot of Utilizing S&T Development Funds of Businesses in HCMC for the 2025-2028 Period”, held recently by the HCMC Department of Science and Technology.
Regarding investment for innovation startups, this department recommended allowing state-owned enterprises to invest in technology R&D, venture capital, and innovation startups to institutionalize Politburo Resolution No. 52-NQ/TW of 2019. The proposal also allows the fund to support, but not exceed 30 percent of the total cost, technology innovation projects.
Deputy Head Phan Quoc Tuan of the Division of Technology and Technology Market Management (under the HCMC Science and Technology Department), the proposed pilot mechanism is based on the principle of incentivizing proactive corporate investment in initiatives supporting innovative start-ups, promoting internal S&T advancement, implementing digital transformation directly impacting operational efficacy, and fostering collaborative partnerships with S&T organisations, S&T enterprises, and innovative start-ups.
Director Nguyen Viet Dung of the municipal Science and Technology Department expressed his anticipation that these measures will empower businesses to deploy their funds more proactively and effectively, thereby accelerating progress towards the strategic objectives of ensuring that by 2028
- at least 60 percent of the aggregate fund value will have been allocated to S&T projects, R&D initiatives, technological innovation, and new product development;
- 10 innovative start-up projects in the S&T domain will have been supported through fund allocation;
- a 30-percent increase in fund utilization by pilot businesses will have been achieved for the implementation of digital transformation projects aimed at enhancing corporate production, operational, and managerial capabilities.
