For technological renovation to succeed, businesses must consider it as a central condition in their development and increased competitiveness in the global business arena.
Technological renovation delayed
According to the Technology Application and Development Department under the Ministry of Science and Technology, in Vietnam, the industrial sector has seen an annual increase of 14.6 percent in hi-tech, 12.2 percent in medium technology and 9.8 percent in low technology respectively. Those figures reflect that the industrial sector has been restructured towards hi-tech development, creating products with high added value, meeting domestic and export demands.
However, the United Nations Development Program (UNDP) and the Central Institute for Economic Research and Management surveyed 100 businesses in Hanoi and Ho Chi Minh City on the use of technology and technological services, revealing the weaknesses in their application of technology. The surveyed businesses spent just three percent of their revenue on technological innovation.
The survey also revealed that most of businesses use technology and equipment produced in the 1980s. Sixty nine percent of businesses depend on imported materials. Fifty two percent used imported machines and equipment and 19 percent depend on secret technologies. The number of qualified technical staff accounted for just seven percent of their workforce.
According to UNDP, the money spent on imported technologies and machines in developing countries accounts for 40 percent of import revenue. However, in Vietnam this figure is very small (just 10 percent). The Central Institute for Economic Research and Management surveys show that Vietnamese businesses are lagging behind other countries in the region in terms of mastering technologies and equipment. 30 years ago, Thailand, Malaysia and the Republic of Korea had the same development level with Vietnam. However, at present, the development level of those countries is much higher than Vietnam. For example, in the field of garment and textiles, many Vietnamese businesses have imported 15 year old machines which are redundant in the Republic of Korea.
Ho Chi Minh City which is has targeted a rapid economic growth rate has lagged behind in technological development. The project on renewing industrial technologies to serve economic restructuring in the city was implemented for two years. However, the project has produced little in the way of results. The Ho Chi Minh City Department of Science and Technology assessed the technological development level of 429 businesses, with just one percent found to use advanced technologies.
1,000 businesses were questioned about their technological renovation demands, but just 50 replied. The Sci-tech Development Fund has only issued loans to four businesses worth about VND20 billion.
Motive force?
Vietnam is enhancing the cause of industrialization and modernization. It is also striving to become a modern industrial country by 2020. It will be difficult for the country to realize this target if the government does not have strong methods to promote technological renovation in all sectors, especially in businesses and production, trade and service sectors. In response the country issued Prime Ministerial Decision 677/QD-TTg on May 15, 2011, approving the national program on technological renovation until 2020. The program is considered a motive force for businesses through issuing preferential taxation and finance policies for businesses to renew their technology.
The program offers concrete measures including creating a favorable legal environment to promote technological renovation, comprehensively implementing projects and programs related to technological renovation, increasing financial resources for technological renovation projects, promoting international cooperation and encouraging technological initiatives. These methods make clear that businesses are the centerpoint of technological renovation to produce high quality products with high added value to serve domestic and export demand.
A Central Institute for Economic Research and Management survey revealed that 90 percent of businesses taking part in the survey consider competition as a major motive force for them to renew technology with the aim to improve product quality, increase output and lower prices to expand domestic and export markets. This means that when businesses are subsidized, hold a monopoly and do not have to compete with other companies, they hesitate when it comes to technological renovation. Lack of capital and information about new technologies and weaknesses in laws on intellectual property rights are other obstacles.
Experts pointed out other difficulties that prevent businesses from renewing technologies. The capital invested in technological renovation is much larger than for normal production expenses. Therefore, businesses do not have enough money to purchase comprehensive production lines. Businesses have difficulties in selling hi-tech products in the Vietnamese market. The standards of technological application in Vietnam are lower than other countries, with many businesses happy to waver over investing in technology. In addition, Vietnam lacks venture capital funds which help businesses feel secure when investing in technological renovation.
An expert from the Ministry of Science and Technology pointed out five failures among Vietnamese businesses when transferring technologies including: Vietnamese businesses are incapable of sound planning and assessing market developments. They do not have ability to manage projects, do not understand technologies and do not have ability to negotiate and draft technological transfer contracts.
Experts say that delays in technological renovation, especially in producing key products and weaknesses in expanding export market are not risks. They have become a reality that Vietnamese businesses have to face. Questions related to technological development will be answered only when these difficulties are overcome./.
By Minh Chau
