Vietnam, a Southeast Asian country with a population of over 96 million people, has experienced rapid economic growth over the past few decades. In recent years, the country has shifted its focus towards innovation and technology, recognizing the potential of these sectors to drive further growth and development.

As of 2023, Vietnam has become one of the most promising destinations for innovation and tech investment in Southeast Asia. The government has implemented several initiatives to encourage and support the growth of the country’s technology sector, which has attracted a considerable amount of investment in recent years. Despite a tumultuous year, Vietnamese startups have secured $634 million in funding, and Vietnam ranked third in Southeast Asia in deal count.

 

Overview of Vietnam’s Innovation Landscape

One of the significant developments in Vietnam’s innovation and tech investment landscape in 2023 is the rising innovation ecosystem. Vietnam has made significant strides in advancing its innovation indexes, positioning itself as a country that is quickly catching up with the rest of the world in this area.

In the 2022 Global Innovation Index (GII) Viet Nam ranked 48th of 132 countries. It ranked second after India within the lower middle-income category. However, Viet Nam must recognize that innovation efforts and solutions must be sustainable. This needs serious attention, given the country placed 44th in 2021 and 42nd in 2020.  

Despite a drop in its position since 2020, the 2022 GII report highlights that Viet Nam has the potential for transforming the global innovation landscape. It scores higher than many upper middle-income countries in every pillar, apart from human capital and research.

The Vietnamese government has been actively promoting innovation and entrepreneurship through various initiatives and policies. For instance, in 2016, the government launched the “Startup Nation” program, which aims to support the development of 5,000 startups by 2025. This program offers various incentives such as tax breaks, funding, and mentoring to help startups succeed.

 

In addition, Vietnam’s tech ecosystem has been growing rapidly in recent years. The country is home to a number of successful startups. Besides, the startup ecosystem is supported by a variety of Venture capital and Accelerators: 

• Startup: Vietnam has a fast-growing startup ecosystem, with more than 3,000 startups in various fields such as fintech, e-commerce, healthtech, and logistics. Some of the most successful Vietnamese startups include VNG, Tiki, and Sendo. Ho Chi Minh City (HCMC) is the leading startup hub in Vietnam, followed by Hanoi.

• Accelerators: Vietnam has a growing number of accelerators, incubators, and co-working spaces that support startups. Some of the most popular accelerators in Vietnam include 500 Startups, VIISA, and Topica Founder Institute.

• Venture capital: Venture capital (VC) investment in Vietnam has been increasing rapidly in recent years. According to a report by Topica Founder Institute, the total amount of VC investment in Vietnam in 2020 was around $890 million, a 34% increase from the previous year. Some of the top VC firms operating in Vietnam include IDG Ventures Vietnam, VinaCapital Ventures, and CyberAgent Ventures.

Opportunities for Tech Investment in Vietnam

Vietnam’s economy is well-positioned for further growth and development in the technology sector. The country has a young and tech-savvy population, with over 64 million internet users and a smartphone penetration rate of over 70%.

According to World Intellectual Property Organisation (WIPO), Vietnam ranks 48th in 2022 Global Innovation Index. Vietnam has placed a strong focus on digital transformation in recent years. The government has implemented various measures to encourage digitalization across different sectors, including education, healthcare, and finance. This has created opportunities for tech companies in Vietnam, particularly in the areas of cloud computing, artificial intelligence, and big data analytics. 

 

There are several industries in Vietnam that offer significant opportunities for tech investment. These include fintech, e-commerce, and logistics. 

• Fintech: Vietnam’s fintech sector has been growing rapidly, driven by the high mobile phone penetration rate and the increasing adoption of digital payments. The sector is expected to reach a value of $7.8 billion by 2025 and grow at a compound annual growth rate of over 30% between 2020 and 2025., presenting significant investment opportunities.  Investment in fintech remained substantial, and the evolution of Vietnamese venture capitalists continued.

• E-commerce: Vietnam’s e-commerce market is also growing rapidly, with a projected value of $23 billion by 2025. The sector has seen significant investment in recent years, with several startups such as Tiki and Sendo raising significant amounts of funding.

• Logistics: With the increasing demand for e-commerce and the growth of the manufacturing sector, Vietnam’s logistics industry is also presenting significant investment opportunities. The sector is expected to grow at a CAGR of 14.6% from 2020 to 2025.

In addition to a large and growing market, Vietnam offers several advantages to investors, including:

• Low labor costs: Vietnam has one of the lowest labor costs in the region, making it an attractive destination for companies looking to set up operations. 

• Large and young population: Vietnam has a population of over 97 million, with a median age of 31.4 years. This presents a significant market for companies looking to target younger demographics. 

• Strategic location: Vietnam’s strategic location in Southeast Asia provides access to a large market of over 650 million people.

Merging technologies that offer significant opportunities for investment in Vietnam’s tech sector. These include:

• Artificial intelligence: Vietnam’s AI industry is expected to reach a value of $800 million by 2025, presenting significant investment opportunities in areas such as healthcare, manufacturing, and finance.

• Internet of Things: With the increasing adoption of smart devices and connected technologies, Vietnam’s IoT market is also presenting significant investment opportunities.

• Blockchain: Vietnam’s blockchain industry is still nascent but has significant potential in areas such as supply chain management and finance.

These technologies are being applied in various sectors, including organizations such as JETRO, META, Singapore, and the Netherlands to collaborate on innovation initiatives. Besides, we signed an MOU with Orsted and T&T Group to transfer offshore wind power technology to Vietnam. The Vietnam-Korea Startup Exchange Program provided a 2-week incubation program in Korea for 7 startups specializing in AI/Big Data agriculture, logistics, and manufacturing. Vietnam is also investing in research and development to develop these technologies further. The government is actively promoting technology adoption, and this has led to a rise in the use of new technologies such as artificial intelligence, blockchain, and the Internet of Things.

However, there are also several challenges and risks associated with investing in Vietnam’s tech sector, such as:

• Bureaucracy: Vietnam’s bureaucracy can be challenging to navigate, particularly for foreign investors.

• Infrastructure: Vietnam’s infrastructure is still developing, particularly in rural areas, which can present challenges for companies looking to set up operations.

• Intellectual property: Intellectual property protection is still a challenge in Vietnam, with piracy and counterfeiting.

 Future Outlook for Innovation and Tech Investment in Vietnam in 2023

Despite these challenges, the future looks bright for innovation and tech investment in Vietnam.  The future outlook for Vietnam’s tech sector is positive, with significant potential for continued growth and development. Vietnam has several advantages that make it an attractive destination for tech investment, including its large and young population, low labor costs, and strategic location. In addition, the government’s initiatives to support innovation and entrepreneurship are expected to drive the growth of the tech sector in the coming years.

 

• Government support: The Vietnamese government has been actively promoting innovation and technology as a key driver of economic growth. In recent years, it has launched several initiatives to support startups and innovation, such as the National Technology Innovation Program and the National Startup Support Center. The government has also introduced policies to attract foreign investment in the tech sector.

• Growing tech talent: Vietnam has a large pool of young and tech-savvy talent, with a high literacy rate and a growing number of university graduates in technology-related fields. This talent pool is attractive to both domestic and foreign investors.

• Increasing venture capital investment: As mentioned earlier, VC investment in Vietnam has been increasing rapidly in recent years, with many international investors seeing Vietnam as an attractive destination for tech investment. This trend is expected to continue in 2023 and beyond.

 

• Strong startup ecosystem: Vietnam’s startup ecosystem is growing and maturing, with more and more successful startups emerging in recent years. This is a positive sign for investors, as it suggests that there is a strong pipeline of innovative and viable startups that can generate returns.

Mr. Cong-Thang Huynh from InnoLab Asia thinks the current situation in Europe is characterized by instability and uncertainty, which can create both challenges and opportunities for countries in Asia, including Vietnam. It is important to note that such challenges can arise in many forms, such as economic, political, or social issues, and can impact different aspects of a country’s development.

 

Despite the challenges, Mr. Thang believes that this presents a unique opportunity for Vietnam to develop alongside Asia, and to take advantage of the opportunities presented by the current global landscape. However, in order to do so, he emphasizes the importance of building up Vietnam’s internal capabilities, which will enable the country to better leverage these opportunities.

 

Conclusion

In conclusion, Vietnam’s innovation and technology sector is rapidly developing, with a growing startup ecosystem, strong government support, and an increasingly tech-savvy workforce. The country’s focus on digital transformation and emerging technologies presents significant opportunities for investors. However, there are still challenges to overcome, and investors need to carefully navigate the legal and regulatory environment and infrastructure limitations.

With a growing ecosystem of startups and investors and a young and tech-savvy population, Vietnam is well-positioned for further growth in the technology sector. However, Investors and entrepreneurs interested in Vietnam’s tech ecosystem should consider the country’s potential for growth, as well as its challenges and risks. 

GatewaytoVietnam is promoting InnoLab Asia, aimed at promoting innovation and startup investment in Vietnam. The event will provide attendees with valuable insights and practical knowledge to navigate Vietnam’s dynamic and rapidly evolving startup ecosystem. GatewaytoVietnam is an experienced investment consulting firm with a proven track record of helping local and international businesses succeed in Vietnam. 

To foreign investors and companies, we are dedicated to helping businesses succeed in Vietnam’s dynamic and rapidly evolving startup ecosystem through market expansion and investment consulting. With our in-depth knowledge of the local business environment and a proven track record of success, we provide expert guidance and support to businesses seeking to expand their operations and tap into the vast opportunities available in this emerging market. 

This year, we will organize Vietnam Innovation Vietnam 2023 and startup programs that give an excellent opportunity for investors, entrepreneurs, and industry leaders to network and explore the vast opportunities available in Vietnam’s innovation and startup landscape. 

If you need any further consultancy, please kindly email us at hello@innolab.asia.

Reference

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A Review of Science, Technology and Innovation in Vietnam. (n.d.). World Bank. Retrieved May 5, 2023, from https://www.worldbank.org/en/country/vietnam/publication/a-review-of-science-technology-and-innovation-in-vietnam

Vietnam ECommerce. (n.d.). International Trade Administration. Retrieved May 5, 2023, from https://www.trade.gov/market-intelligence/vietnam-ecommerce

VIETNAM INNOVATION & TECH INVESTMENT REPORT 2023. (n.d.). Do Ventures. Retrieved May 5, 2023, from https://doventures.vc/assets/uploads/reports/download/vietnam-innovation-and-tech-investment-report-2023-1680151007.pdf

Wanted Now: A Comprehensive Approach to Innovation. (2023, March 10). Savills Vietnam. Retrieved May 5, 2023, from https://www.savills.com.vn/blog/article/210707/vietnam-eng/a-comprehensive-approach-to-innovation.aspx