Addressing a seminar "Developing support industries in Vietnam", Ngo Van Tru, vice head of Ministry of Industry and Trade's Heavy Industry Department said that Vietnam's current industry level is equivalent with that of China in 1980s, Malaysia in 1970s, Korea in 1960s and Japan 1920s.

The survey of the Japan External Trade Organisation (JETRO) showed that over 68 Japan invested enterprises operating in Vietnam showed that 50-90 percent of production accessories must be imported while Japanese firms in Thailand use 70-90 percent of in-place produced accessories.

It is said that Vietnam's support industries is just at the start, remains backward and less synchronic, which could not yet meet the rising demand of assembly and manufacturing industry. Because the support industry development in Vietnam requires the combination of many fields and sectors like metallurgy refining, chemical and material research so the unbalanced growth of these sectors will affect strongly to the support industries.

In addition, the country's manufacturing level remains low because of lacking basic materials namely steel, cast iron, plastic, technical rubber, basic chemical, fibre and leather.

According to Tru, the processing technology of Vietnam still turns out low capacity, high prices and unsustainable quality while the competitive strength of industrial production facilities remain low and less healthy. These also are difficulties the support industries have to face. Factually, the association between major producers and auxiliary contractors, FDI enterprises and local firms is short on professionalism.

Although the support industry development plan till 2010 and vision to 2020 was approved, support industry production of SMEs had no rally. Meanwhile, policy implementation agencies still must wait for guidance step from lawmakers. The plan offers development orientation as for some basic sectors of textile and garment, automobile, electronic and informatics, manufacturing engineering but none of authorities know how to carry out those solutions.

Tru added, first of all, Vietnam's support industries should serve domestic demand, and then exports.

Keisuke Kobayashi from Jetro noticed that the weakness of Vietnam's support industries was shown in support products and the less competitive strength of support producers. The state should point out particular implementation steps and industrial companies should offer their proposal whereby Vietnam will build up a suitable support industry development roadmap.

Among local firms joining the support industry production, 99 percent are SMEs. Therefore, they should encourage SMEs in the production field and increase the close combination between these SMEs according to experiences of Korea, Thailand, China and Malaysia.

The state should create conditions for SMEs to access long term capital for investment development through establishing a system of banks to serve SMEs. In addition, Vietnam needs to attract the support of governments of developed countries like Japan, EU and call for the contribution of FDI enterprises in human resources training for the support industries.

Keisuke Kobayashi remarked that steps should be taken to create better conditions for FIEs to have technological transfer projects and encourage the advanced technology transference in production of Vietnam. If not, Vietnam will be hard to become a modern industry by 2020.

Thoi Bao Kinh Te Vietnam - November 19, 2009