Local Economy

Last updated: Wednesday, May 15, 2019


Tapping Potential for Key Industries Development

Posted: Monday, June 11, 2018

Identifying that four key industrial sectors, namely mechanical engineering, food processing, chemicals - plastics - rubber, and electronics – information technology (IT), play a very important role in local industrial development and economic structure transformation, over the past years, Ho Chi Minh City has deployed many programmes and policies to support these four key industrial sectors to make a spectacular breakthrough.

Fast and strong growth
According to the statistics of the Department of Industry and Trade of Ho Chi Minh City, the industrial production value of the city accounts for approximately 32.3 per cent of the industrial output of the Southern key economic zone and contributes about 16 per cent of the nationwide industrial production scale. The improved quality of growth, the relatively thriving scale and added value in industrial production of the city are shown in the Industrial Production Index (IIP) of the four key industrial sectors with a spectacular growth, a rise by 1.62 times over the average growth rate of the whole industrial sector in 2017 (this growth increased by 1.06 times in 2016). Specifically, in 2016, the IIP of mechanical engineering increased by 7.98 per cent, electronics and IT rose by 8.83 per cent, chemicals - plastics - rubber slightly decreased by 0.58 per cent and food processing grew by 11,88 per cent. In 2017, the IIP of mechanical engineering increased by 2.37 per cent; electronics and IT rose by 39.11 per cent, chemicals - plastics - rubber grew by 3.35 per cent and food processing increased by 3.89 per cent.

In the period 2015-2016, the four key industrial sectors contributed significantly to the municipal industrial structure with the proportion growing from 59.8 per cent in 2015 to 60 per cent in 2016. Namely, in 2016, the proportion of mechanical engineering accounted for 20.4 per cent, electronics - IT made up 4.1 per cent, chemicals - plastics - rubber accounted for 18.6 per cent, food processing made up 16.9 per cent.

According to Mr Pham Thanh Kien, Director of the Department of Industry and Trade of Ho Chi Minh City, over the past time, the city has implemented many programmes and policies assisting business development such as Investment Promotion Programme; Connecting Bank – Enterprise Programme; Investment Promoting and Supporting Programme; Programme for Supporting and Enhancing Localisation Rate; and Programme for Supporting Communication in Businesses Promotion. On the implementation of investment promotion programme under Decision 50/2015/QD-UBND dated October 30, 2015 of the People's Committee of Ho Chi Minh City, as of March 2017, the Department of Industry and Trade has advised the People's Committee to approve 15 investment projects in the fields of industries and supporting industries with the total loans of VND585.316 billion with interest rate support.

Placing a focus on supporting industrial and supporting industrial enterprises, the Department has advised the municipal People's Committee to issue Decision 15/2017/QD-UBND dated March 16, 2017 on stipulating support for enterprises investing in manufacture development in the fields of industries and supporting industries. Furthermore, with the Department’s consultation and proposal, the municipal People’s Committee promulgated Decision 15/2017/QD-UBND dated March 16, 2017 on supporting enterprises which invest in manufacture development in the fields of industries and supporting industries. The municipal inter-sector team (led by the Department of Industry and Trade) already received 11 project dossiers, evaluated and appraised nine projects with the total investment capital of VND943.184 billion; two projects among them with the total investment capital of VND221.975 billion (a loan of VND110 billion with interest rate support) were approved by the municipal People's Committee. The investment promotion programme is considered one of the important solutions and an opportunity for the municipal supporting industrial enterprises to invest in production expansion, renovation of machinery, equipment and technology. Although a limited number of enterprises accessing to and involving in the programmes, thanks to the approved projects from the programmes, many enterprises such as Hiep Phuoc Thanh Production Company, Minh Nguyen Supporting Industries JSC have taken part in electronic products and components production chain of Samsung Group.

Ready to support businesses
According to economic experts, in recent time, although industrial production of Ho Chi Minh City in general and the four key industries in particular achieved relatively good development, it has not corresponded with the municipal potential. The majority of manufacturing enterprises still depended relatively much on imported materials and auxiliary materials, with limited equipment and technologies resulting in high prices, weak competitiveness and low value added content in products and goods. The main reason is that most of industrial manufacturing enterprises located in the city are SMEs with limited capital and scale, not investing in renovation and equipment improvement; maintaining traditional manufacturing methods so long, not investing much in product development research, production management, business strategy and brand name construction and after-sales service, causing a limited competitiveness. The majority of businesses have difficulty in accessing capital sources. The land lease price and manufacturing space fee in the city are still high. In addition, the linkage between local industries and supporting industries enterprises with finished products manufacturers and FDI businesses remains limited.

To strengthen connection, promotion and introduction on enterprise trading and manufacturing capabilities, the Department of Industry and Trade of Ho Chi Minh City officially launched the database gateway about supporting industries (http://csid.gov.vn) on April 18, 2017. Up to now, information on 530 of 860 supporting industries enterprises in the city has been updated and remains supplemented and finalised. As noted by Mr Pham Thanh Kien, although the database gateway has been just established with detailed information on capabilities of supporting industries enterprises being finalised and updated, its establishment has contributed to creating an effective connection channel and opportunities for the municipal enterprises to introduce their capabilities to partners, especially FDI enterprises.

Moreover, the Department has actively executed activities to support enterprises, particularly SMEs in training for improvement of production, management capability and quality; strengthening activities to support and advise businesses enabling them to access to loans of banks; accelerating the implementation of the programme on stimulating and assisting investment and production enterprises in the field of supporting industries; constructing divisions for supporting industries and high-rise workshop buildings in IZs and EPZs to help SMEs access to production sites with appropriate scales and areas. "For an adequate development of the four key industries, Ho Chi Minh City not only actively supports enterprises in terms of capital, policies, land and workshops but also regularly organises trade promotion activities, linking products supply and demand to foreign businesses and initially achieving very encouraging results. In the time to come, we will continue to organise connecting activities aimed to help the municipal enterprises in industries and supporting industries have more opportunities to exchange, connect and cooperate with FDI enterprises," said Mr Kien.

My Chau

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