Hanoi (VNA) – Despite proactively opening its doors to numerous processing and manufacturing sectors, Vietnam's supporting industries have yet to fully tap on their potential, grappling with market access, technology adoption, human resources, and capital constraints. Recognising these weaknesses, the Government has rolled out new policies to catalyse the sector's development.
Struggles behind growing numbers
According to Director of the Ministry of Industry and Trade’s Agency of Industrial Safety Techniques and Environment Pham Tuan Anh, supporting industries have made positive progress on the back of the State’s support policies as well as the business community’s efforts. To date, the country is home to some 5,000 supporting firms which provide electrical cables, gearbox, and plastic components, among others for both domestic and foreign markets.
Among them, some 100 firms are tier-1 suppliers to multinational corporations, while around 700 companies operate as tier-2 and tier-3 suppliers.
Despite the Government’s efforts to foster linkages between foreign direct investment (FDI) enterprises and local firms, these connections remain weak. Social capital has not flowed sufficiently into the sector due to long investment return cycles and less attractive profit margins as compared to investments in many other sectors.
Standing Vice Chairman of the Hanoi Supporting Industry Business Association Nguyen Van said although Hanoi boasts the largest number of supporting industry firms, at around 900, the sector encounters limitations, including low technological content and localisation rate, and shortage of resources for renewal. Most Vietnamese suppliers cannot yet deliver high-tech or precision-engineered parts required for deep integration into global supply chains.
General Director of the MBT Electrical Equipment JSC Tran Van Nam said that many industrial producers need support from the Government and business associations. These associations should play a greater role in bridging supply and demand, coordinating collaboration among firms, and helping local manufacturers enhance product quality and scale up consumption, he said.
Government’s decree sparking hope for supporting industries
Under the Government’s new decree on the development of the supporting industries, various favourable policies and incentives regarding technology, human resources, land and administrative procedures were outlined, expected to lure stronger investments in the sector, especially in the context that enterprises are restructuring the global supply chain and shift to domestic production.
Dr. Mac Quoc Anh, Vice Chairman and General Secretary of the Hanoi Association of Small and Medium Enterprises, said businesses have new development opportunities as the Government expands incentives in terms of capital, technology, human resources, and markets. Financial, technical, and market support mechanisms are expected to be significantly scaled up, while efforts in R&D, technology transfer, and workforce training could receive subsidies of up to 70%.
Meanwhile, General Director of KNTECH Company Nguyen Trung Kien said that new policies will help enterprises with access to advanced technologies, enabling them to improve product quality and competitive edge. Besides, they have received legal consultancy and enjoyed simplified administrative procedures.
Deputy Director of the Hanoi Department of Industry and Trade Nguyen Kieu Oanh held that the incentives are vital, given the domestic manufacturing sector's dependence on imported raw materials and the modest number of enterprises participating in foreign direct investment supply chains./.
