Vietnam urged to encourage growth of support industries

Vietnam's support industries remain underdeveloped in spite of Government directives, with only 27.8 percent of industrial spare parts and accessories coming from domestic enterprises.

In contrast, domestic enterprises in Thailand provide 60 percent of industrial parts and accessories while those in China provide 50 percent.

Nguyen Mai, president of the Vietnam Association of Foreign Invested Enterprises (VAFIE), also told participants of a recent seminar on the development of Vietnam's support industries that the added value of domestic products remained low.

Specifically, the added value was 35 to 40 percent for garments and textiles, 30 percent for footwear and 30 percent for electronics. Foreign direct investment (FDI) enterprises manufactured most of these products, noted Mai.

"This is happening because there is no policy for the priority development of some national support industries for large-scale productivity.

The policy for support industry development has not created linkages between FDI and domestic enterprises," Mai said.

(Photo for illustration. Source: infonet.vn)

The VAFIE president also remarked that this presented an opportunity for Vietnam to review and focus on the development of the support industries, an important concern of provinces.

In addition, some high-tech giants like Samsung, Nokia, Canon and Intel were moving their factories to Vietnam and searching for suppliers from support industries to reduce production costs.

He said the country should ensure a transfer of technology from foreign investors to improve domestic production while upgrading the Vietnamese people's management and innovation skills.

Figures from the Ministry of Planning and Investment showed that Vietnam has attracted around 17,000 FDI projects with a total registered capital of more than 243 billion USD. Of these, an estimated 120 billion USD was disbursed capital from 101 countries and territories.

In recent years, a remarkable increase was seen in FDI to Vietnam's electronics industry from such countries as the Republic of Korea and Japan.

"FDI enterprises have played an important role in turning Vietnam into one the world's top 10 electronics manufacturing centres in less than a decade, with production value of 40 billion USD last year. This is expected to be much higher in the future," said MPI Deputy Minister Nguyen Van Trung.

RoK FDI enterprises, including Samsung subsidiaries like Samsung Electronics, Samsung Display and Samsung Electro-Mechanics, have made their country the biggest foreign investor in Vietnam's electronics industry, with a total investment estimated to be more than 10 billion USD by year-end.

Shim Wonhwan, General Director of the Samsung Complex, said the mother company's investment in Vietnam's electronics and support industries was around 8 billion USD.

However, support industries in the electronics sector remain relatively backward, although Vietnamese businesses have been able to provide printing and packaging products for Samsung.

"As a foreign enterprise in Vietnam, Samsung's objective is not only to develop an important manufacturing facility but also to contribute to Vietnam's economic growth," said Wonhwan.

"Vietnam's supporting industries are young but have huge hidden potential. We strongly believe that with the Vietnamese Government's practical policies and incentives, FDI enterprises and domestic suppliers will have much more opportunities to learn about each other, discuss and co-operate to promote supporting industries," he added.

Wonhwan also revealed that Samsung always sought and opened up lines of communication and co-operation with domestic suppliers who meet quality standards, ensure timely delivery of and offer reasonable prices for products. This is being done to increase the number of domestic suppliers to Samsung's supply chain and benefit both Samsung and Vietnam.

He said companies who wanted to become their suppliers in spare parts and accessories should meet the requirements, including technology, infrastructure for research and development, quality control, ISO certification and environmental clearance.