The Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) and the Japan External Trade Organization (JETRO) reached a deal to establish the Vietnam-Japan Supporting Industry Forum (VIETPANSIF) at a conference in the southern city on Friday.

The forum was founded to create an official channel for mutual support between the relevant agencies of governments, educational institutions and business connections to promote bilateral development in supporting industries in Vietnam.

It will hold quarterly periodical events to connect and create an exchange for local businesses operating in the field.

The forum will also proactively make policy recommendations through empirical research on supporting industries in Vietnam and activities organized by the government and enterprises of the two countries in the training of human resources, attracting investment, and transferring technologies.

On the occasion, Hirotaka Yasuzumi, director of the JETRO branch in HCMC, also proposed three new solutions to supporting industrial development in Vietnam.

They include preferential loans for investors in supporting industries, improvement in human resource training at vocational colleges so that the newly trained laborers can be qualified to handle new transferred technologies, and the need to develop strategies with the right incentives for the long-term development of supporting industries.

“The forum’s establishment aims at facilitating cooperation and mutual assistance between government agencies in charge of supporting the business circles of both countries toward promoting the development of the supporting industry in Vietnam in particular and Vietnam-Japan economic ties in general,” the Vietnam News Agency quoted Vu Van Hoa, HEPZA Director, as saying at the agreement signing ceremony.

The new deal is the realization of what Yasuzumi said two months ago at a conference in the southern hub.

On May 22, at a press conference held to announce a series of events organized to back the local supporting industries, Yasuzumi said the biggest problem foreign investors encounter when investing in Vietnam is a severe shortage of supporting industries.

Specifically, in a survey conducted by JETRO in 2013, the rate of local suppliers that met the standard of Japanese companies in Vietnam was at only 32 percent compared with 53 percent in Thailand and 64 percent in China.

"We have developed a policy to assist the supporting industries of Vietnam in a new form – a collaboration between private enterprises and government agencies.

“In addition, Japanese companies will transfer technology to support Vietnamese technical innovation and human resource development," he added.

It was the second move of HCMC authorities within one month to help boost the local supporting industry sector and assist those investing in the field.

Speaking at the "Vietnam International Supporting Industries Exhibition (VSI Expo 2014),” Nguyen Phuong Dong, deputy director of the HCMC Department of Industry and Trade, said the city budget would cover half of the exhibition fee for domestic enterprises to participate in the VSI Expo 2014.

The event, which concluded on July 19 at Tan Binh Exhibition and Convention Center in Tan Binh District, was also the first international exhibition held on a large scale in Vietnam for five groups of supporting industries including textile - leather shoes, electronics - computer, automobile assembly, and mechanical and industrial products to support high-tech industries.

It hosted about 300 booths of nearly 200 enterprises from many countries with strengths in industrial areas including India, South Korea, Japan and Thailand.

According to Dong, the local supporting industries currently meet only 10 percent of domestic demand, lagging behind many regional nations, which have a rate of 40-60 percent.

In addition, the production of components and spare parts for industrial purposes in Vietnam was still underdeveloped, meeting only 23-37 percent of the local needs.

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