09:25 | 27/12/2019 Industry
(VEN) - Vietnam is revising government policy on supporting industries to update it with products and technologies it seeks to prioritize in order to expand the local content of manufactured goods.
The revision relates to Government Decree 111/2015/ND-CP dated January 1, 2016 on development of support industries, which provides a series of policy incentives for research and development, technology transfer and production.
According to the Industry Agency under the Ministry of Industry and Trade, implementation of the decree has achieved progress in developing support industries, but shortcomings have emerged that need to be fixed. These include products prioritized for development, support industry product manufacturing technology, incentive beneficiaries of support industry production projects, as well as the decree’s compatibility with other legal documents.
The Industry Agency says support industry serves many new fields, and despite the diversification and expansion of the list of support industry products prioritized for development, it still lack products needing to be prioritized for development of specific industries. The Industry Agency, which is compiling the draft revision, is also expected to diversify beneficiaries of the decree’s incentives.
A report by the Ministry of Industry and Trade shows that there are about 3,300 support industry enterprises in Vietnam, including 1,800 manufacturers of spare parts and components, and more than 1,500 producers of raw materials for textile, garment and leather and footwear industries. Support industry companies account for almost 4.5 percent of all enterprises in the processing and manufacturing industry, and are providing jobs for more than 550,000 people.
Vietnamese enterprises are producing molds of all kinds, bicycle and motorbike components, standard mechanical components, electric cable, technical plastic and rubber components, and tires and inner tubes of all kinds, which have met domestic demand and are exported to many countries and territories worldwide, according to the report.
Component and spare part exports yielded more than US$26 billion, while textile, garment and leather and footwear material and accessory exports brought in UD$6 billion. Vietnam exported its support industry products China, the Republic of Korea (RoK), the US, and Japan.
The local content in some industries has improved, reaching 30-35 percent in household electronics, and 40 percent in automobile and motorbike production serving electronics. The local content of some automobile products has even exceeded targets set in the Vietnam automobile industry strategy and master plan.
Most major car manufacturers in the world, such as Toyota, Honda and Ford, operate in Vietnam, requiring components and spare parts suppliers. However, Vietnam lacks a high-quality steel and plastic industry, and manufacturers are forced to import materials with very high logistics costs so that cars imported from Thailand, for example, are still 10-20 percent cheaper than domestically manufactured cars.