Support industries in need of technological assistance

A report recently released by the Mitsubishi Research Institute (Japan) and the Central Institute for Economic Management (CIEM) refers to the lack of technical competitiveness of Vietnamese support industry companies. 

Weak competitiveness

Economic integration is expected to benefit Vietnam, especially in the development of such important industries as textile-garment, footwear and electronics. However, the report points out that Vietnam needs to develop support industries and join global value chains if it is to take advantage of integration opportunities.

According to the report, Vietnam’s support industries remain weak, leading to the increased import of intermediate goods. The cost of making a product in Vietnam is higher than in other Asian countries, which makes domestically made items less competitive. According to the Ministry of Industry and Trade, support industry enterprises recently had to import 80 percent of all materials, spare parts and components that they needed. The local content rate was 32.1 percent in 2015, lower than in 2014.

The report points out that the key difficulty of Vietnamese businesses is to look for partners, which is a consequence of poor information about links and companies in support industries.

Foreign companies also have little information about Vietnamese support industries and face the same problems in looking for partners. Vietnam has had a plan for development of industrial zones for support industries, but the development remains so tardy.

Partners of support industries, such as textile-garment, telecommunications equipment, component and accessory, and footwear sectors have progressed significantly and joined global value chains. However, one thing to know is that foreign-invested businesses are dominating these sectors.

Stronger measures to increase competitiveness

According to Dr. Yoichi Sakurada from the Mitsubishi Research Institute, support industry enterprises need assistance in technological renovation and capability improvement, apart from financial assistance.

Each of the 63 provinces and cities nationwide has a small to medium-sized business promotion center (under the provincial Department of Planning and Investment) and an industry promotion center (under the provincial Department of Industry and Trade). Both kinds of centers offer assistances related to administrative procedures, guidelines, policies, market research, business connection, and trade and investment promotion. However, none of them provide technological development assistance - something that is so important for support industry manufacturers.

A Japanese expert said that the centers should assist enterprises to test products, research and apply new technologies, and develop human resources - something crucial to support industry development in Vietnam.

Consistent policies and detailed plans with incentives for strong investment in support industries, according to experts, are so important to develop and make Vietnamese support industries capable of manufacturing parts and components for trans-national groups as well as accomplishing complicated equipment repair projects.

Apart from overall solutions, experts have suggested establishment of powerful financial institutions to assist support industry businesses to develop and create high quality key products with internationally recognized brands.

Lan Anh / ven