Workers assemble electronic circuit boards at Youngjing Vina Co Ltd. — VNA/VNS Photo Danh Lam

HA NOI (Biz Hub) — State assistance for the development of Viet Nam's support industries must be studied carefully to ensure its effectivity, experts said.

The call was made in response to the draft decree on the development of supporting industries that the Ministry of Industry and Trade recently formulated.

Under this decree, individual and corporate producers and distributors of products and services for supporting industries will be allowed to borrow low-interest credit from a VND30-trillion (US$1.4-billion) support industries fund.

The fund will be sourced from the State budget, official development assistance (ODA) loans and other investment funds, including an initial aid of VND2 trillion that will act as catalyst for the first three years.

Dao Phan Long, vice chairman of the Viet Nam Mechanical Engineering Association, said the most important task following the establishment of the fund would to determine which companies deserved to receive the aid, to avoid rampant and ineffective investment. Detailed policies should also regulate the use of the fund, Long added.

He suggested that business associations act as advisors while central agencies manage, instead of allocate, the funds to municipal and provincial agencies to further ensu re effective implementation.

Besides the aid, the crafting of appropriate policies for support industries are more urgent, said industry insiders.

Tran Tuan Anh, director of the 19-8 Mechanical Joint Stock Company, revealed that enterprises in the support industries sector were interested in policies that would make their products more attractive to Viet Nam-based foreign companies.

The Government should regulate which Vietnamese-made products foreign companies in Viet Nam have to use in their production, Anh said, adding that Viet Nam's support industries needed this because the capital needed to invest in support industries was huge.

Long said it would be difficult for Vietnamese support industry enterprises to take part in foreign companies' supply chains because the latter often brought in their foreign support industry partners to Viet Nam when setting up establishments in the country.

Viet Nam currently has 1,400 enterprises in its support industries sector that manufacture electrical, electronics, metal and rubber components and accessories.

Inadequate supply of components and accessories from domestic support industries has forced manufacturers to look for foreign suppliers, leading to the country's prolonged trade deficit in industrial production in previous years.

Viet Nam had to import a wide range of components and and accessories worth $53.1 billion last year, and that number is expected to jump to $67.6 billion this year. — VNS