Insights

The need for Innovation and Human Resource Development

Results of a recent survey by the General Statistics Office on Vietnamese manufacturing and processing innovation levels, for the period 2011 to 2017, shows that  domestic spending on R & D by local enterprises remains very low with only 6.5% of enterprises investing in R & D. This also reflects the high level of SME’s in Vietnam, with limited access to finance and thus a lack of capital skills and technology to conduct R & D.[1]

 

According to a survey on Global Competitiveness by the World Economic Forum, Vietnam ranks only above Brunei, Laos and Cambodia amongst South East Asian countries, in terms of innovation. Furthermore, in Vietnam, only 15% of the total R & D investment comes from the private sector, whilst 70% comes from the government. In comparison in Japan 80% of R & D investment comes from the private sector, 75% in South Korea, 70% in Malaysia, and 62% in Singapore. Philippines, Thailand and Laos also rank above Vietnam.

 

R & D and innovation is considered critical for Vietnamese business, in order to help them improve the competitiveness and quality of their products, to improve efficiency and to enable them to join the global supply chain, which is one of the key government objectives for the 4th industrial revolution.

 

Another issue is training and HR development. Most surveyed businesses (SME’s) did not have a long term budget for training in innovation and budgets seem to be falling[2]. Low investment in R & D has been a limiting factor on the development of Vietnamese business and in terms of innovation rankings Vietnam ranks 76 out of 142 countries recently surveyed according to university expert Hoang Tri Hue.

 

According to the World Bank Vietnamese business find it difficult to find the required skills such as technical (60%) foreign languages (60%), work ethics (90%) leadership (90%). With Vietnam’s basic education system and the ability to learn in the right environment teaching these basic skills at a vocational level should not be beyond the ability of the system but a critical challenge is that less than 8% of the labour force has university education[3]

 

Kenneth M Atkinson

 

[1] Vietnam Investment Review February 18th 2019.

[2] Vietnam Investment Review February 18th 2019

[3] Ousmane Dione Country Director for Vietnam World Bank February 2019

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