Vietnam Updates Criteria for High-Tech Investment Projects

January 1, 2025 Posted by Vietnam Briefing Written by Vu Nguyen Hanh Reading Time: 7 minutes

New criteria for high-tech investments in Vietnam have come into effect since December 23, 2024, following the implementation of a new circular. These criteria specifically address projects related to high-tech research and development facilities, as well as high-tech applications in producing high-tech goods. This article examines the updated requirements for the reference of businesses and investors.

In November 2024, Vietnam’s Minister of Science and Technology sanctioned Circular 08/2024/TT-BKHCN, providing explicit criteria for high-technology (high-tech) investment projects.

Circular 08/2024/TT-BKHCN specifies several provisions prescribed under Decree 10/2024/ND-CP, dated February 1, 2024, on high-tech industrial zones. These provisions outline criteria for the following high-tech investment projects, which are:

Projects on high-tech research and development facilities; and
Projects applying high technology to produce high-tech products.

The Circular applies to all state agencies, organizations, and individuals involved in implementing the above high-tech investment projects.

For more information read: Vietnam Issues Decree 10/2024/ND-CP to Attract More High-Tech Investments

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Transitional terms

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Circular 08/2024/TT-BKHCN will take effect on December 23, 2024, and will annul Decision No. 27/2006/QD-BKHCN dated December 18, 2006, which established the regulations on standards for determining high-tech product manufacturing projects.

Project investors have the option to either continue complying with the provisions of Decision No. 27/2006/QD-BKHCN or to follow the guidelines outlined in this Circular to complete their documentation, subject to two conditions:

They must have submitted their applications for investment administrative procedures before the effective date of this Circular but have not yet received the results of those procedures; and
The Management Board of the high-tech park is currently reviewing the standards established by Decision No. 27/2006/QD-BKHCN.

Principles for high-tech investment projects

Under Circular 08/2024/TT-BKHCN, projects involving high-tech research and development facilities and high-tech applications in producing high-tech goods must adhere to the principles outlined in Article 28 of Decree 10/2024/ND-CP. These principles include:

Compliance with laws: The objectives and operations of an investment project must align with the tasks designated for the hi-tech park as defined in the Law on High Technologies.
Environmental Protection: Respective projects must be implemented with environmentally friendly practices and measures to promote resource efficiency.
Alignment with Planning: Respective projects must conform to the planning and capacity for providing technical and social infrastructure of the hi-tech park, as well as comply with relevant laws.
Financial Capacity: Investors proposing investment projects must demonstrate their financial capacity or secure other legal funding sources to meet the capital requirements for the project’s construction, maintenance, and operation.
Technological and Managerial Capacity: Investors must possess the necessary technological and managerial skills to ensure that the construction and implementation of investment projects adhere to the established schedule and plan.

Criteria for different types of high-tech investment projects in Vietnam

In addition to the common principles mentioned above, high-tech investment projects in Vietnam must meet specific criteria depending on their type. These requirements are partly promulgated under Decree 10/2024/ND-CP, then further extended by Circular 08/2024/TT-BKHCN.

Criteria	High-tech research and development facilities	High-tech application for the production of high-tech products
Overall	Objectives, plans, and roadmaps for high-tech research and development must be established over both short-term and long-term periods. There must be plans for transferring, cooperating, commercializing, and applying high technologies to create high-tech products and services.	The investment project must comply with technical standards and regulations pertaining to the environment as prescribed by Vietnamese law. Achieving international environmental standards, such as ISO 14000 or equivalent, is encouraged. The annual revenue generated from producing high-tech products within the investment project should account for at least 80 percent of the project’s total annual revenue.
Expenditure	The annual expenditure for research and development must be at least 80 percent of the project’s annual operating expenses.	The ratio of total annual expenditure for research, development, and technology application activities to the total annual revenue of the investment project must adhere to the following requirements: For investment projects with a capital scale of VND 6 trillion or more, which involve the disbursement of at least VND 6 trillion (approx. US$235.2 billion) within 3 years from the date of issue of the Investment Registration Certificate (IRC) or approval of the investment policy, or for investment projects generating total revenue of at least VND 10 trillion (US$392 billion) per year within 3 years from the year of revenue generation, this ratio must be at least 0.5 percent. For all other cases, the ratio must be at least 1 percent.
Personnel	To effectively carry out the research and development activities for the investment project, the following requirements must be met: At least 70 percent of employees must possess the necessary expertise and experience. These employees should have indefinite-term contracts or contracts valid for one year or more. At least 85 percent of these employees must hold a university degree or higher. Each primary research and development field within the investment project must include at least one member with a minimum of five years of experience in research and development activities specific to that field.	At least 75 percent of the total number of employees involved in the investment project must hold diplomas, vocational education certificates, or university degrees. The number of employees with college degrees or higher who are directly engaged in research, development, and technology application activities for the investment project must meet the following criteria: For investment projects with a capital scale of VND 6,000 billion or more, which disburse at least VND 6,000 billion within three years from the date of receiving the IRC or approval of the investment policy, and which have a total of 3,000 or more employees: at least 2.5 percent of the total number of employees must meet this requirement. For all other cases, at least 5 percent of the total employees must meet this requirement. Employees directly participating in the investment project’s research, development, and technology application activities must have either an indefinite-term labor contract or a labor contract lasting one year or more. Additionally, the number of these employees with associate degrees must not exceed 30 percent.
Technical application	The project must adhere to quality control standards and technical regulations concerning environmental practices applicable to the investment project, as required by law. Adequate machinery and equipment necessary for research and development activities should be provided, tailored to the specific research field of the project. These machinery and equipment must be organized in a workspace that complies with occupational safety and hygiene standards mandated by Vietnamese law.	The quality control system complies with international standards. The technological chain of the project should be invested synchronously to achieve advanced levels, organized using specialized and automated methods, with at least one-third of the automatic devices controlled by software. The chain must be set up in a workspace that adheres to occupational safety and hygiene standards mandated by Vietnamese law. Priority must be given to cases involving 100% new investments.
Technologies	The technologies and products involved in the investment project align with the prioritized list of high technologies and the encouraged list of high-tech products outlined in the decisions made by the Prime Minister of Vietnam. If the technologies and products of the investment project are innovative and advanced but are not included in the aforementioned lists, the Management Board of the high-tech park must prepare a report for the Ministry of Science and Technology of Vietnam, seeking the Prime Minister’s approval for the research and development of these technologies and products. The project aims to develop high technologies to replace imported ones and apply these advancements in producing high-tech products. Additionally, it seeks to create key products for various economic sectors to reduce reliance on imported goods.	The technologies and products of the investment project meet the prioritized list of high technologies and the encouraged list of high-tech products outlined in the decisions of the Prime Minister of Vietnam.

Article 5: R&D expenditure for high-tech investment projects

According to Article 5 of Circular 08/2024/TT-BKHCN, expenditures related to research and development (R&D) activities of high-tech investment projects include the following annual costs for investment projects:

Annual depreciation

This includes the depreciation of technical infrastructure that directly supports R&D activities, such as research, experimental, testing facilities, equipment, sample products, software, documents, data, and information used for research.

Annual expenditures for routine R&D activities

This category covers salaries and related expenses (including bonuses, allowances, travel expenses, and business trip costs) for employees directly involved in the R&D activities. Additional costs may include:

Remuneration for experts who review or evaluate research results;
Expenses for seminars and scientific conferences related to R&D;
Costs for renting facilities and equipment for research;
Expenses for hiring inspections of R&D products;
Maintenance and repair costs for technical infrastructure used in R&D; and
Expenses for purchasing tools, supplies, raw materials, chemicals, energy, communication, stationery, labor protection equipment, and other perishable items needed for R&D.

Annual training expenses

This includes costs for long-term or short-term training for employees directly involved in the R&D activities, either domestically or abroad. It also covers expenses for collaboration, sponsorship, and support for training and research activities, such as scholarships and provision of equipment and machinery for scientific and technological organizations and training institutions in Vietnam.

Expenses for intellectual property rights and technology transfer

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This includes costs associated with acquiring intellectual property rights and technology transfer for which a competent state agency has issued a Certificate of Registration (except in cases where the law on technology transfer specifies that registration is not required). These expenses also cover the costs of establishing intellectual property rights for intangible assets resulting from the investment project’s R&D activities.

Additionally, Article 5 promulgates the expenses that are not counted as costs for R&D activities of high-tech applications to produce high-tech products. These expenses include:

Costs for product quality testing or periodic testing of raw materials, materials, fuel, and energy not related to research and development;
Costs for periodic data collection not related to research and development;
Costs for efficiency investigation or management research; and
Costs for marketing and sales advertising research.

Benefits of investing in high-tech investments in Vietnam

Circular 08/2024/TT-BKHCN, detailing clear criteria for high-tech investment projects, is a significant addition to Decree 10/2024/ND-CP. Investors participating in these initiatives will benefit from several advantages, such as exemptions from land lease payments and reimbursement for costs related to land clearance. They will also have access to favorable interest rates on loans and available capital within established legal guidelines to support their projects.

Moreover, Decree 10/2024/ND-CP mandates that local governments develop appropriate living spaces and social infrastructure near high-tech parks to accommodate the workforce. These developments can be financed through public-private partnerships (PPP) or private investments, making these areas more attractive to potential investors.

Additionally, manufacturing and export companies operating in these parks will receive export tax exemptions or reductions comparable to the benefits offered in non-tariff zones.

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