Confusion Hinders High-tech Industry

A worker of Hanel High-Technology Electronics Manufacturing Co assembles devices. Criteria for high-tech firms may be revised. — VNA/VNS Photo Ha Thai

HA NOI (VNS)— What makes a firm a high-tech enterprise?

Answering this question clearly would encourage more foreign companies to invest in Viet Nam, Minister of Planning and Investment Bi Quang Vinh told Dau Tu (Investment) newspaper.

While the 2009 Law on High Technology included several criteria defining high-tech enterprises, these were unclear, Vinh said.

The Ministry of Science and Technology had agreed to amend the criteria, but in the meantime, there was a risk that high-tech firms would invest in other countries because they did not meet the Vietnamese criteria for high-tech enterprises and thus could not enjoy the relevant tax incentives.

Currently, for a company to be considered "high-tech," it must spend the equivalent of 1 per cent of its annual turnover on research and development (R&D) in the first three years. After the fourth year, this number must rise above 1 per cent.

In addition, the percentage of employees with a university degree or higher directly participating in R&D activities must account for at least 5 per cent of the total labour force.

But many experts say that these criteria are too far-fetched for many leading high-tech firms to satisfy.

V Quang Hue, managing director of Robert Bosch Viet Nam, told the Viet Nam Investment Review that 1 per cent of total annual turnover was a huge amount of money to spend on R&D, and it would be difficult for firms to find so many labourers with university degrees given the lack of well-trained workers in Viet Nam.

A representative from Mtex Viet Nam proposed corporate income tax incentives be offered to enterprises already recognised as high-tech to encourage them to continue their work. — VNS