Connecting FDI and private enterprises: 'Leverage' for developing supporting industries

Foreign corporations investing in Vietnam have a great demand for supporting industrial products, this is an opportunity for private enterprises to participate in this field.

The need to increase the localization rate in Vietnam is huge.

Currently, Vietnam has attracted more than 500 billion USD in foreign direct investment (FDI), including the presence of leading corporations in the world , some of which are looking to increase the localization rate in Vietnam.

To clarify the development prospects of the domestic supporting industry, the reporter had an interview with Mr. Do Tien Thinh - Deputy Director of the National Innovation Center (NIC) - Ministry of Finance on the above issue.

- How do you evaluate the development of the supporting industry in Vietnam today?

Mr. Do Tien Thinh: To better understand the development of the supporting industry in Vietnam, we first need to clarify what the supporting industry is, and in that production value chain, which stages have Vietnamese enterprises participated in? For example, in the semiconductor industry chain, there will be 3 chains, including: Design, production and packaging, so which stages can Vietnamese enterprises participate in?

Mr. Do Tien Thinh - Deputy Director of NIC. Photo: TT

In my opinion, the demand for supporting industries of foreign corporations investing in Vietnam is currently very large, however, the participation of Vietnamese enterprises is still limited, especially in fields requiring high technology. There are many reasons, but it can be said that the policies to create conditions for enterprises to participate in the development of supporting industries have not really been put into practice. Many enterprises said that they still face many difficulties in developing supporting industries.

Meanwhile, when global corporations invest in Vietnam, they often bring with them supporting industrial development ecosystems. Therefore, it is difficult for Vietnamese enterprises to participate in this field.

This must also be shared, because for example, Apple Corporation, their development depends on the phone. So when choosing suppliers for electronic devices, they also need to be careful in the selection process, because electronic devices require very high precision, just a small mistake, lack of care can also affect the production process of the business.

Need to build a database of supporting industry enterprises

- To increase opportunities for Vietnamese small and medium enterprises to participate in the production chains of large corporations, what solutions do we need, sir?

Mr. Do Tien Thinh: To create opportunities for Vietnamese enterprises, especially small and medium enterprises, to participate in the supply chain of global corporations, we first need to focus on incubation programs for small and medium enterprises. Create opportunities for Vietnamese enterprises to interact with global corporations, understand the needs of corporations, as well as correctly assess the response capacity of Vietnamese enterprises.

Besides, there should be policies to support small and medium enterprises in terms of capital and technology, because as far as I know, foreign corporations, especially in the technology field, also constantly change their products, on average launching 1-2 new products each year.

Therefore, to participate in their production chain, Vietnamese enterprises must also regularly change technology and invest in production lines to meet the requirements. This is not easy, because Vietnamese enterprises, especially small and medium enterprises, are still considered weak in terms of capital and technology.

In addition to the government's support policies, Vietnamese enterprises themselves need to be proactive and demonstrate their capabilities to foreign corporations, giving them confidence that Vietnamese enterprises can meet the requirements for supporting industry development set forth by FDI enterprises.

Vietnamese enterprises have the opportunity to participate in the global value chain. Illustrative photo

- Recently, the Ministry of Industry and Trade has also implemented cooperation programs with a number of corporations such as Samsung and Toyota to facilitate Vietnamese enterprises to participate in the supply chains of these corporations . How do you evaluate the above model and what do we need to do to replicate it in the future?

Mr. Do Tien Thinh: Personally, I have also studied and highly appreciated this model of the Ministry of Industry and Trade and foreign corporations. However, in my opinion, the replication of the above model cannot be done in the direction of mobilizing the participation of corporations, but needs to be replicated through appropriate policies instead of individual enterprises.

Accordingly, in the process of attracting and selecting FDI projects, Vietnam also needs to set out conditions, including linking with domestic enterprises in developing supporting industries and increasing the localization rate as one of the conditions that investors need to meet when investing in Vietnam.

In addition, the authorities also need to build databases of lists of Vietnamese enterprises that can meet the needs of supporting industries of global corporations. These databases can be specific to each industry such as: Supporting industries in the electronics industry, automobile industry, textile industry, footwear industry, etc. so that when foreign enterprises have needs, they will be able to find Vietnamese enterprises themselves.

Along with that, a database should be built on foreign enterprises and corporations that need to increase the localization rate of which types of components. This data is also very important for Vietnamese supporting industry enterprises to learn and connect for cooperation.

Thank you!

To develop the supporting industry, Vietnam needs to build databases of Vietnamese enterprises that can meet the supporting industry needs of global corporations. These databases can be specific to each industry such as: Supporting industry in the electronics industry, automobile industry, textile industry, footwear industry...

Nguyen Hoa (performed)

Source: https://congthuong.vn/ket-noi-fdi-va-doanh-nghiep-tu-nhan-don-bay-phat-trien-cong-nghiep-ho-tro-389560.html