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published on 26 June 2025 | reading time approx. 8 minutes
Despite its modest R&D intensity, Vietnam has witnessed significant interest from global corporations across a range of industries including electronics, automotive, digital technology, and renewable energy.
Vietnam is emerging as a major destination for R&D in high-tech manufacturing and digital technologies. Noteworthy investments include:
Samsung's $220 million R&D center in Hanoi, the largest in Southeast Asia, focused on mobile devices and communications technologies (Vietnam braces for increased foreign R&D investments).
Qualcomm, which operates Vietnam's first R&D center in Southeast Asia, plans to build its third-largest global R&D hub in the country, specializing in AI (Qualcomm muốn xây trung tâm R&D lớn thứ ba thế giới tại Việt Nam - Báo VnExpress Kinh doanh).
NVIDIA has also chosen Vietnam for its first AI-focused R&D center in the region (NVIDIA mở Trung tâm R&D tại Việt Nam để thúc đẩy phát triển AI | Phòng tin tức NVIDIA).
Apple, via assembly partner BYD, is shifting iPad New Product Introduction (NPI) activities to Vietnam, highlighting confidence in local R&D capabilities (Khi nào Việt Nam có bước đột phá đầu tư vào R&D? - Tạp chí Tài chính).
The automotive sector is another priority area:
LG Electronics has expanded its Vietnam R&D activities around automotive components, operating centers in Hanoi and Danang.
Hyundai Motor Group is also active in Vietnam, incorporating R&D into its broader manufacturing and market strategy.
Infineon Technologies AG of Germany recently opened a chip development center in Hanoi focused on automotive microcontrollers, reinforcing Vietnam’s role in the global electronics supply chain (Investor Magazine, 2023).
Sustainable tech and home appliances are also gaining ground:
Panasonic is developing multiple R&D and production hubs in southern Vietnam, including a facility for indoor air quality products and smart appliances (Investor Magazine, 2023).
Yadea Technology Group is building a $100 million electric motorbike R&D and manufacturing complex in Bac Giang, aiming for 2 million units annually (Investor Magazine, 2023).
Vietnam's R&D ecosystem remains heavily state-dominated, with 84 percent of the R&D workforce employed in public institutions and only 14 percent in the non-state. Furthermore, there are only fewer than 10 R&D workers per 10,000 people, which is just 7.6 percent of South Korea's ratio and 58 percent of Thailand's. This shortage of highly skilled professionals — especially in AI, IoT, and blockchain — represents a key bottleneck for scaling innovation-driven enterprises. The public R&D infrastructure is broad but fragmented, comprising 478 science and technology institutions, of which 301 are operated under ministerial or central government bodies (VN needs to improve R&D for economic growth). While this network provides a baseline for scientific activity, its collaboration with the private sector remains limited.
Vietnam's government has set ambitious targets to boost R&D, including a goal of increasing R&D expenditure to 2 percent of GDP by 2030, with 60 percent of investment coming from the private sector (Việt Nam promotes human resources and R&D investment). Focus areas include semiconductors, artificial intelligence, and renewable energy, aligning with global innovation trends.
Several domestic giants started responding to this shift. For example, Viettel established its own research institute, investing around 10 percent of pre-tax profit into technology development funds. Similarly, PVN has achieved success in R&D for offshore drilling rigs — demonstrating that Vietnamese enterprises can lead high-tech innovation with the right incentives and partnerships.
Vietnam's R&D landscape is evolving from a state-centric system to a hybrid model with growing private sector involvement. Major investments from global technology firms, an improving innovation index ranking (44th in 2024), and strategic policy commitments underscore the country's untapped potential as an R&D hub in Southeast Asia. However, realizing this potential will require concerted efforts to develop human capital, increase funding efficiency, and strengthen academia-industry collaboration.
Vietnam offers fertile ground for foreign and domestic enterprises looking to tap into a cost-competitive, fast-growing innovation ecosystem. With strategic government support and continued private investment, the country is on a path towards becoming a regional center for R&D and technological innovation.
Vietnam: A Growing Destination for R&D Investment
Vietnam is rapidly emerging as a hub for innovation and high-tech industries, supported by a solid legal framework and a government committed to attracting foreign investment. Among high-tech service sectors, research and development (R&D) stands out as one of the most attractive investment areas actively promoted by the Vietnamese government.
Formal Investment Channels
Foreign investors can enter Vietnam through various formal channels. Common forms include the establishment of foreign-invested enterprises, which may be wholly foreign-owned or structured as joint ventures. Mergers and acquisitions (M&A) are also widely adopted, allowing investors to acquire equity in existing Vietnamese companies. In addition, Business Cooperation Contracts (BCCs) offer a flexible arrangement for joint operations without the need to establish a separate legal entity.
Special Investment Procedure
To further attract R&D-intensive projects, Vietnam recently introduced a “special investment procedure" under Law No. 57/2024/QH15 (dated 29 November 2024), supported by Decree No. 19/2025/ND-CP. This progressive reform shortens the timeline for obtaining an Investment Registration Certificate to just 15 days, significantly faster than the conventional process, which may take up to 9 months for prioritized high-tech sectors.
Furthermore, the new procedure removes the requirement for obtaining investment policy approval, technology appraisal, as well as the preparation of environmental impact assessment reports, the formulation of detailed planning, the issuance of construction permits, and other procedures for obtaining approval, acceptance, or permission in the fields of construction, fire prevention, and firefighting. Instead, investors may commence project implementation immediately upon registration, with compliance to be verified by the relevant authorities after launch.
Who Can Benefit?
This streamlined framework particularly supports investment in innovation centers, R&D hubs, semiconductor design and manufacturing, flexible electronics (including polymer electronics, chips, and semiconductor materials), and other high-tech industries prioritized under Decision No. 38/2020/QD-TTg of the Prime Minister. The special procedure is applicable to projects located in specially designated zones such as industrial parks, export processing zones, high-tech parks, centralized information technology zones, free trade zones, and functional areas within economic zones.
Despite the attractive legal framework, actual implementation remains limited. In practice, there have been few cases demonstrating the full effectiveness of these reforms, particularly with regard to post-registration compliance monitoring and procedural consistency.
In a nutshell, with its combination of legal certainty, favorable investment policies, and a national focus on technological advancement, Vietnam is well-positioned to become a leading destination for R&D investment in the region.
Vietnam is rapidly establishing itself as a prominent hub for innovation and technology within Southeast Asia. The government's increasing commitment to promoting research and development (R&D) offers both local and foreign enterprises a distinct opportunity to engage in R&D activities. Accordingly, businesses can benefit from an attractive tax special regime and government grant for R&D activities as follows:
Corporate Income Tax (“CIT") incentive
The Corporate Income Tax (CIT) incentive is applicable to sectors such as high technology, scientific research, technological development, and high-tech enterprises. This incentive includes preferential tax rates and tax holidays. Companies fulfilling the necessary criteria will be entitled to a preferential tax rate of 10 percent for 15 years, with the tax holiday including a CIT exemption for 4 years, and a 50 percent CIT reduction for the subsequent 9 years.
Science and Technology Development Fund
Vietnam´s tax framework offers companies compelling incentives to invest in innovation through the establishment of a Science and Technology Development Fund. Non-state-owned enterprises may spend up to 10 percent of their taxable income during the tax period on scientific and technological development. This amount is deducted from taxable income when calculating Corporate Income Tax. This mechanism not only encourages long-term investment in research and development but also aligns with the country's broader strategy to promote technological advancement and sustainable economic growth.
Investment Support Fund
While recent discussions have raised concerns that global minimum tax rules could affect R&D tax incentives, Vietnam continues to demonstrate its commitment to fostering innovation. A notable step in this direction is the introduction of Decree 182/2024/ND-CP, effective from December 31, 2024, which establishes the Investment Support Fund as a new mechanism to promote strategic investment activities, including R&D. Decree 182 introduces two principal forms of support from the Investment Support Fund:
Each support mechanism is designed for specific business models and development goals, with distinct eligibility conditions depending on the sector and type of enterprise. Importantly, any subsidies disbursed under this fund will not be considered as taxable income for Corporate Income Tax (CIT) calculation purpose.
Eligible entities for annual cost support include:
Entities eligible for initial investment cost support include: Initial investment cost support is provided primarily to enterprises with R&D center projects in the semiconductors and artificial intelligence fields.
Through the Investment Support Fund, Vietnam is expanding its incentive framework by incorporating cost-based incentives in addition to traditional profit-based incentives. This evolution reflects a more flexible and effective approach to supporting investment projects in high-priority sectors.
In conclusion, Vietnam's strategic emphasis on R&D is clearly reflected in its supportive tax policies and funding mechanisms. Through Corporate Income Tax incentives, the Science and Technology Development Fund, and the Investment Support Fund, the government is fostering a more innovation-driven economy. These initiatives not only reduce financial burdens for enterprises but also create a fertile environment for sustainable technological advancement.
Vietnam presents a promising landscape for R&D activities, particularly in fields such as information technology, engineering, biotechnology, and electronics. Over the past decade, we have seen steady improvements in the quality of local talent, supported by a strong academic foundation and increasing access to global technologies.
The country's workforce is young, digitally fluent, and eager to contribute to innovation-driven projects. This is in part thanks to long-standing institutions like:
1. Recruitment Landscape
Despite a growing talent pool, companies often report challenges when hiring for advanced R&D roles. In our experience, some of the key difficulties include:
2. Approaching Talent Acquisition
Successful R&D recruitment in Vietnam typically involves a multi-channel strategy. Based on recent hiring efforts, we recommend:
3. Fostering Retention and Growth
Attracting talent is just the first step — keeping them inspired and engaged is equally critical. Companies that succeed in this area often:
4. HR Policies & Legal Considerations
R&D roles typically involve intellectual property, data sensitivity, and long-term project cycles. It's essential to ensure that employment contracts clearly define:
With a thoughtful HR strategy, collaborative relationships with universities, and a culture that supports innovation, companies in Vietnam can build R&D teams that are not only technically strong but also committed to long-term growth.
Michael Wekezer
Partner
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Rödl & Partner in Vietnam
