Development of Supporting Industries Helping Increase Added Value for Products

Located in the Central region’s key economic zone, Quang Nam has all the elements for developing the supporting industry and is one of the localities in Vietnam that pays the most attention to local supporting industry development.

Quang Nam borders two large industrial hubs in the Central region key economic zone, namely Da Nang and Quang Ngai, and is conveniently located on National Highway 1A, a trans-national route. It has the North-South Railway running through, Ky Ha Port and Chu Lai International Airport. Notably, Quang Nam is investing into Cua Dai Bridge and a coastal road connecting Da Nang – Hoi An – Chu Lai – Dung Quat, creating new development opportunity for the province's vast coastal area.

Regarding industrial infrastructure, Quang Nam has Chu Lai Open Economic Zone and 5 large industrial zones. Dien Nam – Dien Ngoc Industrial Park is one of the most efficient industrial parks in Vietnam. At present, Chu Lai Open Economic Zone has many of the largest-scale projects such as Chu Lai – Truong Hai Automobile Manufacturing and Assembling Complex with production capacity of 45,000 vehicles per year, Chu Lai Float Glass Plant with a daily production of 900 tonnes, and Chu Lai Soda Manufacturing Plant with an annual production of 200,000 tonnes.

With such strengths, Quang Nam province has significant advantages of attracting supporting industries. Currently some provincial spear-head industries such as automobile assembly, machinery, heavy equipment and leather footwear are receiving much investment. Besides, given the advantage of its geographical location, the province has advantages in attracting investment into supporting industries, providing accessories to automobile and motorbike industries, home electronics and appliances, to meet demands of national production and manufacturing, especially in the Central Region’s key economic zone and aiming at export.

Supporting industries in Quang Nam province were formed rather early in some sectors, such as manufacturing accessories, mechanical accessory sets for machines for agricultural production, and traditional fabric weaving in Duy Xuyen. In 2004 – 2010, besides the development of downstream industries, provincial supporting industries saw gradual growth in some sectors such as automobile mechanics, textile & garment – leather footwear and chemicals. However, generally, supporting industries in Quang Nam are still weak with limited capacity and technology, and poor ranges of product types. Industrial production value of supporting industries in Quang Nam is estimated at over VND420 billion, mainly involved in textile and products of mechanical engineering industry for automobile manufacturing, while electric-electronic and chemical supporting industries are of low production value and without featured products.

Manufacturing mechanics industry in the province has seen the strength of Truong Hai Auto Corporation, the spotlight and great potential in both industrial development and supporting industry. Meanwhile, electric-electronic field has only a few enterprises; although textile-garment and leather footwear has promoted production at a rather good scale, it’s still difficult to call for investment into the supporting industry for this sector. The province has also actively developed its network of sea ports and transport infrastructure to appeal investment into production of supporting industry behind products for export. In addition to development of provincial industries in general, there are some businesses in the province that have made investment into manufacturing mechanics, electronics, textile and garment supporting industries for export, but with small volume and not high production value.

Building foundation for investment attraction into supporting industries

When building up policies for supporting industry development, the province has identified key industries, potential supporting industry sectors, narrowed down and specified priorities. These are crucial foundations for the province to introduce reasonable preferences for the development of targeted supporting industries. However, the current biggest difficulty regarding provincial infrastructure in development of supporting industries is that the human resources and training system that is not strong enough. To address this weakness, the province has successfully built up the mechanism of human resource training to be suitable to investment projects. Apart from policies to support labour training, the province has oriented investors to send their employees abroad for technical training (CCI Vietnam) or open on-site training centres (Vocational college of Truong Hai Auto Joint Stock Corporation). Given such policies, investment projects in the province, especially those in Chu Lai Open Economic Zone, have found stable and qualified human resources for long-term development. This is the crucial foundation for investment attraction in supporting industries.

Furthermore, Quang Nam is appraising the Development Plan for Supporting Industries in the province to 2020, with vision to 2025. Director Nguyen Quang Thu of the Quang Nam Department of Industry and Trade explained that “given the current provincial resources and development of Truong Hai Auto Corporation and growing industries in the Central Region’s key economic zone such as Dung Quat oil refinery and petrochemistry and Doosan heavy industry, successful development and implementation of the Development Plan for Supporting Industries will create a foundation for local industrial development,orient investment attraction as well as public governance activities, and build up supporting policies related to industrial sectors and supporting industries.”

Also according to Mr Thu, upon the careful study of features in supporting industrial production, potential in industrial development, supporting industries of Quang Nam province as well as orientation for industrial development in the Central Region’s key economic zone and across the country, in coming time, the two sectors of manufacturing mechanics and textile-garment supporting industries will be fostered by the province aiming at in-depth industrial development, generation of high added value for industrial products, formation of strong supporting industries and reducing the trade gap. Other supporting industries will be developed sustainably, suitable with the potentials and features of each sector and the provincial orientation.