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Saturday, March 30, 2013

Science, technology firms can’t receive promised support

VietNamNet Bridge - The government, while vowing to develop science and technology, has promised to give preferences and big investment incentives to science and technology firms. However, in fact, the preferences have not reached the firms.
Vietnam, investment, government, encouragement, MST

Under the current laws, if enterprises can prove that they are science and technology firms, they will be able to enjoy a lot of investment incentives, including the corporate income tax exemption for the first five years of operation, the 5 percent corporate income tax rate for the next nine years and the 10 percent tax rate for the next years.

Besides, they can also enjoy the preferences in the investment credit, ownership registration tax exemption, priority in accessing the loans from science and technology development funds. They would also get the priority in accessing land fund, in modern equipment at national key laboratories at the state owned scientific and technological research centers.

The reality far different from policy

The promised preferences are really big enough to encourage anyone to invest in science and technology development. However, the reality is far from the policy, and science and technology firms still cannot receive the promised support.

General Director of An Sinh Xanh Company--Phan Dinh Phuong, said he never can borrow loans at preferential interest rates. In general, the actual interest rates are 5-10 percent higher than the promised interest rates. 

Phuong said that he tried to talk with the banks about An Sinh Xanh’s inventions, including the firefighting system which could have extinguished the fire at the Fukishima nuke plant in March 2011. However, the banks still refused to provide loans.

“Brainpower is called an invaluable asset of the human kind. However, it means nothing to banks,” he said, implying that banks always demand visible assets as the collaterals for loans.

Dr. Nguyen Thanh My, General Director of Mai Lan Group in Tra Vinh province, complained about the way the Tra Vinh Department of Science and Technology deals with its inventions. 

“We have a new valuable invention which we reported to the department. However, no reply from the watchdog agency over the last two years,” he complained.

My also complained about the unreasonable tax rates, which make Vietnamese technological products less competitive.

“The import materials from China are taxed 5 percent. However, our finished exports to China bear the high tax rate of 17 percent. The unreasonable taxation will kill the competitiveness of Vietnamese enterprises,” My said.

The state’s encouragement not encouraging enough

With the decrees No. 115 and 80, the government encourages the development of the enterprises in the fields of information technology, biology, automation technology, new materials, nano, environment protection, energy technology and astronautics.

However, despite the encouragement, Vietnam now only has some 100 science and technology enterprises, according to the Minister of Science and Technology Nguyen Quan. Meanwhile, Vietnam hopes it would have 3,000 enterprises by 2015 and 5,000 by 2020.

The problem, according to Dr Tran Dinh Thien, Director of the Vietnam Economics Institute, lies in the implementation of the policies. The preferences promised by the State still cannot reach to enterprises because of the so called “ask-and-grant” mechanism, which means that enterprises have to ask for the preferences as a favor. 

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