Vietnamese and foreign entrepreneurs discussed ways to develop the country's support industries at a recent forum in Ho Chi Minh City.

Nguyen Van Tuan, Deputy Director of the Investment and Trade Promotion Centre (ITPC) of HCM City, said support industries have much room to develop since they are in their infancy.

HCM City considers their development one of its key tasks in the upcoming time, he said.

Hirotaka Yasusumi, Managing Director of the Japan External Trade Organisation (JETRO)'s HCM City office, said "the investment by Japanese companies in Vietnam is still full of vigour and vim", accounting for 26 percent of total foreign investment last year, but the main problem for Japanese firms is the difficulty in procuring parts.

According to a JETRO survey, local procurement of industrial materials and sub-components by Japanese companies in Vietnam is only 32 percent, compared to 64 percent in China and 53 percent in Thailand, he said citing a few examples.

Bui Quang Hai, Deputy Chairman of the HCM City Association of Mechanical Engineering, said the country's exports of electronic products, computers, and telephones have surged in recent years, but import of components for them has increased sharply too.

Many firms admit that their production depends too much on import of inputs, he said.

With multinationals following an outsourcing strategy based on the China plus 1 (Thailand, Indonesia, Vietnam) model, Vietnam should focus on improving the competitiveness of its mechanical engineering industry to take part further in the global supply chain.

Japan has promised support for strengthening Vietnam's supporting industries, he pointed out.

Yasusumi said: "We are now working on a new scheme in which private companies and government departments co-operate to work for the development of support industries.

"We are aiming to identify and satisfy companies' potential needs through business matching events, seminars, and personnel training to make a proposal to the government for policies for support industries.

"In order not to fall into the middle-income trap Vietnam needs technical innovation, and so we promote technology transfer to Vietnamese companies by furthering human resource development and creating a close relationship between Japanese and Vietnamese companies."

Duangdej Yuaikwamdee, Deputy Managing Director of Thai-owned Reed Tradex Co Ltd, said Vietnam is a highly attractive investment destination for international manufacturers including those in support industries.

Finding the right partners to do business with would also help Vietnam's industries become strong and profitable in the long run, he said.

Yasusumi said since most Vietnamese companies involved in the supporting industries are small and medium sized, they need Government support in terms of personnel training and funding.

The forum was organised by the ITPC, JETRO, and Reed Tradex.-VNA