Prime Minister Nguyen Xuan Phuc has signed a directive requesting more support for startups, including the establishment of a venture capital market in the coming years.

Illustrative photo.

Although Resolution No.01 was adopted by the government last month to create favorable conditions for businesses, there remain barriers restricting the development of Vietnam’s startup ecosystem, leading to a low level of competitiveness against those in the region.

PM Phuc requested the Ministry of Planning and Investment (MPI) to continue supporting startups in business registration process, including the inclusion of new fields of business not listed in Vietnam Standard Industrial Classification into the national database for business registration.

A more important approach should be the creation of favorable legal environment and regulatory sandbox for IT companies, especially those in the sectors that have large impacts on the economy such as finance and banking.

Meanwhile, the Law on Investment should be revised towards greater convenience for foreign investors in capital contribution and acquisition of venture capital funds in Vietnam, stated the directive.

The MPI is also tasked with drafting new incentive policies for the National Innovation Center, and submitting to the government in the first quarter.

Phuc expected the Ministry of Science and Technology to continue implementing the project supporting national innovative startup ecosystem to 2025, while promoting cooperation among various agencies in the startup ecosystem.

Another priority is supporting three innovation startup centers in three universities and developing a startup ecosystem in the field of education. The outcome of the process should be reported to the PM in the first quarter.

Phuc requested government agencies to provide legal consulting services for startups in schools and universities, as well as the establishment of startup ecosystem right in these institutions.

There should be strict punishments for those causing difficulties for enterprises when realizing administrative procedures, including business registration, registration for investment or capital contribution and acquisition, among others.

Vietnam’s Innovation Ecosystem 2019 report released by Australian Trade and Investment Commission (Austrade) revealed Vietnam has the third-highest rate of startups in Southeast Asia. “With accelerator programs, incubators and co-working spaces, Vietnamese cities are becoming fast-paced innovation hubs,” said the report.

Austrade also referred to a report by the Topica Founder Institute that investment capital poured into Vietnamese startups increased by more than four times in the 2016 – 2018 period, reaching US$900 million from US$205 million.