Resolution No. 10-NQ/TW, issued on June 8, 2026 by the Politburo on the development of the foreign-invested economic sector (Resolution 10), affirmed that the FDI sector is an important component of the national economy. At the same time, the resolution emphasizes the need for Vietnam to participate more deeply in global production networks and value chains.

Prior to this, Vietnam had adopted a number of major policy directions on science and technology, innovation, and the development of supporting industries. In particular, Resolution No. 57-NQ/TW dated December 22, 2024 of the Politburo on breakthrough development in science, technology, innovation, and national digital transformation (Resolution 57) identifies these areas as among the most important breakthroughs of the new growth model.

However, a major bottleneck at present is that spillover from the FDI sector to domestic enterprises remains limited. For example, in the electronics industry, the common localization rate is only around 5-10%, or approximately 15% if the FDI sector is also included.

Among the policy tools aimed at promoting substantive linkages between the FDI sector and domestic enterprises, the development of a dedicated sandbox mechanism is an approach worth considering in order to test targeted and scalable cooperation models. If the Government submits to the National Assembly a separate resolution on this mechanism, several policy orientations may need to be considered:

1. Focus on a number of priority sectors such as electronics, semiconductors, automobiles and components, and high-tech supporting industries;

2. Allow the application of conditional support tools linked to output results in order to create substantive and scalable cooperation models.

The sandbox should simultaneously support four groups of activities: supplier development; transfer of technology and core production skills; co-financing of research and development (R&D) and product commercialization; and output-based financial support linked to actual supply results.

This article proposes the sandbox mechanism as a policy solution to promote more effective linkages between the FDI sector and domestic enterprises, while also setting out design orientations, scope of application, and an implementation roadmap to ensure feasibility and scalability.

At the same time, the article also recommends designing an investment support mechanism for R&D, training, healthcare, environmental, or social infrastructure projects implemented by strategic investors, in a manner consistent with the context of the Global Minimum Tax.

Context and necessity of establishing a dedicated sandbox mechanism

Resolution 57 identifies the development of science, technology, innovation, and digital transformation as key drivers for enhancing national competitiveness. This orientation requires not only the completion of policies at the strategic level, but also the introduction of implementation tools that are sufficiently flexible and strong to transform policy directions into domestic production capacity.

In practice, Vietnam has become an important manufacturing hub in the region, but the participation of domestic enterprises in global supply chains remains limited. In the electronics industry, the low participation rate of Vietnamese enterprises shows that most value added still lies in components, while design and technology remain controlled by foreign enterprises. Without a breakthrough mechanism to increase linkages and transfer, Vietnam risks continuing a model in which FDI leads growth but generates limited spillover, while the room for competition through traditional tax incentives is narrowing rapidly.

The experience of Samsung shows that the potential for linkages is real if appropriate policies are in place. From 25 Vietnamese enterprises in its supply chain in 2014, the number of tier-1 and tier-2 suppliers has increased to around 306 enterprises. Samsung is currently also the largest FDI investor in Vietnam, with total registered investment of approximately $23.2 billion.

When a separate resolution is adopted to pilot a sandbox mechanism promoting linkages between strategic foreign investors and domestic enterprises, this mechanism should be designed as a controlled policy experimentation space, allowing the application of certain support, coordination, and collaboration tools beyond conventional approaches, while clearly limiting the scope, duration, participants, and monitoring mechanism.

The objective of the sandbox is not to create another broad-based support program, but to develop a number of model cooperation frameworks with measurable results, which can then be standardized and replicated. This is an appropriate approach when Vietnam needs to act quickly to capture the new investment relocation cycle while still ensuring legal safety and budgetary efficiency.

Design principles and eligible participants

The sandbox mechanism should be built on three foundational principles.

First, it must be a mutually beneficial mechanism. Strategic FDI investors are supported in reducing the cost of establishing supply networks in Vietnam; Vietnamese enterprises are upgraded in technology and management capacity; and the State achieves the objectives of developing domestic industry, deepening linkages, and expanding the long-term tax base.

Second, state support must be linked to output results and should not be spread broadly based on inputs. The focus of the policy is not to “inject money” into enterprises, but to create sufficiently strong incentives for the FDI and domestic sectors to proactively cooperate. When support is tied to orders, revenue, localization rates, the number of qualified components, or the number of commercialized supply contracts, State budget resources will be aligned with actual effectiveness and will reduce the risk of policy leakage.

Third, the mechanism must create incentives for substantive transfer, not merely formal linkages. Therefore, participants should be selected carefully based on the following principles:

1. On the side of foreign companies, eligibility should be limited to strategic investors that are global corporations with high technology, a leading role in supply chains, large-scale investment, a need to develop a domestic supplier network, and a medium- to long-term investment commitment in Vietnam.

2. On the side of domestic enterprises, selected enterprises should have a sufficient financial, technical, and management foundation to absorb transfer and be willing to invest in upgrades to meet international standards.

Support measures under the sandbox

The sandbox should allow the simultaneous implementation of four groups of tools.

First, supplier development and production standardization, including technical training, process improvement, quality management, factory capability assessment, and direct connection with the procurement departments of strategic investors.

Second, transfer of technology and core production skills, including the transfer of processes, technical designs, prototype support, molds, materials, components, and manufacturing management software. The policy should encourage both technical transfer on production lines and the transfer of management know-how so that Vietnamese enterprises can gradually move into higher value-added stages.

Third, co-financing of R&D and product commercialization through science and technology funds, innovation funds, or supporting-industry support programs. The focus should be on helping enterprises move through the stage from research and testing to the signing of actual supply contracts.

Fourth, output-based support, which may be designed on the following principle: for each unit of product, each unit of revenue, or each component item that a Vietnamese enterprise supplies to a strategic investor under the sandbox and meets the required standards, the State provides support at a certain rate depending on the priority level of the sector, technology, or value added. This mechanism should be clearly defined as conditional support, disbursed only after results arise and subject to post-audit review. Such a design both provides market orientation and requires the parties to reach actual cooperation.

Policy design in the context of the Global Minimum Tax

One of the major policy changes today is that Vietnam has adopted additional corporate income tax under the global anti-base erosion rules pursuant to Resolution No. 107/2023/QH15, effective from January 1, 2024, applicable to multinational enterprise groups meeting the consolidated revenue threshold of EUR 750 million.

This means that part of the benefit from traditional tax incentives for large corporations will no longer be retained as before, but will be converted into additional tax obligations under the Global Anti-Base Erosion (GloBE) Rules and the Qualified Domestic Minimum Top-up Tax (QDMTT).

In this context, the State may design a mechanism within the sandbox that allows co-financing or partial support for investment costs for projects that simultaneously satisfy three conditions: (i) the project falls within priority areas of the State, such as high-tech R&D, semiconductor and AI human resource training, research facilities, healthcare, environmental projects, or large-scale social infrastructure projects of similar significance; (ii) the project creates clear spillover benefits for the economy or the community; and (iii) the support mechanism is applied based on transparent public policy criteria and is not directly dependent on the specific amount of additional tax paid by each enterprise.

Accordingly, the policy should not be presented as a mechanism to “refund the tax benefit that has been lost”, but should instead be developed as an independent State investment support program for projects that create public benefits and enhance national technological capacity. Such a design helps reduce the risk of being viewed as a direct compensation for top-up tax (so as not to violate international commitments), while still maintaining the objective of attracting and retaining strategic investors through more modern policy instruments.

For large and high-technology corporations, this approach also has an additional important value: supporting brand building and social responsibility in Vietnam. When an R&D project, training center, research institute, or social infrastructure project is communicated as a project of the investor, the policy not only partly compensates for investment incentives in the new context, but also helps promote the investment activities of strategic FDI enterprises, thereby creating a positive spillover effect for other large corporations.

Implementation roadmap and legal basis

For the above mechanism to be implemented in practice, adding a dedicated legal basis at the National Assembly level is a decisive factor. The National Assembly may consider issuing a separate resolution to pilot a sandbox mechanism for linkages between strategic foreign investors and domestic enterprises, allowing the application of certain mechanisms beyond the current legal framework within a controlled scope.

The National Assembly resolution should clearly define the objectives, pilot scope, applicable participants, support principles, implementation resources, pilot period (for example, 3-5 years), monitoring mechanism, and reporting responsibilities. On that basis, the Government would issue action programs or implementation resolutions; the Prime Minister would issue decisions approving the list of priority sectors, investors, and key projects; and relevant ministries would issue circulars or technical guidance on selection criteria, disbursement mechanisms, inspection, and evaluation.

More importantly, the pilot resolution should allow the application of the principle that the mechanisms, tools, and procedures permitted by the resolution may be implemented even if they have not yet been fully provided for in existing laws, provided that they are public, transparent, limited in scope, and subject to special supervision. This is the core spirit of a genuine sandbox. Without such flexibility, the mechanism would very easily be pulled back into the ordinary procedural track and lose its breakthrough meaning.

To increase feasibility, the sandbox mechanism should not be rolled out on a broad scale from the outset, but should instead be implemented in three stages.

Stage 1: This may last approximately 12-18 months, during which the State selects a narrow pilot scope: three to five strategic investors; 20 to 30 capable Vietnamese enterprises; and a focus on two or three sectors with high spillover potential, such as electronics, semiconductors, and automobiles and components. The objective of this stage is to develop the operating model, KPI framework, support procedures, and inter-agency coordination mechanism.

Stage 2: After preliminary evaluation results are available, the Government expands the mechanism to additional localities and sectors, while standardizing the criteria for enterprise selection, disbursement mechanism, post-audit mechanism, and results-recognition mechanism. This is the stage of “soft institutional standardization”, transforming pilot experience into replicable procedures.

Stage 3: Based on the pilot review, the National Assembly and the Government consider expanding or codifying the policies that have proven effective. If properly implemented, this sandbox can become the foundation for a new policy framework on FDI-domestic linkages, rather than remaining merely a short-term program.

In terms of coordination, an inter-agency task force should be established with a clear lead agency assigned by the Government, potentially placed within an agency with sufficient authority to consolidate and coordinate industrial, investment, science and technology, and financial policies. This agency would be responsible for selecting projects, monitoring KPIs, submitting support packages for approval, resolving inter-agency bottlenecks, and reporting periodically to the Government.

Expected impacts

If designed and implemented properly, this sandbox mechanism will generate three main impacts:

First, for the economy, the mechanism will help increase localization rates, expand development space for domestic supporting-industry enterprises, reduce dependence on imported components, enhance the spillover effect of FDI, and create additional growth drivers based on technology.

Second, for Vietnamese enterprises, the mechanism will create a shorter path to access orders, technology, management standards, and international customer ecosystems. Instead of having to overcome all barriers to entering global supply chains on their own, Vietnamese enterprises will be placed within a cooperation framework supported by policy and driven by strategic corporations as “lead firms”.

Third, for strategic foreign investors, this mechanism sends a very strong signal that Vietnam is ready to enter a new phase of competition: competing through flexible institutions, supply ecosystems, and long-term policy partnership, rather than only through tax incentives. This is not simply another incentive, but a transition in the country’s model of industrial development and investment attraction.

Conclusion and recommendations

From the above analysis, it can be affirmed that establishing a dedicated sandbox mechanism to promote linkages between strategic foreign investors and domestic enterprises is a timely, issue-focused, and highly feasible solution. This policy not only addresses the challenge of developing domestic suppliers, but also directly responds to a broader requirement for Vietnam in the new period: how to shift from “attracting projects” to “creating ecosystems”, from “cost advantage” to “capability advantage”, and from “tax incentives” to “value-added cooperation”.

Therefore, the Government may consider soon assigning a lead agency to study, complete, and submit to the National Assembly a separate pilot resolution on a sandbox mechanism for FDI-domestic enterprise linkages; and at the same time, immediately develop an implementation scheme with a controlled pilot scale, clear selection criteria, specific measurable KPIs, and a strict monitoring mechanism. If implemented successfully, this could become one of Vietnam’s notable institutional initiatives during the period of high-tech industrial development and deep integration into global supply chains.

* Huong Vu is also president of the International Association of Financial Executives Institutes (IAFEI) Asia

* The views expressed in this article are those of the author and do not necessarily reflect the views of the global EY organization or its members.