Vietnam’s electronics industry has grown by leaps and bounds in recent years owing largely to the foreign direct investment (FDI) sector, and the country is striving to boost supporting industries to further bolster the sector, the Saigon Times Daily reported on July 10.

According to statistics of the Ministry of Information and Communications, the total export value of phones and phone parts amounted to 10.6 billion USD in the January-May period, up 30.6 percent against the same period of last year. Meanwhile, exports of electronic devices, computers and components dropped nearly 5 percent to 3.7 billion USD.

The Vietnam Electronic Industries (VEIA) noted that the country’s electronics industry has seen steady growth over the years in terms of export sales, obtaining 3.4 billion USD in 2010, 6.9 billion USD in 2011, 20.5 billion USD in 2012 and 32.1 billion USD in 2013. Of the 32.1 billion USD generated last year, exports of mobile phones and phone parts amounted to 21.5 billion USD.

However, experts said that such strong development of the electronics industry was actually contributed by FDI companies like Samsung, Canon, Nokia and LG. Vietnamese electronic companies make up less than 20 percent of the domestic market and nearly 10 percent of the export turnover.

Despite the huge export revenue, the added value of Vietnam’s electronics industry is not high and the contribution of the industry to the country’s GDP is not commensurate with its contribution to the export turnover.

Chairman of VEIA Luu Hoang Long said that though FDI companies account for only a third of the total number of electronic companies in Vietnam, they possess high technology, hold over 80 percent domestic market share and contribute over 90 percent of the export turnover.

According to experts, FDI companies and companies of supporting industries make the most of cheap labour and the Government’s investment incentives, and thus the added value mainly lies in labour and energy use. As a result, in order to inflate the added value of the electronics industry, Vietnam needs to develop supporting industries as the competitive edge will become blunt when labour cost increases.

However, Vietnam’s supporting industries are undeveloped and have not been able to meet the demands of companies.

There are few Vietnamese companies able to supply components and services for FDI companies and component suppliers are mostly foreign ones. Samsung Electronics Vietnam, for instance, currently has 60 components suppliers, with 45 of them Korean-invested, five Vietnamese-owned and ten from other countries.

Vietnamese companies, according to experts, are not experienced in supplying components for big manufacturers, do not have a marketing system to approach customers, face capital shortages and are weak in technology.

To boost Vietnam’s supporting industries, Vu Duong Ngoc Duy, General Director of Viettronics Tan Binh Company, suggested that the Government issue policies to facilitate investments and support companies in selling products.

According to General Director of 4P Company Hoang Minh Tri, Vietnam needs to invest in technology, ensure good services, enhance the quality, offer the competitive prices and deliver goods on time.

Companies in supporting industries also need to improve their production capacities and management capacities to meet requirements of foreign companies and cooperate with customers to improve production and products.-VNA