Illustrative image (Source: VNA) The article noted that Vietnam has had increasing and steadyeconomic growth of between 6 and 7 percent in the last decade. Itsinternational trade and foreign direct investment (FDI) inflows have been growing and Vietnam has beenoutpacing its regional peers in this respect. Vietnam is mostly open toinvestment across sectors. Despite the pandemic, Vietnam is one of the fewcountries to report positive GDP growth of 2.91 percent in 2020.
Vietnam is a party to several free trade agreements (FTAs) which are pushfactors that can help it further integrate into GVCs. The ratification ofthe EU-Vietnam FTA and the upcoming UKVFTA and RCEP will help further its economy propelling its GDPgrowth, it said.
The article added that the government has launched severalincentives to attract investment and encourage Vietnamese businesses to becomea part of GVCs. For example, electronic components are entitled to an importtax of 0 percent, while are there additional incentives in income tax forhi-tech projects and investment in industrial zones. Additional incentives inthe form of labor and technology policies are also provided by the government.
The government also supports R&D and the development ofadvanced IT systems as well as the manufacturing of ICT products. This will bea key theme as Vietnam gets more involved in IoT and 5G communications,according to the article.
With proactive participation in GVCs, Vietnamhas steadily grown into a prominent manufacturer and exporter for electronics,ranking 12th in the world and third in ASEAN as an exporter for electronics in2019, it noted.
It held that the electronics industry can be grouped byHarmonized System (HS) codes in three groups. These include finished productsthat consist of 3Cs – computer, communication and consumer electronics,subassemblies and components which include electronics components. In 2019, thetotal export value reached 2.5 trillion USD in 2019.
According to the article, Vietnam had strong growth ofaround 20 percent for electronic finished products surpassing Thailand and justbehind the Republic of Korea in export assemblies in 2019.
Vietnam joined GVCs in the late 2000sand is considered a global tier-2 supplier for 3C products. The top importers for electronics were China, the US, followed by Hong Kong.
The 3Cs finished products group dominates the Vietnameseelectronic industry, with communications equipment and consumer electronicsleading. While 3Cs dominate Vietnam’s electronics, Vietnam’s role in the globalelectronics value chains is limited to be an integrator of components, it said.
GVCs can be broken down further into three parts, upstream,midstream, and downstream activities. Vietnam is mainly integrated in themidstream part with lower value add. These include subassemblies, such asdisplays and special parts, and finished products such as consumer electronics,communications, and computers. Vietnam is also involved in upstream activitiesbut predominantly in low-value added products such as plastic, glass, andpackaging.
The article pointed out that Vietnam still needs to do more to integrate into GVCs and faces several challenges in logistics and infrastructure. Thereis a gap between raw materials and finished goods. The logistics industry ishighly fragmented with more than 3,000 logistic companies. These consist ofsmall and medium enterprises providing low-value services. Goods in Vietnamhave to go through many intermediaries from raw materials to delivery,increasing transaction costs. In addition, the connection between differentmodes of transport is weak as well.
Vietnam also lacks the production scale and humaninfrastructure thus making moving up the value chain challenging, it said,adding that Vietnam’s labor force is also another challenge./.
The 3Cs finished products group dominates the Vietnameseelectronic industry, with communications equipment and consumer electronicsleading. While 3Cs dominate Vietnam’s electronics, Vietnam’s role in the globalelectronics value chains is limited to be an integrator of components, it said.
GVCs can be broken down further into three parts, upstream,midstream, and downstream activities. Vietnam is mainly integrated in themidstream part with lower value add. These include subassemblies, such asdisplays and special parts, and finished products such as consumer electronics,communications, and computers. Vietnam is also involved in upstream activitiesbut predominantly in low-value added products such as plastic, glass, andpackaging.
The article pointed out that Vietnam still needs to do more to integrate into GVCs and faces several challenges in logistics and infrastructure. Thereis a gap between raw materials and finished goods. The logistics industry ishighly fragmented with more than 3,000 logistic companies. These consist ofsmall and medium enterprises providing low-value services. Goods in Vietnamhave to go through many intermediaries from raw materials to delivery,increasing transaction costs. In addition, the connection between differentmodes of transport is weak as well.
Vietnam also lacks the production scale and humaninfrastructure thus making moving up the value chain challenging, it said,adding that Vietnam’s labor force is also another challenge./.
VNA
