A talk titled“Transferring technology from FDI firms to domestic ones” from Mr Hirotaka Yasuzumi, Managing Director of JETRO Office in Ho Chi Minh City, was presented at the seminar titled "Reality, orientation and solutions for supporting industry development for industrial clusters in southern provinces and cities” held by Vietnam Chamber of Commerce and Industry (VCCI) and VP Bank.
According to experts, the development of supporting industries fails to meet expectations of the economy. Locally sourced parts now make up just 28 percent in industrial products. Particularly, Vietnamese supporting industries cater for just 8 percent for the automotive industry, 20 percent for the electronics industry, 40 percent for the footwear industry and 50 percent for garment - textile industry.
Vu Xuan Dang, Deputy Director of the Southern Investment Promotion Centre under the Ministry of Planning and Investment, said Vietnam’s supporting industries are now at the early stage of development because they remain largely reliant on imported materials, have backward technologies, and turn out substandard products. Compared with other countries in the region, Vietnam’s localisation rate for Japanese companies is 32.2 percent, while the rates of Thailand and Indonesia are 52.7 percent and 40.8 percent, respectively. He said that to create the driving force for the development of supporting industries, the Government will modify investment preference policies for supporting industries. The new Law on Investment will supplement the list of preferential supporting industries to stimulate the development of such sectors. Regarding two specially designed industrial parks for supporting industries in Hai Phong City and Ba Ria - Vung Tau province (Phu My 3), the Government will soon enact investment incentives for businesses to invest in these two industrial zones to lure Japanese subcontracting companies, thus helping Vietnamese subcontracting companies.
VCCI-HCM Director Vo Tan Thanh added that, to support subcontracting companies to deal with the biggest difficulty of production sites, many industrial zones for small and medium enterprises (SMEs) were set up. However, these zones have failed to perform their roles as the occupancy rate in combination is only about 30 percent. He suggested, “The construction of industrial zones suitable for SMEs and side service suppliers is essential for the development of SMEs in general and small and medium parts suppliers in particular."
Vuong Trong Sanh, Director of Industrial Management Department under the Department of Industry and Trade of Dong Nai province, said a majority of supporting industry companies in Vietnam are foreign-invested, while domestic firms play secondary roles. Therefore, in the supporting industry development strategy for the upcoming time, the Government needs to encourage Vietnamese firms to invest in supporting industries to raise the localisation ratio. He said, in the long term, the Government needs to compile and submit the Law on Supporting Industry Development Encouragement and the Law on SME Development Promotion to the National Assembly for approval to create a regulatory framework for the development of supporting industries. He cited that countries in the region such as Japan, South Korea, Thailand and Malaysia always issued laws on the development of fledging industries when they embarked on industrialisation.
However, according to Prof Vo Thanh Thu, Member of the Advisory Council for International Trade Policies and Arbitrator at the Vietnam International Arbitration, Vietnam is still seeing a lot of great opportunities in supporting industry development. In the coming time when FTAs that Vietnam is a signatory of begin to take effect, it will have a more favourable environment for many more countries to enter Vietnam to invest in supporting industries. Remarkably, many big corporations such as Samsung and Microsoft intend to move their production bases from China to Vietnam. They have very high demand for supporting products and this is a real opportunity for Vietnam to expand its supply capabilities. Additionally, with the advent of the ASEAN Economic Community by the end of 2015, a common market will open up and many companies from ASEAN countries will arrive in Vietnam to develop supporting industries. She also noted that developing supporting industries is now essential, but Vietnam needs to toughen environmental pollution monitoring and ensure water sources. She stressed, "If it loosens environmental protection monitoring when it develops supporting industries, Vietnam will have to pay dearly."
Hirotaka Yasuzumi suggested that Vietnam support the development of local businesses and accelerate the transfer of technology from FDI firms to local businesses in order to effectively develop supporting industries.
My Chau
Vietnamese
