HCMC envisioned as Asia’s major innovations and startup center

The future picture of HCMC as an innovation and startup center was envisioned at a meeting between the city’s leadership and the world’s top-notch business incubator Plug and Play Tech Center on July 4, 2023. Data given at the meeting depict a city with vibrant changes towards innovations, the legal corridor and relevant policies under formulation, socio-economic infrastructure facilities taking shape, and most importantly, the development orientations for the city in the years to come.

This was the third meeting in HCMC between the Silicon Valley incubator following two other events, one with HCMC-based universities on July 1 and the other with entrepreneurs, startups and capitalists on July 3. Jojo Flores, co-founder of Plug and Play, said that with the meetings, Plug and Play wanted to learn about the startup and innovation ecosystem in HCMC to sound out collaboration opportunities. Given the discussions and data at the meetings, it is assumed Plug and Play has found a good reason for establishing its presence.

Jojo Flores, in his first notes at the meeting held at the head office of the HCMC government, said he came back to Asia to oversee the expansion of Plug and Play in this part of the world. “We have five offices in China, three in Japan, and one in each of South Korea, Singapore, the Philippines, Malaysia, Indonesia, Thailand and Taiwan, and hopeful very soon in Vietnam as well,” he said. In an exclusive interview with The Saigon Times, Jojo Flores said Plug and Play performance in South East Asian will not be complete without Vietnam.

Plug and Play’s core business is to make early-stage investment in sci-tech startups, and has invested in around 2,000 startups, with 30 of them having reached the unicorn status. “We annually invest in 200-250 startups globally. Here in Asia we invest in 30-50 startups per year, he said, adding it is time now to invest in Vietnam. To prepare for its engagement, Plug and Play needs to understand HCMC’s policies in the startup ecosystem and innovation.

From initial foundation…

Nguyen Viet Dung, director of the HCMC Department of Science and Technology, gave his presentation on the startup ecosystem, and relevant sci-tech activities as requested by HCMC Chairman Phan Van Mai at the meeting.

According to Dung, HCMC over the past few years has determined to build the startup and innovation ecosysem given the perception that with the conditions available, it has strong potential to promote the establishment of new tech enterprises. HCMC is home to over 100 universities and colleges of various disciplines enrolling over 600,000 students, alongside 43 business incubators, and has seen the active participation of over 200 venture funds, local and international alike. The city organizes some 50 startup contests annually, drawing thousands of entries.

In the past five years, capital pledged by venture funds into the city has seen a five-fold increase. “In 2021, the venture capital volume amounted to US$831 million before falling to US$591 million in 2022 in the wake of the pandemic,” he said. In 2022, HCMC was ranked among the 110 cities worldwide with the most vibrant startup ecosystem, and the ranking is expected to be between the 80th and 90th this year.

There are currently some 2,000 startups in the city, accounting for half of the national total, and among four Vietnamese unicorns, three are based in HCMC. The city government has issued many policies to support the startup community, and has offered tax incentives to venture funds making investment, as well as FDI enterprises to set up science-technology funds.

Impressed by the city’s initiative to encourage FDI enterprises to set up sci-tech funds, Jojo Flores asked about the operations of such funds and their total value. Dung said the city has seen 120 such funds established with a total value of some US$100 million, but “the weak point is that the city has not found a viable solution to use such funds for leveraging development.”

The city has also developed a new building for the Center for Innovations. Apart from the common space for the community, four floors of the buildings are reserved for startups, as part of the city’s effort to develop infrastructure facilities for this purpose.

…to development orientations 

Jojo Flores, upon the presentation by the Department of Science-Technology’s leader, appreciated the city’s preparations to develop its startup ecosystem. He then went to the point: “What are important industries you want to push with technology that is future-proof? Where can we help, what industries can Plug and Play address so that is is not only good for the startups individually, but also good for the city and the entire nation?”

Fielding this question, Chairman Phan Van Mai gave a preview of the city’s development orientations. In the city’s economic structure, he said, the service sector accounts for 60%, and it would continue to be the driving force, but the sector will be further developed, extensively and intensively, to enhance the city’s international stature.

“We are focusing resources on building HCMC into an international financial service center, a logistics hub, and a commodities exchange,” Mai said.

“HCMC, a metropolis of over 10 million people, is facing adverse impacts from climate change, so in my opinion, environmental protection and coping with climate change will also be a highly-potential field for startups, apart from areas that Mr. Dung has mentioned like life sciences and biotech,” stressed the city chairman.

Regarding the legal corridor, according to Mai, the National Assembly has issued Resolution 98 allowing HCMC to trial new special mechanisms and policies, creating sandboxes to promote innovations and the startup ecosystem.

“Our Center for Innovations has been basically completed, and its working mechanism is being fleshed out. We will multiply this model in the future, in the public and private sectors as well as via public-private partnerships. We are also setting up the Institute for Advanced Technologies on the basis of a sandbox as well,” he said.

Per the national determination, strategy and political commitment, HCMC by 2030 will become a center for science-technology, innovations and startups of Asian stature. The city will also be the destination for international organizations, multinational corporations, and international financial institutions to set up their headquarters. “We are preparing conditions in terms of the legal corridor, socio-economic infrastructure and manpower to realize this goal,” he said.

Invitation to Plug and Play

Chairman Mai noted that HCMC is a startup and innovation ecosystem in the becoming, so authorities will manage to improve regulations, policies and support mechanisms for startups. The city wishes to learn from Plug and Play regarding such issues as how to attract venture funds, how to help startups accelerate and operate more efficiently, and what role the local government plays.

As Plug and Play intends to set up a presence in Vietnam, Chairman Mai said: “I think Hanoi, HCMC and Danang are venues for your choice. For our part, we expect you to choose HCMC, and we are ready to accompany you so that your choice will be proven a right one.”

Mai explained that HCMC has a sizeable market for science and technology, for innovations, for startups; the city has the manpower to meet the demand; and more importantly, a crucial factor for expansion is that the city has high regional and international connectivity, as well as the connectivity between sci-tech and economic resources.

“Thank you all for coming here. You can consider HCMC as the new frontier with new opportunities,” Chairman Mai said in wrapping up the meeting.

At the meeting between Plug and Play and universities on July 1 on a campus of the University of Economics HCMC (UEH), Dr. Bui Quang Hung, Vice President of UEH, stated that the university is the single one in Vietnam to be ranked among the top ten universities with the best incubator in Asia, and that “UEH and Plug and Play have the common mission to promote innovation and sustainability.”

Jojo Flores, while highlighting the pivotal role of universities in developing startups and innovations, said he was impressed with UEH activities and the working environment. Flores said that having observed startup activities at universities over the past 15 years, he saw few schools successful in developing their own startup ecosystems. “UEH is among a few universities following their right pathway to create values for society […] It is hopeful the UEH incubator can help nurture new Vietnamese unicorns in the future,” he is quoted by the UEH website as saying. 

* At the meeting between Plug and Play and enterprises on July 3 with the theme “How to help Vietnamese startups become global unicorns”, Jojo Flores said that Vietnam has a young and tech-savvy population, and is a highly-potential market for technology. Importantly, the Government has had positive signals for the development of technology and acknowledged the contribution by enterprises to the country’s development.Some entrepreneurs told The Saigon Times that they have high confidence in the development of the startup and innovation ecosystem in Vietnam.Vo Quang Hue, a leading expert in the auto industry and a council member of the Vietnamese-German University and the HCMC University of Technical Education, as well as the CEO of consulting firm VOCIS, said: “I have confidence in the talent of young Vietnamese startups because they have strong knowledge of natural sciences comparable to young people in other countries.”

Meanwhile, Adib Kouteili, co-founder and director of Pebsteel, said: “Universities are working closely with the private sector to equip the students for the next stage in their life… for the startups… Therefore, Vietnam is ready and capable to handle this huge capital inflows in this sector.”

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