09:57 | 07/03/2018 Industry
(VEN) - Vietnam has adopted many policies designed to boost development of the electronics support industries. However Vietnamese businesses mainly supply packaging and plastic and rubber parts for electronics manufacturing in the country, while most accessories are imported.
Low local content
A survey conducted by the Institute for Industry Policy and Strategy under the Ministry of Industry and Trade showed that the electronics industry has to import about 77 percent of its products’ added value, meaning that the domestic supply of electronic components is very low.
Vu Thi Thanh Huyen, lecturer at the University of Commerce, said most important components of electronic products made or assembled in Vietnam are imported. Businesses tied to the supply chain of electronics manufacturers are mostly foreign-invested firms or joint ventures.
According to Huyen, most electronic products sold in Vietnam are imported. Some are assembled domestically but most of their components are foreign-made. Domestic businesses are only involved in finishing products by making packages, manuals and plastic parts.
She also said support industry businesses are mainly small and medium-sized enterprises, with limitations in terms of capital, technologies and high-quality human resources, making it difficult for them to participate in the supply chain of electronics manufacturers.
Vietnam has 610 manufacturers of electronic accessories, accounting for half of the total number of electronics businesses. However, Huyen said foreign-invested electronic makers and assemblers, such as Samsung Electronics, rarely sign long-term contracts with Vietnamese suppliers of components. In addition, local businesses mainly provide low-value components such as packaging, plastic and metal parts, or transport and catering services. Foreign-invested suppliers mainly supply sophisticated components that make up most of the products’ value.
Bang Hyun Woo, deputy general director of Samsung Vietnam, said that under the guidance of Samsung, the products that Vietnamese businesses can supply to Samsung have shifted to more specialized fields, such as plastic injection or more sophisticated parts. By the end of 2016, Samsung’s official local content was 57 percent. The number of Samsung’s tier-1 Vietnamese vendors had grown to 29.
Nguyen Thi Tue Anh, deputy director of the Central Institute for Economic Management (CIEM), said it is necessary to promote links between domestic businesses and FDI companies to help Vietnamese firms participate in the regional and global value chain. In particular, domestic businesses need more support from the state. Cao Bao Anh from the Industry Department under the Ministry of Industry and Trade said foreign businesses must be encouraged to transfer modern technologies to Vietnamese partners.
|According to the Vietnam Electronic Industries Association, Vietnam’s consumption of electronic and electrical appliances is expected to rise from 7.3 percent to 11.9 percent by 2020.|