Creating institutions to encourage innovation

Tuesday, 2019-04-16 16:47:32
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EVN Finance has launched its Easy Credit consumer finance service based on Big Data technology. (Photo: Nhue Man)
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NDO - Legal institutions are the key for the advance and success of enterprises in the digital transformation in order to take advantage of opportunities from the industrial revolution 4.0, Director of the Central Institute for Economic Management (CIEM) Nguyen Dinh Cung told Nhan Dan.

Q: The Government is developing a national digital transformation project. But for most enterprises this remains a rather strange issue. Are they hesitant inapproaching this issue?

Nguyen Dinh Cung: Almost all Vietnamese enterprises are not pioneers in technology, but they are trying to follow, receive and apply technology in their business. Therefore, enterprises need the correct approach to digital transformation, towards the settlement of each specific problem. For example, logistics companies need to seeksolutions to deal with the inefficiency of warehousemanagement. Based on their capabilities and resources, enterprises must analyse their own situation to choose the most suitable solutions to optimise their operational efficiency.

When dealing with a specific problem, enterprises should look for solutions from Vietnamese enterprises, not only from foreign partners, which will provide balance in costsalong with the convenience in exchanging andimplementing solutions that match the situation of enterprises. This is also a motivation for enterprises, research units and solution developers to follow in their goals. But, the problem is how to create confidence for enterprises to embark on these things.

Q: What does that confidence mean?

Nguyen Dinh Cung: Vietnamese enterprises do not yet believe in their ability to apply technology in their business and the effectiveness of technology solutions. Thus, two things should be done to build enterprises’confidence. The first is a change in institutions towards creating motivation for enterprises to seek technology solutions to compete with others.

Secondly, the State should play the role of building and perfecting ecosystems for scientific and technological applications. For example, idea developers and enterprises can work together to determine the suitable costs for developing a technological solution. With this approach, investment funds can also participate in supporting start-up businesses to develop ideas in accordance with the needs of enterprises.

Q: What should Vietnamese enterprises do to take advantage as a late comer in the digital economy?

Nguyen Dinh Cung: In the industrial revolution 4.0, several weaknesses of the Vietnamese economy willbecome strengths. For example, banking payment servicesare in the early stages of development due to the habit of using cash, but will create large room for mobile banking payment and other new forms of payment.

To make use of the room and develop new forms of digital payment, it is not possible to follow the path of traditional credit institutions or rely on the Law on CreditInstitutions. This is the time to promote the role of institutions. Institutions must support new and non-traditional ways of doing things to see the appearance of new comers such as Uber, Bee, Vietgo and Airbnb, among others. Maybe, post and telecommunications companieswill provide payment services that were only offered by banks or there will be non-bank businesses to mobilise capital.

Without a new approach, non-bank enterprises that mobilise capital under new technology models will violate the law on credit institutions, while technology taxis are blamed for violating current business conditions. Businesses will not dare to innovate in case of facing toohigh risks.

In this industrial revolution, digital connection makes geographical boundaries and distance become vague. Vietnam’s knowledge in the technology era is no longer inferior, even equivalent to the knowledge of developed economies.

Therefore, we need creative and flexible institutions to encourage people and businesses to create new methods, products and services to meet the needs of the people and the development of society.

Without institutions to promote innovation and creativity, Vietnamese enterprises will not be able to grow up. It is necessary to change the thinking on institutions to build an ecosystem for innovation and creativity. The key for innovation is non-traditional institutional thinking.