Vietnam on its way to becoming a global innovation hub
By Andrew Rowan
INCREASINGLY, Southeast Asia, in particular, Vietnam, is emerging as an arena for social entrepreneurs who are interested in solving 21st century challenges resulting in global impacts. ASEAN is home to over 600 million individuals, of which more than 90 million people live in Vietnam. The region is undergoing economic changes, in part marked by the formation of the ASEAN Economic Community (AEC) at the end of last year, and by many accounts, Vietnam may reap the biggest beneﬁts from the proposed 12-nation Trans-Paciﬁc Partnership (TPP) – the largest-ever trade deal which also includes the United States.
Vietnam is also party to several other Free Trade Agreements (FTA) including those with the European Union, Russia, Korea, and Japan. Since 1986 – the beginning of the Communist Party’s Doi Moi (‘Renovation’) economic development program – Vietnam has steadily integrated its economy with the global marketplace, including the country’s ascension into the World Trade Organization (WTO) in 2007.
In January, Hanoi held its 12th National Party Congress (NPC) where it reafﬁrmed the contributions that the private sector has made to the development of the country, and even made supporting SMEs and startups policy development priorities. As a result, the ﬁrst ever Vietnam Private Sector Forum (VPSF) was hosted in Hanoi in June, supported by the Mekong Business Initiative, part of the Asian Development Bank.
Vietnam Private Sector Forum focusing on Digital Economy, Capital Markets & Fundraising, Startups & Innovation, etc. pic.twitter.com/wBswTDSdBt
— Andrew Rowan (@MrRowan) June 3, 2016
Topics among private industry leaders, local and foreign government representatives, and other public sector stakeholders included the digital economy; startups and innovation; capital markets and ﬁnancing; and clean energy and energy efﬁciency. Moreover, there are a number of economic development initiatives which are supported by the Vietnamese government and other nations such as Australia, Belgium, Finland, Israel, Switzerland, U.K., and U.S. Via this support and public policy reforms, Hanoi hopes to eventually have one million companies operating in Vietnam’s private sector by 2020 – about double its current number of approximately 500,000.
In an interview last month, U.S. Secretary of State John Kerry identiﬁed Ho Chi Minh, the economic powerhouse of Vietnam, as one of four cities (all in Asia, with the exception of Guadalajara, Mexico) that Silicon Valley should keep an eye on for innovation growth or investment opportunities. During the interview, Kerry described present day Vietnam as “a place where that entrepreneurial energy and spirit is palpable on every street corner” in contrast to his experience in the country during the 1990s.
Additionally, leading organizations are beginning to acknowledge Vietnam’s potential as a market for new products and services. When Google’s CEO, Sundar Pichai, visited Hanoi in December 2015 he said, “[Vietnam] will easily be in the top 10 countries for many companies and people who are building products. I think you’re in the process of that transition. When I come here, see the energy, the optimism, the culture of entrepreneurs and the potential of the market, I think all the right ingredients are there.” However, Pichai wasn’t the only senior-level executive from Silicon Valley to visit
Vietnam’s capital; Mike Cassidy, vice president at X (formerly Google X) also met with local and foreign entrepreneurs last November, reafﬁrming the country’s growing importance to Google (and X), which it considers the most dynamic internet market in the world; free Wi-Fi in cafes have a ubiquitous presence in Vietnam.
Vietnam was chosen to host one of two initial UNICEF Innovation Labs in Southeast Asia (another is in Indonesia) since UNICEF’s global innovation unit in New York City identiﬁed Vietnam as a regional leader that has the potential to contribute to the emerging technology community. This kind of recognition for Vietnam is not unusual; the World Bank supported the establishment of the Vietnam Climate Innovation Center (VCIC) to focus on creating solutions to climate change challenges. Having come fully online this year, it is the only CIC presently in Asia and one of seven in the world, perhaps because of the threat of a rising sea level to Vietnam’s Mekong delta, which is currently experiencing its worst drought in 50 years.
— IFRC Asia Pacific (@IFRCAsiaPacific) July 31, 2016
The VCIC’s primary role is to foster and facilitate private sector resources for local enterprises, including access to foreign talent and investment for innovative technologies or business models. In short, Vietnam has gone from a Subsidy Economy (with food rationing in the period before 1986) to a Startup Economy in the span of 30 years – but what is coming next?
It’s still very early in the development of Vietnam’s private sector; one Singapore-based American investor described today’s Vietnam as “seed stage” in startup terms. This early starting point is both a challenge and an opportunity because Vietnam can leapfrog as it continues to develop and it can also make use of exponential technologies like Artiﬁcial Intelligence and Digital Medicine (as they become available or are localized) to overcome present and future challenges that aren’t exclusive to Vietnam.
What makes Vietnam special for startups and entrepreneurship – and will continue to be an advantage for Vietnam’s development – is the diversity and convergence of people, ideas, and sub-cultures across the three major cities: Hanoi, Ho Chi Minh City, and Danang. The various art, music, and startup scenes across the nation are constantly evolving due to past policies, current trends, and new inﬂuences – including an increasing number of newcomers comprised of designers, entrepreneurs, investors, and coders.
So as we look to the future of Vietnam, while it can never fully replicate the factors which created Silicon Valley, it can create its own unique environment that leverages its people’s strengths (including the diaspora around the world) to become a leader in innovation in this century. For now, it’s a great place to start something.