SOEs Slow Response to Industry 4.0

9:31:52 AM | 14/1/2020

The draft National Strategy on Industry 4.0 does not set forth any specific goal for State-owned enterprises (SOEs) to promote science and technology. It only points out directions, solutions and tasks that SOEs are encouraged to adopt. Perhaps, without much pressure, SOEs are still responding slowly to Industry 4.0.

Challenges for SOEs

As SOEs are assigned to play a key role in the economy, act as a growth engine and lead other economic sectors, they will be strongly affected by Industry 4.0. However, a survey on business readiness to join Industry 4.0 conducted and released by the Central Institute for Economic Management (CIEM) in early November 2019 showed that the SOE sector is slower in applying Industry 4.0 than other economic sectors.

This report pointed out that Industry 4.0 poses great challenges to SOEs as follows:

The governance model of most SOEs is outdated, not active and flexible enough to engage information technology application to many business stages, including decision-making (online meeting, real-time management, etc.) At the same time, the rate of highly qualified employees in SOEs, who are good for Industry 4.0, is still too low to meet Industry 4.0 requirements. In the context of Industry 4.0, SOEs are forced to change their development strategies from resource utilization to technology-based innovation to match the global megatrend. But, according to CIEM, most potential SOEs in Vietnam now rely heavily on extracting natural resources such as oil, coal, minerals and forests and employ medium-quality or low-quality workers, resulting in limited growth.

Meanwhile, the only constraint for SOEs on science and technology is to set up a science and technology development fund and use 3-10% of taxable income for this fund while there is no legal regulation, policy or strategy that sets specific goals of promoting science and technology for SOEs.

There is a dire need to accelerate SOE restructuring, especially for those engaged in priority industries and fields in Industry 4.0, to enable SOEs to develop Industry 4.0. It is essential to modernize and digitize governance, supervise State ownership and support SOEs to improve their digitally enabled operations. Besides, SOEs must develop digital applications, integrate digital features into their smart products and services; expand markets and reach customers using digital technology, upgrade value chains and digitize internal production processes, develop digital formats for products such as QR codes to connect with online payment networks and e-wallets.

Adopting Industry 4.0 to make breakthroughs

At the end of September 2019, Party General Secretary and President Nguyen Phu Trong signed the Politburo's Resolution 52/NQ-TW on guidelines and policies on active engagement in the Fourth Industrial Revolution. With this resolution, the Politburo affirms that the active participation in Industry 4.0 is indispensable. This is a particularly important strategic task that is both urgent and long-lasting for both the political system and the entire society. The active participation in the Fourth Industrial Revolution must be considered an opportunity for Vietnam to make breakthroughs in socioeconomic development. The Politburo aims to develop a strong digital economy; achieve fast and sustainable development based on science - technology, innovation and high-quality manpower; and improve the quality of life and welfare for the people.

According to the resolution, by 2025, Vietnam must build a digital infrastructure on par with the advanced level of ASEAN and broadband internet covers 100% of communes. The digital economy accounts for about 20% of the gross domestic product (GDP) and labor productivity will increase by over 7% a year on average.

By 2030, the 5G mobile network will reach nationwide. All citizens have access to broadband internet with low cost. The digital economy accounts for over 30% of GDP and labor productivity will increase by 7.5% a year on average. There are at least three smart cities in three key economic regions of the North, the South and the Central Coast. The digital government will be completed and some smart city chains will be established in key economic regions in the North, the South and the Central Coast.

By 2045, Vietnam will become a leading manufacturing and service center and a startup innovation center in Asia; have a high-productive labor force, capably master and apply modern technology in all fields of economy, society, environment, defense and security.

Applying modern technology to the garment and textile industry for sustainable development

Mr. Le Tien Truong - General Director of Vietnam National Textile and Garment Group

In the context of Industrial Revolution 4.0, the garment and textile industry has put into stable operation two yarn factories with a yearly output of 10,000 tons in Dinh Quan, Dong Nai province, which were qualified for the U.S. global supply chain to supply yarn to make knitwear fabrics. Their G7 equipment consumes 20% less energy than other devices and needs 50% less workers.

In the coming time, the garment and textile industry will use robots in hazardous workplaces; invest in solar power in suitable factories, strive to use 10% of renewable energy; and integrate big data in the Vietnamese garment and textile industry and interconnect data environment of global buyers and supply chain operators.

In addition, garment and textile companies pledge to invest in green production, adopt modern technology, ensure the lowest emissions, focus on developing non-emission production such as fiber production, waterless dyeing technology, endeavor to add competitiveness and grow toward global supply chain criteria.

5G will be deployed in 2020

Mr. Thieu Phuong Nam - General Director of Qualcomm Vietnam, Laos and Cambodia

Under the aggressive guidance of the Government, Vietnam has made remarkable progress in the 5G network deployment. In the light of clear policy goals of the Government, carriers have started preparing or testing 5G to make sure that Vietnam will become one of the first countries to commercialize 5G in 2020.

Together with urgent preparation for 5G commercialization in Vietnam, public and private sectors need to be prepared to ensure a smooth and good launch of 5G for more Vietnamese people.

Currently, one of Qualcomm's most important goals is to help the Government of Vietnam and its partners like Viettel to soon complete the 5G deployment plan in 2020. 5G infrastructure is an essential factor for Vietnam to achieve the targets of the Fourth Industrial Revolution and national digital transformation. This innovative connectivity technology is key to opening up new opportunities, creating new business models that can change the economy and help Vietnam break out to become a country of strong technology development.

Qualcomm's second focus is to support Vietnamese partners to become more involved in the global mobile device design chain, especially for 5G networks that are about to be rolled out worldwide. Now is a right opportunity to develop the manufacturing industry, and 5G is opening up a huge opportunity for companies to not only succeed in Vietnam but also successfully export “Made in Vietnam” products to the global distribution network.

Digital transformation is a hot trend

Mr. Nguyen Van Khoa, General Director of FPT

Over the past three decades, from doing simple things, FPT has been going global successfully, with many major projects done domestically and internationally for various industries and fields. FPT currently has more than 600 global customers, including 100 in the Fortune Global 500.

Especially, FPT can compete on par with those from the United States, Europe and Japan. FPT not only sells its products but also has already become a partner of many giant corporations worldwide.

There is a common approach for all businesses today: They are all aiming to become digital entities of the future. At the moment, digital transformation is still a ‘hot trend’, which is showing no sign of cooling down. In other words, we will definitely have to face it and have to find a way to live with it. In Vietnam, the rate of businesses that have not started this journey is quite high, as many as 1.5 times higher than the global average. If we do not start, we will easily be removed from the game and will most likely disappear completely. In fact, many famous businesses already disappeared from the market due to slow transformation.

Over the years, FPT has found a methodology of digital transformation, with three basic principles: Think big, start smart and expand fast. And, the smart start is the most important.

Nguyen Thanh