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​Vietnam’s electronics industry struggles with low local content

Wednesday, November 29, 2017, 17:04 GMT+7

Vietnam’s lack of electronics component suppliers is preventing the multibillion-dollar industry from achieving its full potential, experts said at a conference in Hanoi on Tuesday.

Organized by Vietnam’s Central Institute for Economic Management (CIEM), the conference discussed the role of interconnection among different areas of production in the development of Vietnam’s electronics industry.

Vietnam is currently the world’s 12th largest electronics exporter, and the third largest in Southeast Asia, according to Dr. Nguyen Thi Tue Anh, vice president of CIEM.

The country is poised to export more than US$70 billion worth of electronics in 2017, Anh said, thanks to large investments from electronics giants like Samsung, Intel and Sony.

According to statistics from the Ministry of Industry and Trade, there are currently 610 businesses operating in the electronics sector in Vietnam, over 52 percent of which are manufacturers of electronic components.

This is not nearly enough to sustain a healthy electronics manufacturing industry, according to Vu Thi Thanh Huyen, a professor from Hanoi-based Vietnam University of Commerce.

In order to maintain a high local content in electronics production, the number of component suppliers must be much larger than assemblers, Huyen explained.

“Most electronics on the [Vietnamese] market are either CBU imports or assembled from imported components,” she added.

“Domestic companies are only capable of finishing the packaging, printing instruction manuals and making plastic components - which are low in added value.”

CBUs, or Complete Build-up Units, are manufactured goods for export in completely built form.

According to Tue Anh, foreign direct investment (FDI) companies accounted for nearly 100 percent out of Vietnam’s over $34 billion in exports of mobile and electronic components last year, which demonstrates the negligible role of local companies in the booming industry.

Vietnam’s Center for Supporting Industry Businesses Development estimates that the country currently imports around 77 percent of the value of its electronics products, a strikingly low supplier localization rate considering the scale of the industry.

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