Supporting industry should be a major priority: PM

By Nguyen Ha   December 19, 2018 | 03:05 am PT
Supporting industry should be a major priority: PM
An employee works at a company which produces car and motorcycle parts in Vinh Yen, outside Hanoi. Photo by Reuters/Kham
Vietnam needs to make its supporting industry a production base for the global manufacturing chain, PM Nguyen Xuan Phuc says.

"Vietnam should become a production base for multinational companies. This is what the Ministry of Industry and Trade and other government bodies should think about in their development strategy," Prime Minister Nguyen Xuan Phuc said Wednesday.

He was speaking at the conference on "Solutions for Promoting the Development of Supporting Industry in Vietnam," held in Hanoi.

He said that Vietnam should strive to compete in regional and global markets, manufacturing parts for cars, motorbikes and even airplanes.

The government has always been prioritizing land access for the supporting industry, and has never said no to any such request, Phuc said.

Supporting businesses should speed up and start operations earlier, Phuc said, adding that there were firms in the industry that could finish clearance and lay their foundations in just three months, while some have left things hanging for as long as three years.

The supporting industry in Vietnam remains weak, having to import nearly 90 percent of raw materials, spare parts and components needed for production, according to the Ministry of Industry and Trade.

This means a low localization rate, even in industries with great supporting industry potential, like automobiles and textiles and garments, it said.

Minister of Industry and Trade Tran Tuan Anh said at the conference that only 300 supporting firms were currently part of the supply chain for multinational companies. As of last year, Vietnam had 75,000 manufacturing firms.

The number of new businesses in this sector has barely increased in recent years, even though this is a key foundation for industrialization, Anh said.

Therefore, those making finished products in the country are having to import accessories and parts from other countries or produce them on their own, he added.

He cited Japan as a good example of a strong supporting industry. Even though the majority of Japanese supporting businesses are medium, small and micro sized, they are integrated deeply in the global manufacturing chain with high added value. They provide accessories and parts to the aviation industry, he noted.

The trade minister added that Vietnam’s policy for attracting foreign direct investment (FDI) does not create favorable opportunities for local supporting businesses to develop and join the global manufacturing chain.

There are over 3,000 supporting industry businesses in Vietnam, accounting for 4.5 percent of the manufacturing and processing sector, creating jobs for over 550,000 employees, according to the Ministry of Industry and Trade.

From January to November this year, Vietnam imported $30.66 billion worth of machines, accessories and parts, and exported $15.13 billion worth of products, according to Vietnam Customs, marking a trade deficit of $15.53 billion.

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