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Dong Nai to develop support industries

Update: February, 01/2012 - 10:21


Automotive batteries are manufactured in the southern province of Dong Nai. The province has implemented many measures to develop support industries to reduce reliance on imports and add more value to industrial products. — VNA/VNS Photo The Anh
HCM CITY — The southern province of Dong Nai has implemented many measures to develop supp-ort industries to reduce reliance on imports and add more value to industrial products, a Tin Tuc report said.

The province's 2007-15 (with a vision towards 2020) support industry development plan sought to meet the demand of both domestic and export markets, the report said.

The province has asked the Prime Minister to allow the establishment of specialised zones for support industries that will be chosen from industrial zones that the PM has already approved for the province.

It has proposed that the Government allows these zones to enjoy policy incentives in terms of corporate income tax, land rents, credit and tax exempts for importing equipment.

The province has also decided to review its policies to attract more small- and- medium sized enterprises into spare parts production.

To enhance development of the support industry, economists say the province should promote diverse co-operation models with foreign investors involved in supporting industries so that local companies can become part of the product supply chain in global production lines managed by multinational corporations.

They also say local firms should focus more on becoming strategic partners and satellite companies of foreign firms, as well as on taking franchises of established brands instead of focusing, as is currently done, on capital contribution and outsourcing of simple products.

They have suggested that the province set up a credit support system for SMEs since this sector usually finds hard to access capital from banks without assets that can be mortgaged.

Providing information as well as building training and technical support centers to support SMEs was also very important in having them participate in the development of support industries including spare parts production, the experts were cited by the Tin Tuc report as saying.

Weak sector

The current weak state of supporting industries in the country has resulted in mass imports of spare parts to meet local production demand, leading to a high trade deficit for many years now, the report said.

It quoted Dinh Quoc Thai, chairman of the provincial People's Committee, as saying Dong Nai had in the past attracted some investment projects producing components, accessories and equipment such as coat buttons, footwear soles and fabric, but the figures were still modest and unable to satisfy local demand.

"If the situation does not improve, industrial production will continue to depend on imported inputs, making it difficult for firms to reduce costs and become more competitive, not to mention the impact on the nation's trade deficit," Thai said.

Dong Nai's industrial sector has for many years now focused mainly on developing key industries like textiles and garment, footwear, automobiles, motorcycles and electronics, either as outsourced or assembly projects that are characterised by low added value and low competitiveness.

Support industries play an important role in enhancing the competitiveness of finished industrial products, increasing the ratio of local content and reducing dependence on imported inputs, the Tin Tuc report said.

It said the engineering, electronics and garment and textile sectors have invested a lot in developing support industries over the past years, achieving significant progress and contributing greatly to export growth.

However, most support industries in the province are being developed by Japanese and Taiwanese companies, with domestic producers making up a minority.

Domestic firms in the sector lack links with primary industries and large manufacturers so they cannot make big investments in parts production, Tin Tuc said.

Citing experts, it said Government's policies to develop support industries were not attractive enough to stimulate domestic investment in the sector.

"The development of support industries in the province is gaining urgency, because it is needed to meet integration requirements and local socioeconomic development," Thai said.

Dong Nai would strive to realise the goals of the support industry development plan and meet the overall target of industrialisation and modernisation by 2015, he added. — VNS

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