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Electronics industry teeters on the brink

Update: October, 01/2012 - 10:19

HCM CITY (VNS)— With many businesses shifting from production to imports, Viet Nam's electronics industry is standing on the verge of extinction.

The Sai Gon Giai Phong (Liberated Sai Gon) newspaper reported said last Tuesday that impressive growth figures for the industry were mainly posted byforeign-invested enterprises.

The report cited the Viet Nam Electronics Business Association, as saying that from 2007 until now, the export turnover of Vietnamese electronics industry has increased every year by an average of 40 per cent. The export turnover is expected to reach $4 billion by the end of this year.

The Central Institute for Economic Management estimates that there are more than 10,000 enterprises active in the electronics industry at present.

Although the number of businesses and the export turnover is high, more than 90 per cent of the exports are by foreign-invested firms. Main electronic export items include printers, computer RAMs, and motherboards.

Most electronics businesses imported 100 per cent of the parts and raw materials, and the localisation ratio in products like televisions and music systems was very low.

Furthermore, despite the high export growth rate, the competitiveness of Vietnamese electronics industry was very low compared to ASEAN countries such as Singapore, Malaysia, Thailand and the Philippines.

The report noted that in recent years, electronic manufacturers and assemblers including foreign-invested enterprises have reduced production drastically and shifted to importing finished products for sale.

In 2008, Sony announced it would stop production and assembly in Viet Nam. It was followed by JVC and Toshiba soon after. All these firms switched to import their products from other countries.

Other electronics brands have also gradually decreased production and assembling. As a result the volume of products imported has increased to 3-4 times that produced and assembled in the country.

Nguyen Trung Hoang, director of the Quang Hoang Electronics Services and Trading Ltd. Co. said the main reason for large imports of electronic products in the recent past was the low five per cent import tax.

Meanwhile, a strategic plan to develop the Vietnamese electronics industry has been in place for some time now, but it seems unrealistic, said Ngo Van Vi, general director of the Tan Binh Electronics Joint Stock Co.

The Government names electronics as a key national industry, but it still lacks specific investment policies. There has been no effective implementation of trade promotion activities to attract investment into the electronics support industry, he said.

Nguyen Minh Duc, lecturer at HCM City National University's Economics Faculty pointed out another reason for the electronic industry's "bankruptcy" – technological backwardness compared to international standards. — VNS

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