Domestic firms in support industries currently meet only 10-15 per cent of the local procurement demand with mostly simple and low-value components and materials, even though incentive policies for developing support industries were raised three years ago. — Photo BizLIVE

HA NOI (Biz Hub) — Viet Nam should boost the development of support industries to improve the production chain for multinational corporations, as it can meet a modest portion of local demand for raw materials.

According to the Ministry of Industry and Trade, domestic firms in support industries currently meet only 10-15 per cent of the local procurement demand with mostly simple and low-value components and materials, even though incentive policies for developing support industries were raised three years ago.

There remains a large gap between the demand of multinational corporations and the manufacturing capacity of domestic firms, the ministry said, adding that Viet Nam had still failed to provide technology-intensive components.

A report by the Industrial Strategy and Strategy Institute revealed that the support industries of Viet Nam had failed to meet the demand of many industries, including automobile production, garments and textiles, mechanics and electronics.

Specifically, the automobile industry aimed to reach a local procurement rate of 60 per cent by 2020, but the current rate is a mere 7-8 per cent. The local procurement rate of the garments and textiles industry was expected to reach 60 per cent by 2015 and 70 per cent by 2020. However, in 2013, the sector imported 99 per cent of its cotton, 60 per cent of its fibre and 70 per cent of its cloth.

Domestic firms were urged to pay attention to intensive investment in technology and equipment rather than production scale expansion and were tasked with ensuring three factors were maintained: stable quality, on-time delivery and reasonable prices for the production chain.

An expert from the institute said incentives of tax, credit, land and infrastructure for domestic firms to invest in support industries must be clarified.

The national programme to develop the support industries aims to see these industries meet some 45 per cent of local procurement demand by 2020 and 60 per cent by 2025. — VNS