To become a modern industrial province and a major center for automobile and motorbike manufacturing, Vinh Phuc prioritizes the development of supporting industries as an important strategy to attract foreign investment.
Bolstering the development of supporting industries
Vinh Phuc province has about 400 companies in supporting industries, with over 70 participating in supply chains of major corporations. It hosts four major manufacturers namely Toyota Vietnam, Honda Vietnam, Daewoo Vietnam Bus Company and Piaggio Vietnam, who lead in developing mechanical parts and the automotive sector. As a result, Vinh Phuc ranks among the Top 15 provinces in industrial value contribution, with its motorbike industry at the top nationally and the electronic components industry sixth after major cities/provinces.
Established in 2001 on over 16 hectares in Khai Quang Industrial Park, Vietnam Precision Industrial No. 1 Co., Ltd (VPIC1) is a key investor contributing significantly to the province. Affiliated with Eurocharm Group (Taiwan), VPIC1 manufactures components for automobiles, motorbikes, snowmobiles and medical equipment. With ongoing technological advancements and investment in cutting-edge machinery, VPIC1 has become a leader in localization and the province's supporting industries, partnering with renowned firms like Toyota, Honda and Ford. In recent years, the company has achieved annual revenues exceeding US$150 million, contributed over VND 100 billion to the state budget, and provided nearly 3,500 jobs.
To enhance supporting industries, Vinh Phuc province announced Resolution 57 to attract investment and support business growth, along with Decision 39 to assist priority manufacturers in supporting industrial products. Decision 23 outlines the management of funds for industry development, while Decision 3663 allocates VND 95 billion for a support program (2021-2025) aimed at qualifying over 50 parts and component manufacturers as first and second tier suppliers for the automotive, motorbike, electric and electronics sectors. Additionally, 10 local manufacturers are now part of value chains with large firms, producing products that meet international standards for export.
According to the Provincial Planning for the 2021-2030 period, with a vision to 2050, Vinh Phuc is resolved to develop industry intensively, make breakthroughs in improving productivity and product quality, and ensure conditions for green growth and sustainable development. Accordingly, the province has focused on developing key supporting industries like prioritizing the production of electronic and semiconductor industries; developing mechanical engineering, assembly and metal production to become a foundational industry and manufacturing environmentally friendly automobiles and motorbikes; and encouraging the development of mechanically engineered products for industry and agriculture.
Besides, the province has enticed investment projects in line with its industrial development orientation, especially high-tech manufacturing projects like computers, phones, electronics, semiconductors, automobiles, electric vehicles, pharmaceuticals and high-tech agriculture. As a result, Vinh Phuc has become one of the largest centers of high-tech, electronics, automobile and motorbike industries in the country.
Strengthening linkage between FDI firms and local companies
In response to Resolution 115/2020 of the Government on solutions for developing supporting industries, Vinh Phuc province has strengthened linkage and capacity for domestic companies to meet supply chain requirements and supported the connection of supporting industries and high-tech companies with large organizations and foreign-invested firms. The province directed specialized agencies to register with the Ministry of Planning and Investment to join Component 3 of the Link SME Project to promote reforms and improve the connectivity capacity of small and medium-sized enterprises (SMEs), funded by USAID. The locality coordinated with the Vietnam Institute of Strategy and Policy for Industry and Trade under the Ministry of Industry and Trade to carry out “Research on the current situation and solutions to support connection, linkage and cooperation between local companies and FDI companies” project. At the same time, it has stepped up communications and consultations on competitiveness for companies, promoted and supported them in participating in supply chains run by FDI enterprises.
Investment in Vinh Phuc's automobile and motorbike supporting industries remains modest, leading to limited product variety and competitiveness. Major firms like Toyota Vietnam and Honda Vietnam import significant quantities of components for vehicle manufacturing. Most supporting companies are small to medium-sized, with over 80% employing fewer than 50 staff and generating low production value. Key material industries, such as iron, steel and plastics, are underdeveloped and heavily reliant on imports. Supporting products often have low added value and are labor-intensive. Additionally, local second-tier suppliers face challenges in capacity, technology and governance to engage effectively in FDI-led supply chains.
To develop supporting industries, the Vinh Phuc Provincial People’s Committee has tasked relevant agencies with implementing key solutions, including promoting supporting industrial enterprises through mass media, organizing trade fairs and exhibitions, hosting investment promotion events to explore domestic and foreign markets, and assisting local companies in joining FDI-led supply chains.
Vinh Phuc will implement support policies for training high-quality human resources and enhancing production technologies. This includes researching, developing and testing components, as well as improving the Vinh Phuc Investment Promotion and Business Support Center to address challenges and facilitate the growth of supporting industrial companies.
By Tran Ngoc, Vietnam Business Forum