How the government supports the support industry

09:09 | 06/03/2017 Industry

(VEN) - From now to 2020, Vietnam will focus on developing support industries in the fields of spare parts and components, textile and garment, leather and footwear, and the high-tech industry.  

Ten percent of domestic demand

Domestic enterprises have so far satisfied only 10 percent of the domestic demand for support industry products. Their products are mainly simple components and materials with a low value.

Vietnamese enterprises have hardly satisfied the demand for higher tech support industry products. In other words, the gap between multinational corporations’ requirements and domestic manufacturers’ capability is still quite large. Most support industry enterprises in Vietnam have been interested only in expanding their production scale, but not in intensive investment.
Prime Minister Nguyen Xuan Phuc signed Decision 68/QD-TTg on a support industry development program from 2016 to 2025, aiming to create prerequisites and orientations for development of Vietnam’s support industries. The program is designed to help decrease the production costs of automobiles, textiles, garments, electronics, and leather and footwear made by enterprises using domestically made materials. It is also aimed at reducing the cost of a number of associated services, such as transport and logistics.

The program also provides Vietnamese support industry enterprises with the opportunity to apply advanced standards and quality management systems, in accordance with international standards, in order to improve product quality and gradually join global supply and production chains.

Increasing local content

According to the program, domestic enterprises will satisfy 45 percent and 65 percent of the domestic demand for support industry products by 2020 and 2025, respectively. From now to 2020, Vietnam will focus on developing support industries in the fields of spare parts and components, textile and garment, leather and footwear, and the high-tech industry.

The country will focus on developing metal parts and plastics, rubber and electrical components to meet 35 percent and 55 percent of the domestic demand for related products by 2020 and 2015, respectively.

The goal is for 65 percent and 75-80 percent of the domestic demand for textile/garment and leather/footwear support industry products to be satisfied by domestic enterprises by 2020.

Support industries serving the high-tech industry will be developed to manufacture materials and equipment for special use, software and services.

According to the Department of Heavy Industry, the program will help Vietnam gradually reach its support industry development targets in a number of fields. One target is to form a support industry for automobile manufacturing, which will meet almost 35 percent of the domestic auto industry’s demand for support industry products by 2020.

The textile and garment sector will work with the leather and footwear industry to increase the supply of fabric for footwear production, especially export footwear manufacturing.

Lan Anh