Vietnam bets new fund will bring home AI, semiconductor crown

Vietnam is stepping up its tech game with a bold new fund.

The Investment Support Fund, rolled out this year, aims to court tech giants, offset the impact of the global minimum tax (GMT), and tackle the country’s tech talent crunch.

It also prioritizes the semiconductor and AI industries over other high-tech sectors, as Vietnam competes aggressively with other emerging countries to secure major investments in these areas.

Leif Schneider, lawyer and Vietnam country head at international law firm Luther, says one of the “unusual eligibility criteria” that sets the fund apart in Southeast Asia is the requirements on human capital.

Engineers work at an automotive manufacturing plant in Vietnam. / Photo credit: Shutterstock

For example, it offers incentives to enterprises that employ at least 300 Vietnamese engineers and managers and train at least 30 high-skilled engineers annually. It also doesn’t require these firms to meet the minimum revenue or capital scale.

See also: How Vietnam’s tech scene has turned skeptics into believers

“Neither Malaysia nor Singapore – two of the most sophisticated economies in the region – have such specific and detailed requirements for human capital development in their incentive schemes,” he adds.

Financed by top-up tax revenue from large multinationals, the fund will provide cash grants to cover operational costs and initial investments for eligible high-tech projects of enterprises. This includes up to a 50% reimbursement for the training of Vietnamese workers in a fiscal year, as outlined in a decree effective December 31.

It also offers reimbursements of up to 3% of the added manufacturing value of high-tech products in Vietnam. This is provided the sum constitutes at least 30% of the total cost of goods sold, the enterprises employ at least 10,000 people, and have a minimum revenue of 200 trillion dong (US$8 billion).

Other incentives include covering as much as 30% of the costs for research and development (R&D), 10% for additional fixed assets, and up to 25% for the construction of social infrastructure such as housing for workers, schools, and medical facilities.

These elements also make the fund stand out, observers say.

“The direct reimbursement of R&D and training costs, which is a unique aspect of Vietnam’s approach, is not commonly seen in the region,” says Jack Nguyen, chief executive for Vietnam at Singapore-headquartered business advisory company InCorp.

Industry-specific focus

With the new fund, eligible firms must have at least US$478 million in investment capital for high-tech projects or a project turnover of at least US$797 million per year.

Appeal to tech giants