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This article was originally written in Vietnamese by Hong Quang for Bao Dau Tu and has been translated by Tran Le, Marketing Assistant, Dezan Shira and Associates.
What is the significance of innovation and skilled workers in boosting digital transformation and developing Industry 4.0 technologies?
Digital transformation and the development of Industry 4.0 technology is strictly dependent on innovation and human capital . Creating a favorable environment for innovative enterprises as well as improving education and providing guidance to local enterprise on how to implement digitalization and automation of processes should be a priority for the Vietnamese government.
Vietnam has already improved its legal framework to foster the development of innovative startups. However, attracting high-quality investments in R&D and innovation is not enough, as human capital plays a crucial role in the implementation of Industry 4.0 technology.
Without the appropriate combination of skills available in the market, local enterprises cannot really undergo digitalization and automation, as there will be gaps that cannot be filled and roles that cannot be occupied. In general, right now, the major challenges for Vietnam in boosting Industry 4.0 technologies is a lack of talented workforce, funding, lack of scale, and slow regulatory reforms. In addition to financial support through funds and preferential loans, the government needs to increase investments in training and education to build a skilled workforce.
It also needs to continue with its regulatory reforms, as this will lead to a friendly business environment for investors and developers. This will not only attract much needed foreign investments but also talented workforce from surrounding regions.
The Vietnamese Ministry of Planning and Investment kick-started construction on the National Innovation Center in Ha Noi. What is your expectation of the center?
If successful, the National Innovation Center will be the cradle of innovation in Vietnam. The center will be the prime location to support the application of Industry 4.0 technologies as well as attract startups and develop highly skilled human resources.
Also, the National Innovation Center aims at creating a favorable environment for enterprises to conduct R&D and innovation and will provide a regulatory sandbox with very appealing incentives to attract talent and investments, as well as fostering the connection between local innovators and innovators overseas.
The Vietnamese government is in the process of granting incentives for R&D and innovation activities not only to enterprises within the center but also looking to expand them to include all enterprises in Vietnam that conduct R&D and innovation activities. To this end, the local Ministry of Planning and Investment is discussing a list of potential sectors likely to benefit from special tax incentives.
Apart from incentives, to attract new funding and to maintain investment growth that is already in the country, the Vietnamese government should increase transparency and ensure foreign companies have an equal and predictable playing field.
Private enterprises like Microsoft, GE, Siemens, etc have reportedly made progress in Industry 4.0 technologies. Do you have any suggestions for Vietnamese enterprises to obtain opportunities emerging from Industry 4.0?
Firstly, I would advise enterprises to develop a sound technology strategy, which means understanding the potential impact of digitalization and automation across their organizations and then developing a strategy to exploit the opportunities arising from the implementation of 4.0 technologies. Such strategies would be prodromal to clearly defining the skillsets required for future roles within organizations.
Based on that, enterprises should first assess the skills currently available in their workforce and identify the gaps that must be filled to meet their needs. Together with defining the skill gaps, enterprises should also assess their current HR and training infrastructure, as well as understand if the workforce is willing to change. After clarifying these matters, enterprises would need to decide to build certain capabilities in-house and hire for specific roles.
As far as building capabilities in-house goes, enterprises should re-think their training centers and possibly implement gamification to train operational staff in new working methods, – a new managerial trend that allows businesses to transform corporate applications into games for workers to join to gain experience, research, and enhancing productivity.
Finally, enterprises – now more than ever – should implement effective HR policies to attract and retain the best talent, as there is likely to be a scarcity of workforce with certain skills. Competition is likely to be fierce at the beginning, until the workforce can adapt to the new changes.
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