HCM CITY (Biz Hup)— The municipal administration plans to implement several measures to develop the Integrated Circuit (IC) industry in the coming years, officials said at a forum on Monday.

Nguyen Anh Tuan, chairman of the HCM City Semiconductor Industry Association (HSIA), said at the international forum on hi-tech supporting industry that the "IC-semiconductor industry" is considered one of the key industries in the world, playing a critical role in industries like information technology, telecommunications, mechanical and automatic engineering.

He said HCM City would follow up on policies issued by the Vietnamese Government to encourage development of the IC-semiconductor industry.

Towards this, the city has outlined its IC development plan for the 2013-20 period, focusing on designing and manufacturing processes to create high added value for the industry, he said.

ICs are small devices made with semiconductor material.

The city wants to turn the IC industry to a key industry, contributing to boost the twin goals of industrialisation and modernisation as well as reinforcing the city's status as the nation's economic as well as science and technology hub, he added.

A major focus of the city's IC industry development plan will be the development of human resources skilled in designing and producing semiconductor products, Tuan said.

Once this is done, the city will establish a "Design House" to support domestic firms in designing and trial-production of ICs.

The city also plans to build an IC-semiconductor factory by 2015 to meet market demand, he said.

Underdeveloped industry

Tuan and many other delegates at the forum agreed that the hi-tech supporting industry is not well developed in Viet Nam.

"For many years, we have attracted big corporations, but mostly assembling companies that have low added value, while important sectors such as research and development (R& D), designing, distribution that yield high-added values have been ignored almost totally."

Osato Kazuhiko, director of the Japan External Trade Organisation in HCM City, told the forum that because of rising labour costs in China and Thailand, many Japanese companies in these markets were considering shifting their manufacturing base to the Indochina region, including Viet Nam.

However, "the biggest problem when investing in Viet Nam is the deficiency in supporting industry," he said.

According to a JETRO survey carried out last year, local procurement of industrial materials and sub-components for Japanese companies was just 28 per cent, compared to 61 per cent in China and 53 per cent in Thailand.

"Viet Nam industry cannot develop without development of the supporting industry. We have supported strengthening of the supporting industry in Viet Nam for 10 years through many business meetings and exhibitions.

"However, even after 10 years, the local procurement rate has still not improved and there have been no remarkable results."

He said this October, Jetro will embark on a new approach called the "Business Alliance for Supporting Industry in HCM City."

Peter Opdahl, president of the ITO Corporation, said Viet Nam needs to move away from a focus on low- cost labour to developing more knowledge-based industries and technology-based industries.

"In order to do that you need support from outside. The Government does a good job of policy, but what we need to start doing is to bring companies in the US$50million or $100million, may be $200 million (scale) here to provide support on a large scale, so that they can support the growth of local Vietnamese companies."

Nguyen Thi Nhu Phuong, chief representative of VEIA in the south, said the Government should provide local firms in the supporting industry with the same incentives in terms of tax or land rentals that are given to foreign firms.

Le Thai Hy, director of the HCM City Department of Communication and Information, said that the city will support enterprises active in hi-tech and supporting industries to solve difficulties they face in terms of capital and human resources.

Forum delegates agreed that the market for IC and semiconductors in Viet Nam has huge potential, offering a great opportunity for domestic and foreign enterprises to invest in and develop this industry.

The forum was jointly organised by the HCM City Computer Association (HCA), Viet Nam Electronic Industries Association, the HCM Semiconductor Industry Association (HSIA) and ITO Viet Nam. — VNS