Despite the potential for growth, a law on industrial development has yet to be formulated, while planning management, development strategies, and regional connectivity for industries remain limited in Vietnam.
At a seminar themed 'Supporting Small and Medium Enterprises (SMEs) in Joining Global Supply Chains' held by Tuoi Tre (Youth) newspaper in association with the Industry Agency under the Ministry of Industry and Trade and the Ho Chi Minh City Department of Industry and Trade at Rex Hotel in Ho Chi Minh City on Tuesday last week, experts agreed that it is necessary to build the law on industrial development to foster the development of industries and serve as a foundation to boost industrialization and modernization.
|Tran Anh Hao, head of the industrial management division under the Ho Chi Minh City Department of Industry and Trade. Photo: Huu Hanh / Tuoi Tre|
Early introduction of law on industrial development proposed
Regarding Ho Chi Minh City’s assistance for supporting industries, Tran Anh Hao, head of the industrial management division under the municipal Department of Industry and Trade, said that the city has drawn up a plan to spur supporting industry development since 2015.
To date, the plan has attracted many enterprises, which has helped the localization rate in the city exceed 50 percent.
Nevertheless, the state management of industry remains inefficient. Enterprises in the sector are mainly small and medium ones, so they face limitations on personnel, financial resources, and product development research.
To beef up industrial development, it is key to focus on expanding the industrial land bank, developing human resources and priority industries, and enhancing trade promotion, market expansion, and supply-demand connection.
A legal framework should be completed early, specifically introducing the law on industrial development and establishing a national steering committee for such development.
|Dr. Vo Tri Thanh, former vice-president of the Central Institute for Economic Management, says that appropriate support policies should be worked out for industry in Vietnam. Photo: Huu Hanh / Tuoi Tre|
Supporting leading enterprises
Dr. Vo Tri Thanh, former vice-president of the Central Institute for Economic Management (CIEM), said that during the process of getting involved in global supply chains, Vietnam has many advantages as it is located in the center of Asia-Pacific, which is the most dynamic region for development and has participated in many free trade agreements.
However, there is no specific answer to the question whether Vietnam’s industrialization and modernization will be a success.
Global supply chains, in the context of the Russia - Ukraine military conflict and the COVID-19 pandemic, are uncertain, but enterprises’ opportunities for development are obvious.
Supply chain development is often associated with comparative advantages in transport costs and automation, so it is related to not only efficiency and technology but also confidence among partners and increasing protection tendency.
“The partnership between Vietnam and its partners is comprehensive and strategic, which will open up opportunities for cooperation," Thanh noted.
Once Vietnam determines industry as a potential sector, support policies, especially those for leading enterprises, should be issued. The leading enterprises are pioneers in establishing the connection with relevant companies and institutions.
However, it is a great pity that the CIEM had earlier proposed these policies but they were later scrapped, Thanh said.
Phil Kyun Choi, an expert from South Korea, detailed processes that helped his company get the support from the South Korean government in its initial stage of taking part in global supply chains, saying, “The most remarkable support is developing an online export platform where export enterprises can introduce their products and services to foreign importers.
“We also expect to build a similar platform for Vietnamese enterprises to access importers easily."
|Phil Kyun Choi, director of South Korea-based Korean Business Services. Photo: Huu Hanh / Tuoi Tre|
Challenges of Vietnamese enterprises
Vietnamese firms do not have advantages in capital and technology and are holding low positions in supply chains.
In particular, the Southeast Asian country fails to develop supporting industries for value chains of autos and electronic products, which are ruled by manufacturers.
Meanwhile, as for value chains ruled over by purchasers, such as those of textiles-garments and footwear, Vietnam faces pressure from high human resource and service costs.
Amid the fourth industrial revolution, its participation in free trade agreements, financial connection, and the flexibility of partners have forced Vietnam to engage in higher added value chains.
Therefore, the apparel, footwear, and electronics sectors, which are labor-intensive, reliant on imports, and ruled over by purchasers as well as have a large proportion of foreign investment, should review and improve their capacity and come up with appropriate support policies.
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