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Support industry stumbling despite development demand

Update: August, 31/2013 - 09:01
Motobike components are manufactured at TS Viet Nam Limited Co in Ha Noi. The support industry requires incentives from the Government to increase its competitiveness.— VNA/VNS Photo Huy Hung

HA NOI (VNS)— Although the support industry was among prioritised sectors for Viet Nam, enterprises were struggling to find ways for further development, it was announced at a conference on Thursday.

The Ministry of Industry and Trade held the conference, aiming to create advantageous conditions for the development of support industry in member countries of APEC.

According to Sotaro Nishikawa, director of the Japan External Trade Relations Organisation (JETRO) in Ha Noi, Japan remained among the top FDI investors in Viet Nam. Japanese enterprises were not really "satisfied" with Viet Nam's support industry, however.

Jetro's survey on more than 8,000 Japanese enterprises operating in Asian countries showed that only 27.9 per cent of Japanese enterprises in Viet Nam could buy locally-produced components. While the percentages in Indonesia, Thailand and China were much higher, at 43 per cent, 53 per cent and 60 per cent, respectively.

Although the country had lower labour costs, the total production costs in Viet Nam could be higher due to enterprises having to import components and parts from other ASEAN countries and pay import taxes as regulated.

The general secretary of the Viet Nam Chamber of Commerce and Industry, Pham Thi Thu Hang, said the development support industry of Viet Nam still lacked overall planning and was at a low technology level in comparison with other countries in the region.

The co-ordination of domestic manufacturers with FDI enterprises also remained weak, while the capacities of local small and medium-sized enterprises (SMEs) could hardly meet the demand of quantity and quality for production of big foreign companies, she said.

According to Hang, the Government of Viet Nam should have had policies to grasp chances when the ASEAN region was becoming the world's component supply centre, while selecting core industries to focus investments in.

Cao Bao Anh from the ministry said that the support industry of Viet Nam currently encountered a lot of challenges, citing small outputs and poor quality despite high demand of supportive products.

Anh pointed out that an advantageous environment was necessary to encourage investments in support industries, stressing the importance of research and development (R&D), technology transfer and infrastructure development.

According to Koji Ito from the Japanese Ministry of Industry and Trade, developing support industry played an important role for a country to engage deeply into the global value chain and integrate into the world market.

Mainly drawing the participation of SMEs, the support industry needed incentives from the Government to increase the competitiveness, he said. — VNS


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