Japanese give solutions to develop Vietnamese supporting industry

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Electronic components of 4P Co., Ltd. in Van Giang district, Hung Yen province are supplied to many corporations around the world. Photo: Kien Nguyen

According to Vietnam Customs, in the first five months of 2021, Vietnam's export turnover is estimated at US$130.94 billion, up by 30.7% compared to the same period last year. In which, export turnover of phones and components increased by 19.6%; computers, electronic products and components increased by 26%; machinery, equipment, tools and spare parts increased by 74.8%.

Mr. Vu Ba Phu, Director of the Trade Promotion Department (Ministry of Industry and Trade), said that the above result are thanks to the active participation of the supporting industry in Vietnam. Over the years, Vietnam's supporting industry enterprises have developed both in quantity and quality, improved their production capacity, and become increasingly involved in the global production chain.

The number of enterprises operating in the supporting industry accounts for nearly 4.5% of the total number of enterprises in the processing and manufacturing industry, creating jobs for more than 600,000 employees, accounting for 8% of the total labor force in the processing and manufacturing industry.

Production and business revenue reached more than VND900,000 billion, contributing nearly 11% of the total revenue of the entire processing and manufacturing industry.

Some Vietnamese component manufacturing enterprises have good capacity in such fields as: manufacture of molds of all kinds; bicycle and motorcycle components; standard mechanical components; power cables; plastic components - technical rubber; tires of all kinds. These products have met domestic demand and are exported to countries around the world, including Japan.

At the 2021 online trade conference between Vietnam and Japan, besides the achieved results, analyzing the challenges of Vietnamese enterprises in the supporting industry, Akutsu Michio, a consultant at the Japan Association of International Business Consultants, said that business productivity is still quite low.

Enterprises still lack human resources with high technical skills; funding to invest in equipment is still low; lack of information of cheap and quality raw material suppliers abroad.

“Vietnam's enterprises in the supporting industry need to make efforts to improve production capacity and product quality; take supportive measures to attract high-quality human resources,” said Akutsu Michio.

In addition, he also noted that for Vietnamese enterprises, industrial products are made up of thousands of parts, if one part is missing, the assembly line will be halted. Therefore, Vietnamese supporting industry enterprises must determine their ability to supply supporting industry products on a regular basis.

From the perspective of capital, according to Akutsu Michio, it is necessary to improve the funding mechanism so that small and medium enterprises can easily access funding.

In fact, in addition to supplying supporting industry products to Japanese enterprises operating in Vietnam, Vietnamese enterprises also have many opportunities to supply final assembly and manufacturing enterprises abroad.

Determining the processing, manufacturing and supporting industries as the driving force for economic development, the Government of Vietnam has always encouraged and created all conditions and policies to develop this industry group.

The Ministry of Industry and Trade has established three technical centers to support industrial development in three key economic regions in the North, Central and South.

The goal is to support industrial production and supporting industry enterprises to innovate, transfer experimental production technology, improve productivity and quality, create added value as well as participate in the global supply chain.

Talking with a reporter of Customs News, Dr. Le Quoc Phuong, former deputy director of the Information Center for Industry and Trade (Ministry of Industry and Trade), said that there have been many calls for development, many policies and solutions, but they have not been able to do as expected, posing a need for a more drastic approach in the future.

“The strong development of new supporting industries helps Vietnam increase the added value in exports, increase the domestic content, thereby reducing the import of raw materials, accessories, and dependence on foreign countries. Vietnam will gradually shift from a processing and assembly economy for export to a higher level of production," said expert Le Quoc Phuong.