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Economic Sector

Last updated: Wednesday, December 13, 2017

 

Electronics Industry: Imports Make up 77 Pct of Product Value

Posted: Thursday, December 07, 2017


This figure was reported by the Supporting Industry Enterprise Development Centre (SIDEC) under the Industrial Policy and Strategy Institute (IPSI), Ministry of Industry and Trade, in a survey released at the Workshop on Connectivity in Electronics Industry Development in Vietnam hosted by the Central Institute for Economic Management (CIEM) in Hanoi on November 28.

95 per cent of electronics exports come from FDI firms
The number of electronics enterprises in Vietnam increased rapidly from 256 in 2005 to 1,021 in 2014. The workforce in the electronics industry increased from 46,000 in 2005 to 500,000 people in 2016. Vietnam is currently the world's 12th largest exporter of electronics and the third largest in ASEAN. Ms Nguyen Thi Tue Anh, Vice President of CIEM, said, following the advent of multinational corporations such as Samsung Electronics, Canon and Intel, the face of Vietnamese electronics industry is changing positively.

However, 95 per cent of electronics export value is contributed by FDI enterprises. In 2016, mobile phone and parts exports valued at more than US$34 billion, 99.8 per cent of which came from FDI enterprises. In 2017, the value is expected to exceed US$70 billion but this reality will not change. This shows that the role of domestic enterprises is very weak. According to the Supporting Industry Enterprise Development Centre, most domestic companies primarily undertake assembly, supply of services and simple parts like mechanical, plastic and rubber components. Therefore, they lack competitiveness or clear development strategy and their products have low added value.

Sectoral imbalance
Mr Cao Bao Anh from the Department of Industry under the Ministry of Industry and Trade, said, the Vietnamese electronics market is seriously imbalanced and lacks long-term development strategy. Currently, consumer electronics products such as audio-visual devices, entertainment gears have the largest market. In production structure, consumer electronics products assembled or manufactured in Vietnam account for about 80 per cent. Consumer electronics revenue makes up for 30 per cent of the sector’s total revenue.

Ms Do Thi Thuy Huong from Vietnam Electronics Industry Association (VEIA), said, while FDI electronics companies are seeking to reduce costs, domestic companies still make old products with low added value. Most Vietnamese companies only engage in assembly and distribution, not making intensive investment, technology and automation. At the same time, product research and development (R&D) at Vietnamese businesses is still weak, said Mr Cao Bao Anh.

Old solutions
The final message from the workshop seems not to be new, according to some experts. Domestic companies are recommended actively investing in production and technological upgrading. At the same time, the government needs to have more positive policies to encourage domestic enterprises to join more deeply in supporting industries.

According to some experts, Vietnam will necessarily have a clear electronics development strategy which will define core products. Meanwhile, companies need to determine their product segments and target customers and envisage consumption trends and world tech development.

The Ministry of Industry and Trade will continue to issue mechanisms and policies on business support to improve their technical and technological competences to approach sophisticated products made by foreign enterprises. At the same time, the ministry will create channels to help Vietnamese businesses to boost trade and investment promotion and adopt new business practices to join global supply chains.

Nguyen Thanh








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