Accelerating Supporting Industry Development, FDI Attraction

 

The event series, co-organised by the Japan External Trade Organisation (JETRO) and the Vietnam Trade Promotion Agency (Vietrade), is one of important activities in commemoration of the 40th founding anniversary of Vietnam - Japan diplomatic relations.

 

An official from the Ministry of Industry and Trade of Vietnam said manufacturing industries like automobile and parts manufacturing, and electric and electronic and parts manufacturing are playing an important role in economic development acceleration. To prop up industrial development, it is important for Vietnam to organise some high-quality specialised technology exhibitions for domestic manufacturing industries. The ministry believed that the four events, namely the 5th Vietnam - Japan Exhibition on Supporting Industries in Hanoi (SIE 2013); Japanese Monozukuri Technology Exhibition, Vietnam Manufacturing Expo 2013, and Industrial Component & Subcontracting Vietnam 2013, all held concurrently in Hanoi, will be an effective bridge linking Vietnamese and international companies engaged in supporting industries to meet, exchange and set up long-term business and investment cooperation.

 

Mr Daisuke Hiratsuka, Executive Vice President of JETRO, said Japanese companies’ interests in Vietnam continued to rise. The number of Japanese companies and business delegations visiting Vietnam to survey the market is on the rise. The number of Japanese manufacturing companies in Vietnam has also increased, along with the amount of Japan’s direct investment. As of March 2013, a total of 1,900 Japanese projects worth US$31.8 billion had been licensed in Vietnam. Of the figures, 55.7 percent of projects and 83.4 percent of investment capital were engaged in the manufacturing industry. With their huge investments, Japanese businesses are playing an important part in Vietnam’s economic development.

 

He also stressed that difficult localisation of parts made in Vietnam is one of the problems Japanese manufacturing companies in Vietnam are facing. According to JETRO surveys, the parts localisation rate in China and Thailand are 50 - 60 percent, while the rate in Vietnam was 27.8 percent.

 

Labour costs in Vietnam are relatively low and quite competitive in comparison with neighbouring countries like China and Thailand. However, as materials are dependent on foreign supplies, in some cases, total production costs are very high. Hence, investment environment improvement is a huge challenge. To improve Vietnam’s competitiveness internationally and get ready for the ASEAN Economic Community formation by 2015 and the industrialisation cause by 2020, the country’s supporting industry development is vital and indispensable.

 

Mr Chainarong Limpkittisin, Managing Director of Reed Tradex Company, said an advanced nation needs to develop many different industries to grow and develop in harmony. Supporting industries are one essential factor that we need to build and maintain well to strongly back economic growth. With outstanding supporting industries and promising prospects of electronics, automotive and motorcycle parts industries, Vietnam is currently a good manufacturer of printers and photocopiers for leading Japanese brands. This will promote Vietnam’s exports. This exhibition helped boost strength and competitiveness of supporting industries.

 

According to experts at the opening ceremony, supporting industry exhibitions have brought in many high-value production contracts for Vietnamese businesses like mould engineering, and created more business opportunities between Japanese and Vietnamese firms. Japanese companies’ standards for localised products are so high that immediate contract signing is unlikely and this exhibition serves as a bridge to link Vietnamese parts manufacturers with potential industrial firms.

 

Speaking of the supporting industry development orientation policy of Hanoi City, Mr Nguyen Van Suu, Vice Chairman of Hanoi People's Committee, said, according to national industrial development strategy and Hanoi industrial product development plan in the 2011 - 2015 period, developing key industrial products and supporting industries, leveraging domino effects in production stages, creating intermediate products with high content of knowledge and added value, and playing a support role in industrial manufacturing system and consumer industry are top tasks of the Hanoi industry and trade sector to quicken economic restructuring, industrialisation and the modernisation process.

 

He said that to achieve these strategic goals, Hanoi has closely coordinated and connected with other provinces and cities in the region to allocate human resources and develop industrial component production. Through the exhibition, companies in Hanoi and other northern provinces and cities had the opportunity to meet, study competency, and exchange business and investment cooperation in order to increase valuable commercial transactions with partners not only from Japan, but also from other countries in ASEAN and around the world.