firms in Viet Nam struggle to find raw materials
HA NOI — Locally made
materials can only satisfy 22 per cent of demand from Japanese companies
operating in Viet Nam, according to a recent Viet Nam Development Forum (VDF)
report, forcing executives to look abroad for intermediary goods and services.
The VDF, which is
partially funded by Japan’s Government, estimates that Malaysia’s and
Thailand’s suppliers meet 45 per cent of Japanese companies’ demand.
The report indicates it is
very difficult for Japanese producers to find parts and accessories in Viet Nam,
and among hundreds of local suppliers companies may only find one that meets
their demands. The VDF noted problems actually finding suppliers, with
executives having to rely on telephone books or word of mouth references from
One the opposite end,
local companies say that it may take two to three years before they receive an
order from their Japanese counterparts, which discourages them from seeking out
further business. In addition, Japanese firms tend to be too choosy about input
materials, according to suppliers.
The main concern, though,
for the VDF and companies on both sides is the lack of high-quality materials
available in the local market. The forum estimates that input materials account
for 70-90 per cent of the companies’ production costs. If the Viet Nam’s
input materials suppliers do not find the ways to improve quality standards, the
production companies will take a lot of money to import the input materials from
other countries, warns the VDF.
The organisation also
warns that the labour force needs to be better trained in order to help improve
companies organise training courses for local labourers, the employees often
discontinue the courses, even though it could lead to a higher paying position,
says Ngo Duc Anh, a VDF researcher.
The VDF was established
under a co-operation between Viet Nam’s National Economics University and
Japan’s National Graduate Institute for Policy Studies (GRIPS). — VNS