8 Regulations and Policies Supporting Startups in Vietnam

Posted by Written by Mark Barnes Reading Time: 4 minutes

Vietnam has been actively pursuing a strong startup sector for over a decade. In doing so it has enacted several policies and initiatives to stimulate growth and entrepreneurship. Here are eight of those policies and initiatives.

Recognizing the country’s need to diversify its economy outside of the manufacturing sector, Vietnam has for some years been striving to drive investment in high-tech industries. This has manifested as a number of key policies and initiatives supporting startups and appears to be working.

During the COVID-19 pandemic, when industries like tourism and hospitality were suffering under the weight of prolonged shutdowns, Vietnam’s startups sector was thriving. In 2021, Vietnam received over US$1.4 billion in funding for its startups, four times what it received in 2020.

This has come from both domestic investors and international firms.

Investment in Vietnamese startups by country, number of projects

  2014 2015 2016 2017 2018 2019 2020 2021
Vietnam 3 7 6 10 10 20 21 28
Singapore   5 6 4 6 19 19 34
Korea   1 2 6 7 21 20 17
North America   4 7 1 7 18 19 28
Japan 9 4 2 5 11 19 7 11
Other 5 8 8 9 14 32 22 55
Total 17 29 31 35 55 129 108 173

Source: Vietnam Innovation & Tech Investment Report 2021

It has also gone into a range of sectors including real estate and gaming. The big draw cards, however, have been payments and retail. In 2021, US$450 million was invested in digital payments startups and US$469 million was invested in retail startups.

Chief among the recipients of these cash inflows have been Vietnamese startups like Sky Mavis (gaming) and VNPay (fintech). Sky Mavis collected US$152 million in Series B funding in 2021 and VNPay received US$300 million in 2020.

See also: Investing in Vietnamese Startups: Quick Guide 2023

So, what are the key policies and initiatives driving investment into Vietnam’s startup sector?

1. Assistance Policies for the National Innovative Startup Ecosystem

Decision No: 844/QD-TTg was issued May 18, 2016. It was subsequently amended in February, 2021. This Decision outlines policies for the development of Vietnam’s startup sector including:

  • Setting up a national startup ecosystem portal; and
  • Providing US$42 million for 800 startup projects and 200 startups, including 50 enterprises financed with venture capital.

It also outlines targets for the sector to be met by 2025, including:

  • A total of 2,000 startup projects; and
  • 100 startups under the scheme to be financed by venture capital to the tune of an estimated US$85 million.

Supporting legislation

Details for the implementation of Decision No. 844/QD-TTg are contained in:

2. Establishment of a National Innovation Center

Decision No. 1269/QD-TTg was issued October 2, 2019, and forms the framework for the establishment of the National Innovation Center (NIC). The NIC provides training and support for young enterprises and partners with international technology companies like Amazon and Google.

Supporting legislation

The NIC is further supported by Decree No. 94/2020/ND-CP, which was issued August 24, 2020. Its focus is to provide support mechanisms for the NIC. These include:

  • The NIC can lease land for up to 50 years in high-tech zones and will be exempted from paying land rent for the term of the lease;
  • Its premises at Hoa Lac Hi-tech Park will receive: a 10 percent corporate income tax rate for 30 years from the first year in which it generates revenue, a tax exemption for four years and a 50 percent tax discount for the following nine years; and
  • An exemption from duties on raw materials, supplies and components under certain circumstances.

See also: Vietnam’s Tech Startups: Human Resource Challenges

3. Assistance Policies for Female Entrepreneurship

Decision 939/QD-TTg was issued June 30, 2017 and provides for a number of initiatives to encourage women to engage in entrepreneurship This Decision sets out several objectives, including:

  • Supporting 20,000 women to start new businesses;
  • Coordinate and support the establishment of 1,200 women-led cooperatives; and
  • Establish 100,000 new women-owned enterprises.

4. Assistance Policies for Student Entrepreneurship

Decision 1665/QD-TTg, issued October 30, 2017, approves policies to encourage students to engage in entrepreneurship. This includes, but is not limited to:

  • Communications support through mobilizing the media to provide coverage of student entrepreneurs;
  • Startup training support;
  • Establishing ‘startup clubs’ at universities; and
  • Establishing a fund to finance student-led startups.

5. The Strategy for the Development of Science, Technology, and Innovation

Decision 569/QD-TTg issued May 11, 2022, outlines a roadmap for driving innovation in science and technology. Specific goals outlined in the Decision include:

By 2025:

  • 1.2 percent to 1.5 percent of GDP to be invested in science and technology; and
  • Total national expenditure on scientific research and technology to reach 0.8 percent to 1 percent of GDP.

By 2030:

  • 1.5 percent to 2 percent of GDP to be invested in science and technology; and
  • Total national expenditure on scientific research and technology to reach 1 percent to 1.2 percent of GDP.

6. National Innovation Startup Portal

Decision 3084/QD-BKHCN issued by the Ministry of Science and Technology in October 2019 established the framework for the National Innovation Startup Portal (NISP).

The NISP was established as a digital repository of information relating to startups in Vietnam. It includes information on policies and laws, information technology, intellectual property; human resources, investment funds, investors, business promotion incubators, news, events, and services and support activities related to startups.

7. Regulations on Investment and Financial Mechanisms for Scientific and Technological activities

Decree 95/2014/ND-CP, issued in October 2014, details regulations pertaining to funding of research and development in the fields of science and technology. This includes:

  • Tax incentives for establishing science and technology development funds;
  • Investment credit incentives from the Vietnam Development Bank; and
  • Being prioritized by industrial park, export-processing zone, economic zone or hi-tech park management boards and local People’s Committees about renting land or infrastructure at the lowest rates possible.

8. Investigation of Innovation in Enterprises in 2022

Decision 976/QD-BKHCN issued by the Ministry of Science and Technology in June 2022 is the framework for collecting data on innovation in Vietnam. Specifically, it details a Business Innovation Survey to determine and monitor the development of Vietnam’s startup sector. This data is to be used to develop strategies and policies moving forward.

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