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Climate change is a global phenomenon with far-reaching environmental effects such as heatwaves, melting polar ice and declining biodiversity. Vietnam specifically is threatened by rising sea levels, typhoons and floods that could have disastrous consequences for its ecosystem, economy and the wellbeing of its population. In light of these prospects, policy makers such as the World Bank have called for immediate and drastic measures in Vietnam to adapt to climate change by building resiliency and to mitigate climate change by decarbonising the economy. Responding to this call, the Alexander von Humboldt Institute for Internet and Society (HIIG) organised a research sprint in collaboration with the Digital Transformation Center (DTC) Vietnam. The sprint was part of the research project “Sustainability, Entrepreneurship and Global Digital Transformation” (SET), which is funded by Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development.
Can green technologies be promoted through private businesses and entrepreneurs?
The deployment of green technologies, or green tech, is central to the measures to mitigate climate change in Vietnam. For example, using sustainable energy sources such as water, wind and solar power could help to decarbonise the energy sector, while the expansion of public transport and adoption of electric vehicles could contribute to decarbonising transport. Promoting the development and adoption of green tech will require considerable efforts not only from the government and state-owned enterprises, but also from private businesses and entrepreneurs. And yet, the Vietnamese green tech ecosystem suffers from a shortage of entrepreneurs. This raises the question: What obstacles do Vietnamese green tech entrepreneurs currently face and what can be done to promote the founding of green tech startups in Vietnam?
The approach of the research sprint “Green-Tech, Entrepreneurship & Climate” to investigate limiting factors
To find answers to these questions, the research sprint “Green Technology, Entrepreneurship & Climate” brought together eleven international and interdisciplinary fellows to study the barriers to digital entrepreneurship in Vietnam’s green tech sector. Initially, the fellows worked online with data provided by the DTC Vietnam before travelling to Vietnam to discuss their initial findings with local entrepreneurs, policy makers, academics and intermediaries such the Vietnam Initiative for Energy Transition. Finally, the fellows discussed their findings during a multi-stakeholder dialogue and a panel discussion at the Green Economy Forum & Exhibition (GEFE) 2022 in Ho Chi Minh City with key stakeholders from Vietnam’s green tech ecosystem and documented their insights in a final report.
Four factors constrain digital entrepreneurship in Vietnam’s green tech sector
Throughout the sprint and in the report, the fellows identified a variety of factors that inhibit digital entrepreneurship in Vietnam’s green tech sector, which can be organised into four broad categories, namely economic, institutional, social and technological challenges.
- Economically, entrepreneurs face challenges such as insufficient access to high levels of funding. While the capital market for startups is maturing in the South-East Asian region overall, the level of investment in Vietnam has been relatively low, as compared to Singapore, Indonesia and Thailand. There are several reasons for this, including but not limited to bad debts in financial institutions and unexpected tax assessments.
- Institutionally, digital entrepreneurship in the green tech sector could be promoted by developing clearer and preferential policies for early-stage green tech investors. While some policies promoting green tech entrepreneurship are in place, several entrepreneurs reported difficulties in benefiting from these policies due to the administrative efforts involved.
- The social challenges involve factors such as social acceptance and willingness to adopt new technologies. One reason for this has to do with the lack of quantity and quality of existing green tech offerings in the market, concerning products such as e-motorbikes, so that consumers opt for alternatives based on fossil-fuels.
- The technological challenges for digital entrepreneurship in Vietnam’s green tech sector can be summarised into skill-, infrastructure- and data-related challenges. In addition to mere technical digital skills, for example, there is also a need to develop legal and finance skills; competencies that green tech startups often lack.
Accelerators and incubators could play a central role in enabling and empowering entrepreneurship
In addition to addressing the above challenges head-on, both the fellows and the stakeholders they engaged with in Vietnam highlighted the importance of enabling and empowering entrepreneurs through accelerator and incubator programmes. Next to offering advice on developing viable business models and reaching product-market fit, such programmes could help entrepreneurs to navigate the tricky institutional landscape of Vietnam’s green tech sector. The findings of the research sprint therefore point to the potential of the Green Tech Hub that the DTC Vietnam established in partnership with the National Innovation Center Vietnam, the local and regional startup ecosystem and members of the Make-IT Alliance. The sprint’s findings have been shared with the DTC Vietnam and its political partner to support the further development of Vietnam’s green tech sector.