Investment in sciences: Abundant or inadequate?

Hanoi Times - Vietnam is investing 2% of total budget spending, equivalent to 5% of GDP, in science and technology. Is this level too much or not enough? Dr. Nguyen Quan, Deputy Minister of Science and Technology, talks about this.

Some say that Vietnam’s investment in science and technology is too little so the effect of science and technology o­n the country’s economic and social development is minimal. The “abundant” or “inadequate” labels need to be analysed thoroughly from various angles because they are not simple numbers that can be measured.

Spending o­n research activities just a small part

Realising the Law o­n Science and Technology, since 2001 Vietnam has spent 2% of its state spending o­n science and technology. Thanks to the country’s stable growth in the past decade, spending o­n science and technology has been o­n the rise (nearly $400 million in 2007). 

Some recent articles have said that that figure is too high and questions the effect of that investment.  

If this sum of money is paid for research works and shared equally among state-funded research institutes or the current number of Vietnamese researchers, it is remarkable. But o­nly some know that more than 40% of that sum is spent o­n development investment, which is allocated to ministries, agencies and provinces (mainly for building sci-tech infrastructure). Up to 40-50% of that amount of money is managed by ministries, agencies and provinces.

The Ministry of Science and Technology merely receives around 8-11% of that amount to invest in research projects. 

To determine whether that sum of money is large or small, we can refer to the following data:  

In Vietnam, investment in science and technology is 2% of the budget spending, equivalent to 0.5% of GDP. The non-state sector invests another 0.1% of GDP in sci-tech and thus Vietnam invests a total of 0.6% of GDP in this field. Meanwhile, European Union countries invest 1.95% of their GDP, Japan 3.15%, China 1.31%, the US 2.59%, South Korea nearly 5% (in 2004) in research and development activities. 

Per capita investment in sci-tech in Vietnam is around $5 (2007) compared to China’s $20 in 2004 and South Korea’s $1,000 in 2007. 

In terms of investment in the research and development field based o­n the number of full- time scientists, it was $7,260/year/scientist for Vietnam in 2007, while it was $230,000 for Japan in 2003 and $14,900 for Russia in 2004. 

As for the ratio of investment in sci-tech from the state budget/non-state sector (which shows the socialisation of investment in the sci-tech of nations): it is around 1:3 for developed countries and even China and 5:1 for Vietnam. 

It is a great effort for Vietnam to spend 2% of state spending o­n sci-tech, even higher than some countries. For example, in 2004 China spent 0.36% of its GDP o­n sci-tech, Russia 0.3%, the EU 0.25%, Japan 0.29%, the US 0.23%, and Thailand 0.26%, also in 2004.

Investment from other sectors needed

Investment in sci-tech is still in demand because poor socialisation. The strategy to develop Vietnam’s sci-tech to 2010, approved by the Prime Minister, aims to reach the ratio of investment in sci-tech from the state budget/non-state sector of 1:2 by 2010 or the total investment in this field to reach 1.5% of GDP, in which the state invests around $0.5% of GDP and 1% of GDP comes from other sources. With that ratio, Vietnam will temporarily have enough sources of income for sci-tech development. However, the socialisation of investment in sci-tech is very slow since non-state sectors are not interested and measures to encourage businesses to invest in this field are lacking. As a result, Vietnam is nearly at the bottom of this category in the region. This is the responsibility of all of society, especially businesses.

In Vietnam, universities have large numbers of competent scientists but they are allocated almost no money to conduct national research works. They o­nly receive ministry and grassroots-level research works, which have very low funding (VND5-10 million or $300-600 for a grassroots-level research work). Consequently, universities’ research results are very poor. They don’t have many articles published in reputed world journals and haven’t registered many inventions (according to statistics of the Hanoi-based and HCM City-based National Universities – the two largest training centres in Vietnam – from 2005-2007, Vietnamese universities didn’t have any inventions or solutions registered domestically or internationally. 

Investment in sci-tech by non-state sectors in Vietnam is modest because most Vietnamese businesses are small and super-small o­nes established since 1995, when the Enterprise Law was issued. These companies are struggling to exist so they are unable to or not interested in investing in sci-tech. 

The big o­nes, mainly state-owned, still rely o­n state assistance so their investment in this area is very low. There is an absurdity that the ratios of income or turnover invested in sci-tech at big state-owned economic groups are even lower than those of private o­nes. This is the biggest barrier for bringing into play the effect of sci-tech activities. 

It is a good news that the newly-approved Corporate Income Tax Law was supplemented with a regulation that enterprises are allowed to use 10% of pre-tax income to invest in sci-tech. According to the Ministry of Finance, 10% of pre-tax profit of enterprises is estimated at VND12.5 trillion ($781.2 million), equivalent to 1% of GDP and nearly doubling the state spending in sci-tech. 

If enterprises seriously follow this regulation, Vietnam can reach the goal of having 1.5% of GDP invested in sci-tech by 2010.