VN must develop parts-supplying industry

Thursday, Dec 20, 2018 08:06

Workers assemble cars at Ford Viet Nam Company in the northern province of Hai Duong. Viet Nam needs a proper strategy to thrive in the global production chain, Prime Minister Nguyen Xuan Phuc stressed. — VNA/VNS Photo Tran Viet

The Vietnamese Government will issue a resolution on promoting the development of parts-supplying industry, heard a conference held by the Government Office in Ha Noi on Wednesday.

Prime Minister Nguyen Xuan Phuc said it was necessary to build a strategy to develop the industry with an aim to enable Viet Nam to engage deeply in the global production chain and become a production centre of the world.

Praising results for footwear and electronics production, PM Phuc said there are several problems.

Viet Nam has not developed spearhead industries as expected to drive the development due to the lack of effective policies for enhancing the capacity of private firms, the Prime Minister said.

“Many policies are issued but they are not effective enough,” he said, adding that incentive policies for the parts-supplying industry focused on administrative procedures, taxes and credits but attention to developing market for products, improving quality and enhancing technology capacity remained inadequate.

“The number of Vietnamese suppliers is modest while most of them are of low capacity,” he said, citing statistics of the Ministry of Industry and Trade that Viet Nam just had around 2,300 companies operating in the part-supplying industry in 2016, only accounting for nearly 4.5 per cent of the total number of firms operating in the manufacturing and processing industry. Only three hundred are now engaged in the production chains of multi-national corporations.

“We have made efforts but most Vietnamese suppliers are not capable of participating in the global supply chain due to a considerable gap in technology level with other countries,” Phuc pointed out, adding the links between the domestic and foreign direct investment (FDI) sectors remained limited.

Stressing the ambition of the industry, Phuc said Viet Nam needs to grasp opportunities from the global production transition trends to turn our country into a production centre of the region and the world.

To realise this, focus must be placed on raising policies to develop orientations for a smart parts-supplying industry.

Phuc also urged producers to enhance co-operation, citing the quote: “If you want to go fast, go alone. If you want to go far, go together.”

Phuc also said special attention should be placed on promoting research and development and developing talents.

Phuc urged the Ministry of Industry and Trade to complete development policies and submit them to the Government early, adding that, if necessary, a stimulus credit package or elimination of taxes on several components could be proposed.

In addition, it was critical to develop firms which became growth drivers for the parts-supplying industry.

Deputy Prime Minister Trinh Dinh Dung said Viet Nam lacked firms which played a role as a driving force to create market and bring opportunities for local suppliers.

Vietnamese producers still looked at the domestic market and not many targeted the global market. “Viet Nam is integrating rapidly and intensively, the target should be the global market,” Dung said, adding that participating in the global value chain was a solution.

Dung said policies for the parts-supplying industry should prioritise enhancing production capacity rather than simply providing incentives.

Minister of Industry and Trade Tran Tuan Anh said countries and territories with developed industries like Japan, the Republic of Korea, Taiwan and Thailand all spent huge resources, with a budget worth billions of US dollars each year to enhance capacity.

“Investing in parts-supplying industry is a critical solution to develop revenue for the budget in the long term, improve the quality of the economy and enhance the national capacity,” Anh said.

According to the ministry’s report, it would take a long time to develop and it was necessary to allocate appropriate resources to support firms, especially small and medium - sized enterprises (SMEs).

From experiences in the world, the lessons for Viet Nam would be developing appropriate policies targeting non-State enterprises and allocating resources to enhance capacity of driving companies in prioritised industries and SMEs operting in the parts-supplying industry to leverage their production capacity to the global level, the report said.

Viet Nam set goal of developing parts-supplying industry with high competitiveness which met 45 per cent of the domestic production demand by 2020 and 70 per cent by 2030.

By 2020, at least 1,000 firms would be capable of supplying parts and components for multi-national corporations, from currently just 300 firms. The number would be doubled by 2030. — VNS

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