Hanoi (VNA) – Vietnam’s system of State-run funds for science, technology and innovation is now backed by a clearer legal framework and is gradually being rolled out, with expectations of fundamentally reshaping how the State commissions, finances and supports scientific and technological activities, moving away from the earlier model of scattered budget allocations.
Building a multi-tier fund structure
Resolution No. 57-NQ/TW of the Politburo defines fund-based mechanisms as the core financial tool for advancing science, technology and innovation. Under the resolution, State budget funding for research and development is prioritised for allocation through funds, alongside reforms in financial management, expanded autonomy, streamlined procedures, and acceptance of the risks and time lags inherent in research activities. It also calls for the establishment of venture capital funds and science and technology development funds to steer, mobilise and unlock social resources for innovation.
Translating Resolution No. 57 into law, the 2025 Law on Science, Technology and Innovation, together with Decree No. 265/2025/ND-CP, introduces a multi-tier fund model. The Vietnam National Foundation for Science and Technology Development (NAFOSTED) acts as a central-level financial instrument, tasked with financing and commissioning programmes, projects and scientific and technological missions for research and development, while supporting efforts to strengthen national science and technology capacity. At the same time, science, technology and innovation development funds at the ministerial, sectoral and local levels operate closer to real-world needs, focusing on commissioning, financing and supporting tasks aligned with the development priorities of each sector and locality, as well as promoting technology application, transfer, innovation and the growth of innovation ecosystems, particularly for small and medium-sized enterprises.
Notably, the 2025 Law on Science, Technology and Innovation and Decree No. 264/2025/ND-CP establish, for the first time, a legal framework for a national venture capital fund and local venture capital funds, enabling the State to co-invest alongside the private sector in innovative start-ups. This move is widely seen as a significant breakthrough, signalling a shift from administrative support towards market-oriented investment with managed risk.
Under this framework, the national venture capital fund will invest and co-invest in innovative start-ups, invest in other funds, and support the development of the national start-up ecosystem. The fund will be capitalised by the State budget and may also receive sponsorships, grants and other lawful funding sources. The model underscores the State’s role as a provider of “seed capital”, helping to build confidence and generate momentum to attract social capital into high-potential but high-risk innovation projects. Crucially, the fund is no longer bound by annual or project-based capital preservation requirements, as was the case under previous regulations. The law also allows localities to proactively establish their own venture capital funds, tailored to local conditions and development needs, to support start-ups linked to regional and sectoral strengths.
Early implementation needed to expand resources
Reviewing more than a year of implementing Resolution No. 57, Dr Nguyen Quan, former Minister of Science and Technology, stressed the need to swiftly establish and operationalise science, technology and innovation development funds across ministries and sectors.
In the past, around 20 provinces and cities had set up local science and technology development funds. However, many later stalled after being classified as off-budget financial funds, receiving only one-off initial capital without annual replenishment. With starting capital often limited to just a few billion VND, many funds struggled to maintain their capital base after several years of financing scientific and technological projects, and some were eventually dissolved due to depleted resources. Resolution No. 57 and the Law on Science, Technology and Innovation have addressed this bottleneck by introducing mechanisms for annual capital injections to ensure the sustainability of fund operations. Experts stress that, drawing on earlier experience, ministries, sectors and localities should quickly establish new funds or restructure existing ones, treating them as a cornerstone financial tool for shifting decisively towards commissioning and financing science and technology tasks.
Regarding venture capital funds, Hanoi is currently the only locality to have established one. Experts note that innovative start-ups require early-stage capital to test and refine products, followed by significantly larger funding during the commercialisation phase. Dependence solely on the State budget makes it difficult to foster globally competitive enterprises. The development of venture capital funds is therefore seen as essential to unlocking social resources for innovation. Through its role as a “seed investor” and market guide, the State can not only create initial momentum but also provide a legal foundation that gives private investors greater confidence. Pilot implementation is thus needed to gradually refine the legal framework for venture capital funds, clarify profit-sharing mechanisms, and build investor trust before scaling up the model to attract broader social investment.
A representative of Mobile Service JSC (M-Service) noted that access to capital is a decisive factor for business growth. Alongside existing support policies, the State needs to swiftly create more room for venture capital flows, an approach widely adopted by developed economies to nurture innovation ecosystems and produce high-growth enterprises.
Deputy Minister of Science and Technology Hoang Minh said that after a period focused on developing and completing the legal framework, attention from 2026 will shift towards implementation. Through fund-based mechanisms, the State will commission solutions to concrete, real-world challenges, with a focus on major and pressing issues in socio-economic development./.
