Monday, June 24,2024 - 19:51 GMT+7  Việt Nam EngLish 

Vietnam's supporting industry needs support 

 Tuesday, June 11,2024

AsemconnectVietnam - The fact that multinational corporations investing in electronics, semiconductors, etc. in Vietnam are a good sign and an opportunity for the supporting industry.

Concerns about the "health" of supporting industry enterprises
Considered to play an important role in changing the industrial structure, being the "soul" of the manufacturing industry, but recently, Vietnam's supporting industry sector has not received adequate attention. At the same time, the wave of supporting industries from many countries entering Vietnam is happening on a large scale and very quickly. This shows that supporting industry enterprises are not large enough to participate in global manufacturing supply chain.
A report from the Ministry of Industry and Trade shows that domestic supporting industry manufacturing enterprises have improved their level of production organization, increased productivity and production efficiency, and cut costs to help improve competitiveness of businesses, becoming direct suppliers to manufacturers, complete product assemblers and multinational corporations, participating in production networks, regional and global value chains.
Supporting industry activities are increasingly developing, providing raw materials for domestic production, the localization rate has been increased in many manufacturing industries such as the textile, garment and footwear industry reaching 45-50%, manufacturing gas reached more than 30%.
However, the Ministry of Industry and Trade also recognizes that the implementation of policies and laws to develop supporting industries and mechanical industries, especially in serving agricultural, forestry, and fishery processing, and agricultural development, rural areas still have shortcomings and limitations.
Specifically, the effectiveness of implementing preferential policies is still limited; the dissemination and propaganda of preferential policies to the business community is limited and has not been carried out regularly and on a large scale; and the understanding of some businesses about the State's policy regulations is still limited.
The reason is due to the characteristics of supporting industrial production and the low starting point, the production capacity of Vietnamese enterprises has not met the conditions to enjoy preferential policies. Some conditions to enjoy incentives are quite strict and not really suitable during policy implementation.
A part of supporting industry enterprises are not interested in, proactively learning about and grasping information about incentive and support policies; Due to limited resources, there is often no specialized department to research and learn about preferential policies.
In fact, the concerns about the "health" of domestic supporting industry enterprises are not a new problem, but so far there is not much improvement.
According to the Vietnam Electronics Business Association (VEIA), in recent times, FDI enterprises have continuously received requests for support in connecting and building supply chains, including leading chain enterprises from Europe and America or a series of Apple's suppliers. In particular, these "big guys" do not only ask about finding one or two suppliers but also want to approach the chain, building a supporting product ecosystem in Vietnam. This is clearly an expectation for Vietnamese businesses to develop and have a more pivotal position in the global value chain with products with high technology content and great added value.
However, Mr. Pham Tuan Anh - Deputy Director of the Department of Industry (under the Ministry of Industry and Trade) pointed out that there is an existing concern when the connection between FDI enterprises and domestic enterprises is still loose, limiting the spillover effect between the FDI and the domestic economic sector. In addition, the competitiveness, organizational management capacity, and technological level of most Vietnamese enterprises are still low, not meeting the strict requirements and standards of multinational corporations or leading chain enterprises.
Most supporting industry enterprises are small and medium-sized enterprises, not capable of competing with imported goods in terms of price, quality, and delivery schedule. “Supporting industrial products with high technology content are still mainly provided by FDI enterprises. To serve the needs of domestic production and assembly, Vietnam still imports components and spare parts with a large value deficit" - stated the leader of the Department of Industry.
Increase connections, remove 'bottlenecks' in policy
Opportunities for the supporting industry are present, the prospects are very positive, the core issue to turn opportunities and prospects into reality requires synchronous solutions and drastic implementation to fundamentally overcome the problems of congestion that foreign investors as well as domestic businesses have continuously proposed.
Talking on the sidelines of the National Assembly, delegate Tran Hoang Ngan – of Ho Chi Minh delegation shared his view that, in the context of complicated geopolitical conflicts, Vietnamese businesses must pay attention to frontier markets such as ASEAN, China, India, etc. So there will be the possibility to reduce the impact of potential supply chain disruptions. In particular, "we must create a mechanism to connect domestic industry with the development of the foreign invested sector (FDI), only then to support domestic enterprises to develop more sustainably." Therefore, there must soon be a Law on domestic supporting industries to support domestic production" - said delegate Tran Hoang Ngan.
Mr. Nguyen Van Toan - Vice Chairman of the Association of Foreign Investment Enterprises also said that to attract FDI effectively, Vietnam needs to support domestic enterprises to cooperate and provide auxiliary products for FDI enterprises at a cheaper price. Thus, Vietnam will achieve the goal of retaining FDI giants and developing domestic businesses.
What to do to support domestic enterprises cooperate with FDI? I think it is necessary to build research and development (R&D) centers for domestic enterprises. Since then, the development has been supported by large domestic corporations capable of leading. Therefore, if we want to develop, we need to issue more support policies soon.
On the part of the Ministry of Industry and Trade, the important solution is to innovate policies to attract foreign investment, strongly shifting policies to attract FDI in the industrial sector from quantity to quality with focus and emphasis. “Orientation to select and encourage FDI projects in industries in the direction of prioritizing the use of many domestically produced raw materials and components, with a proportion of spending on research and development of science and technology in high water level, with a commitment to technology transfer and on-site human resource training; prioritize joint ventures and production links with domestic enterprises; prioritize multinational companies with international brands and high competitiveness, foreign enterprises participating in the field of supporting industries" - the leader of the Department of Industry stated the solution.
In addition, focused support is given to industrial enterprises with the potential to become regional and global corporations, playing a leading role in domestic enterprises, through the support mechanism. Support and encourage mergers and acquisitions between domestic enterprises; technology transfer; continue supporting policies, tax and financial incentives.
At the same time, we need to focus on developing supporting industries according to the Government's preferential and supportive policy orientations to gradually improve the competitiveness of domestic enterprises, develop domestic value chains, and improve quality. human resources, focusing on developing a number of important products with high technology content and added value, enhancing connections, spreading capital, transferring technology and innovation know-how between FDI and domestic enterprises, supporting the development of the model of spin-off enterprises in the field of supporting industries.
Source: VITIC/


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