Telecommunications equipment manufactured at VNPT Technology. The foreign direct investment into electronics should aim to promote local companies and enable them to engage in the global value chain. (Photo: nhandan.com.vn)
Hanoi (VNS/VNA) — Foreign direct investment (FDI) into electronics should aimto promote local companies and enable them to engage in the global value chain,industry insiders have said.
Truong Thi Chi Binh, DeputyPresident of the Vietnam Association of Supporting Industries, said the FDIwave into Vietnam had brought significant opportunities for domestic producersto participate in FDI companies’ supply chains.
However, the fact was that mostdomestic companies were of small scale and poor capacity and few could meet therequirements of big corporations, Binh said. The production cost of electroniccomponents of Vietnam was often higher than in China and Thailand.
Binh said a large number of FDIinvestors came to Vietnam to enjoy preferential policies in investmentattraction and from free trade agreements, adding that the supporting industryin general and the electronics industry in particular struggled to takeadvantage of opportunities from FDI inflow.
Do Thi Thuy Huong from the VietnamElectronic Industries Association said electronic industry developmentrequired a huge investment in technology and high-quality labour.
Huong said training programmesat schools and universities were not suitable and remained more theoreticalthan practical and used mostly outdated machines.
Luu Hai Minh, chairman of NhatHai New Technology Joint Stock Company, said firms were still facingdifficulties in accessing support policies from the Government. He saidcompanies needed capital to invest in developing new technologies.
The electronic industry of Vietnamis heavily dependent on FDI.
With an average annual growthrate of 50 percent in 2010-18, the electronic industry’s exports reached 84billion USD in 2018, making Vietnam the 12th biggest exporters ofelectronic products in the worth and 3rd in ASEAN. However, the FDI sectoraccounted for some 95 percent of the country’s export revenue.
Nguyen Dinh Hung, chairman ofEDX Corporation Group, said technology transfer and environmental protectionshould be important factors in attracting FDI.
According to Binh, theGovernment should have a new approach in negotiating supply with multinationalcompanies. Detailed plans to develop supporting industries should also be builtwith incentive policies for investments in technologies, she said.
For the long term, Binh saidFDI inflow must promote the development of local producers and enable them toengage in global value chains.
Prime Minister Nguyen Xuan Phuchas founded a working group in charge of attracting foreign investment in thecontext of the global production shift away from China spurred by the trade warand the COVID-19 pandemic.The group will work withmultinational and hi-tech corporations and those who lead the value chains for investmentco-operation.
However, Vietnam will beselective in attracting FDI with a focus on big multinational corporations andthose with modern and environmentally-friendly technology.
According to the VietnamForeign Investment Agency, FDI in the first five months of this year totalled 13.9billion USD, down 17 percent against the same period last year due to theimpact of the pandemic. Disbursed capital also fell by 8.2 percent to 6.7billion USD.
The country has so farattracted 376.6 billion USD in FDI with a disbursement rate of 58 percent. Theprocessing and manufacturing industry attracted more than 58 percent ofthe total FDI into the country./.
