The scenario: where to put 80 R and D engineers?
VoltEdge, an electronics company with an assembly plant in Vietnam since 2019, wants to build an 80-engineer research and development centre to design next-generation circuit boards close to its factory. Two options are on the table: Singapore, near research institutes and technology partners, or Vietnam, right next to the plant to shorten the prototyping loop. The board demands a comparison on exactly two axes: operating cost and R and D tax incentives. This article analyses precisely those two axes.
The cost axis: Singapore is expensive in people, Vietnam in start-up time
Personnel cost: experienced R and D engineer salaries in Singapore run several multiples of Vietnam’s. At 80 engineers, the annual payroll gap between the two locations can reach millions of dollars. Vietnam wins decisively here, especially when hiring young engineers from major technical universities in Hanoi and Ho Chi Minh City.
Premises and equipment: renting lab and engineering office space in Singapore ranks among the region’s priciest; in Vietnam, companies can lease inside industrial parks or high-tech parks at far lower cost, sometimes with site support when entering a high-tech park.
Hidden costs: Singapore compensates with productivity and ecosystem: engineers access shared laboratories, technology partners and leading experts within a few kilometres. In Vietnam, companies invest more themselves in initial training and specialised equipment, because the R and D support ecosystem is thinner.
The tax incentive axis: two different philosophies
Vietnam: corporate income tax incentives attach to the investment project. R and D projects, research centres or high-tech projects may enjoy corporate income tax incentives under the Law on Investment 143/2025/QH15 and the Law on Corporate Income Tax 67/2025/QH15 if sector and scale conditions are met. Spending on science and technology activities, including allocations to the science and technology development fund, counts as deductible expenses. Locating the R and D centre inside a high-tech park opens additional tax and land incentives.
Singapore: incentives target actual R and D spending rather than projects. Companies deduct R and D expenditure at enhanced rates and access government innovation support schemes. Singapore’s philosophy rewards real R and D dollars spent, regardless of company size or nationality.
The substance of the comparison: Vietnam’s incentives are powerful when the project is large enough and meets sector conditions, a “project” model; Singapore’s flex with actual spending, a “cash flow” model. For an 80-engineer centre focused on product development near the factory, Vietnam’s project-based incentives usually deliver greater absolute value; for expensive breakthrough research, Singapore’s spending-based deductions shine.
The combined equation: near the factory or near the ecosystem?
For VoltEdge, the deciding factor is neither axis alone but five-year total cost of ownership: payroll plus premises, minus incentive value, plus training costs and time to market. If the goal is product design tightly coupled to the Vietnamese assembly line, placing R and D next to the plant cuts the prototyping loop from weeks to days, a value hard to price but decisive for launch speed. If the goal is fundamental research needing institute collaboration, Singapore justifies its higher cost.
Conclusion and action plan
No location wins on both axes. Vietnam wins on personnel cost and project-based incentives; Singapore wins on ecosystem and spending-based incentives. VoltEdge and peers should: (1) model five-year total costs for both options; (2) verify corporate income tax incentive conditions for the specific R and D project in Vietnam; (3) assess dependence on external research ecosystems; (4) consider a hybrid: applied R and D in Vietnam near the plant, fundamental research in Singapore.
Frequently asked questions
What tax incentives apply to an R and D centre in Vietnam?
R and D or high-tech projects may enjoy corporate income tax incentives under the Law on Investment 143/2025 and the Law on Corporate Income Tax 67/2025 if sector and scale conditions are met; science and technology spending is deductible; high-tech park locations add further tax and land incentives.
How do Singapore’s R and D incentives work?
They target actual R and D spending: enhanced deductions for research expenditure plus government innovation support schemes, regardless of company size or nationality.
How wide is the R and D personnel cost gap?
Experienced R and D engineer pay in Singapore runs several multiples of Vietnam’s; at 80 engineers the annual payroll gap can reach millions of dollars. Singapore offsets this with lower initial training costs thanks to its dense ecosystem.
Should R and D be split across two locations?
The hybrid model is increasingly popular: applied R and D and product development in Vietnam near the plant to shorten prototyping loops; fundamental research needing institute collaboration in Singapore. Factor in the management cost of a two-site model.
FLAT Law Firm stands with investors
FLAT Law Firm advises on structuring R and D centres in Vietnam: corporate income tax incentive conditions, investment procedures and intellectual property protection for research outputs. Contact us to assess your optimal R and D location strategy.
This article has been quality-reviewed by the FLAW AI Legal Council
