Reforming policies to bolster development of supporting industries

Reforming policies to bolster development of supporting industries

The domestic capability to manufacture auxiliary products has improved significantly in recent times, meeting 30-35% of demand for components serving the home electronics industry and about 40% of electronics serving the automotive and motorcycle industries (mainly for motorbike production).

In particular, the manufacture and assembly of automobiles has recorded a high localization rate regarding some specific car categories, exceeding the strategic goals and the set plans and basically satisfying the domestic market.

For example, the localization rate is 55% for 7-ton trucks and 40% for passenger cars of 10 seats or more and special-purpose vehicles, meeting about 70% and 90% of market demand, respectively.

A number of Vietnamese SI companies have quite good capabilities in manufacturing mold products for bicycle and motorcycle parts, standard mechanical components, electric cables, plastic-technical rubber parts, and tires of all kinds. These products have both met the domestic demand and have been exported to countries around the world.

Despite their significant progress in recent years, Viet Nam’s SIs have not yet lived up to expectation, requiring new appropriate mechanisms and policies as well as synchronous and effective measures to bolster their development.

Measures to boost SI development

Determining SIs as a decisive factor in shifting economic structure, improving labor productivity and skills, and enhancing the added value and competitiveness of products and the quality of the economy, the Prime Minister has approved a master plan for the development of SIs by 2020, with a vision to 2030.

Accordingly, Viet Nam strives to have about 1,000 qualified enterprises capable of supplying parts for assembly firms and multinational corporations in Viet Nam by 2020, and 2,000 companies by 2030. In addition, the country’s SI products are expected to meet 70% of the domestic production and consumption demand and account for around 14% of the production value of the entire industry in the next ten years.

To accomplish the aforementioned goal, the Government previously issued Decree No. 111/2015/ND-CP on SI development, alongside the PM’s Decision No. 68/QD-TTg dated January 18, 2017 approving a SI development program in the period of 2016-2025.

Mechanisms and policies have been issued and put into practice, driving SI businesses in Viet Nam to develop in both quantity and quality and to participate more and more deeply in the global production chains. SI firms in the country currently makes up nearly 4.5% of the total number of manufacturing enterprises, creating jobs for more than 600,000 employees.

Net revenue of Viet Nam’s SI enterprises is estimated at VND900 trillion (US$38.78 billion) annually, contributing 11% of the total revenue of the entire manufacturing sector./.

By Vien Nhu