08:33 | 31/07/2016 Industry
(VEN) - Vietnam needs to boost support industries and grasp opportunities to participate in the global supply chain by utilizing existing connections with foreign direct investment (FDI) enterprises.
Support industries underdeveloped
According to Deputy Director of Local Science and Technology Development Department, Ministry of Science and Technology Tran Van Quang, there are 1,383 support industry companies, accounting for 0.3 percent of the country’s total number of businesses, the majority of which are small and medium-sized enterprises that are weak in competition and generate little added values due to mainly performing assembly or low-level processing.
At a recent support industry workshop, Deputy Minister of Industry and Trade Nguyen Cam Tu said that there were few Vietnamese support industry enterprises able to join Samsung’s supply chain. This year, Samsung has signed contracts with 190 Vietnamese support industry enterprises, a triple increase over 2015. However, only three of which are able to become secondary electronic device suppliers. Others are primary suppliers for packaging cell phones and tablets for Samsung.
“Any companies that meet Samsung’s requirements on quality, delivery and price are qualified for becoming suppliers for the Group. Vietnamese enterprises are potential but lack a good strategy”, said General Director of the Samsung Electronics Vietnam Complex Han Myoungsup.
Opportunities to join the global supply chain
The government has issued a series of support industry incentive documents including Decision 111/2015 (effective from January 1, 2016), Circular 01/2016/TT-NHNN and Circular 21/2016/TT-BCT, with a view to encouraging domestic enterprises to engage in support industries and join the global supply chain through promoting links with FDI enterprises.
Samsung, Vietnam’s biggest investor, is trying to drive local businesses into its global value chain. There are 63 Vietnamese companies working on the Samsung’s global supply chain, 11 of which are primary suppliers and 52 are secondary suppliers. Han Myoungsup expects the number of local Vietnamese support industry companies to increase, as Samsung will continue to support domestic enterprises.
Another example with Toyota, Vietnamese enterprises must compete with Thai counterparts in securing orders, although there is a trend of outsourcing electronic, auto parts and components to Vietnam and other ASEAN countries. Therefore, both local authorities and enterprises need to join to develop support industries.
Director General of Foreign Investment Agency, Ministry of Planning and Investment Do Nhat Hoang affirmed to focus more on the new projects in hi-tech and environmental-friendly industries, and the ones which can strengthen regional and sectoral links to join the global supply chain.