Illustrative image (Source: baocongthuong.com.vn) Hanoi (VNA) - The Government plans to provide wide-rangingassistance to the domestic supporting industry so that they can increasesupplies of parts and components to both local and foreign firms and betterparticipate in the global production chain.
Decision No 68/QD-TTgsigned by the Prime Minister envisages sustained assistance to the industryover the next 10 years (2016-2025).
Accordingly, the Government will assistthe industry in research and development, technology transfer and renewal,and human resources development. It will also promote foreign direct investmentin the industry.
The plan is to have the local supportingindustry meet 45 percent of the domestic production demand by 2020, and 65 percentby 2025.
In the 2020-25 period, Vietnam will focus ondeveloping the industry inthree key areas: spare parts; garment, textiles and footwear; and hi-techequipment.
The aim is to reduce the domestic productioncosts as manufacturers increase localisation.
The decision also says favourable conditionswill be created for supporting industry businesses to access loans towardsexpanding research and production.
The Ministry of Industry and Trade has saidthat the supporting industry in Vietnam has seen modest growth over the pastseveral years.
For example, the automobile industry hadtargeted increasing the localisation rate for 9-seat vehicles to 60 percent,but the current rate is just 7-10 percent.
The localisation rate in the garment andtextile industry is estimated at 51 percent, while that of footwear at 20-25 percent.
Truong Thanh Hoai, Director of the Ministry’sHeavy Industry Department, said Vietnam has 1,383 businesses inthe supporting industry, mostly using simple technologies and offering lowvalue-added products.
While some companies have paid attention toadvanced technology and developing new products, this has not been the norm.
A survey conducted by the State Agency forTechnology Innovation under the Ministry of Science and Technology showed thatonly 51 out of 200 spare parts supply firms were keen on renewing their technology, and thatthis interest is mostly in purchasing new equipment and training staff.
The ministry said this situation was caused bypolicies that have not paid attention to production realities, especially thoserelating to tax cuts on imported spare parts and initial support for businessesjoining the global supply chain.
Sakurada, a Japanese expert heading a R&Dproject on developing Vietnam’s spare parts industry, told the Ha Noi Moi (NewHa Noi) Newspaper that Vietnam can try a Japanese model.
Under this model, small companies can access alot of public support mechanisms including local Kohsetushi technology centresthat provide research, testing, training and guidance for firms for nominalfees. The centres help small firms improve their manufacturing operations,technology and products.
In Japan, the industry is divided into rawmaterial suppliers, machine suppliers, spare parts suppliers, assemblysuppliers and packaging material suppliers.
Each locality would choose a suitable keysector, based on their strengths, to develop the parts supply industry andestablish support centres, he said.
"The centres support businesses inmonitoring the quality of products and connecting with institutes, universitiesand research centres, as well as large importers of spare parts," Sakuradasaid.
Supporting industries are defined as a group ofindustries to supply “manufactured” inputs, which are mostly intermediategoods. In the framework of business, supporting industries manufactureproduction parts as well as tooling to produce those production parts. -VNA
Decision No 68/QD-TTgsigned by the Prime Minister envisages sustained assistance to the industryover the next 10 years (2016-2025).
Accordingly, the Government will assistthe industry in research and development, technology transfer and renewal,and human resources development. It will also promote foreign direct investmentin the industry.
The plan is to have the local supportingindustry meet 45 percent of the domestic production demand by 2020, and 65 percentby 2025.
In the 2020-25 period, Vietnam will focus ondeveloping the industry inthree key areas: spare parts; garment, textiles and footwear; and hi-techequipment.
The aim is to reduce the domestic productioncosts as manufacturers increase localisation.
The decision also says favourable conditionswill be created for supporting industry businesses to access loans towardsexpanding research and production.
The Ministry of Industry and Trade has saidthat the supporting industry in Vietnam has seen modest growth over the pastseveral years.
For example, the automobile industry hadtargeted increasing the localisation rate for 9-seat vehicles to 60 percent,but the current rate is just 7-10 percent.
The localisation rate in the garment andtextile industry is estimated at 51 percent, while that of footwear at 20-25 percent.
Truong Thanh Hoai, Director of the Ministry’sHeavy Industry Department, said Vietnam has 1,383 businesses inthe supporting industry, mostly using simple technologies and offering lowvalue-added products.
While some companies have paid attention toadvanced technology and developing new products, this has not been the norm.
A survey conducted by the State Agency forTechnology Innovation under the Ministry of Science and Technology showed thatonly 51 out of 200 spare parts supply firms were keen on renewing their technology, and thatthis interest is mostly in purchasing new equipment and training staff.
The ministry said this situation was caused bypolicies that have not paid attention to production realities, especially thoserelating to tax cuts on imported spare parts and initial support for businessesjoining the global supply chain.
Sakurada, a Japanese expert heading a R&Dproject on developing Vietnam’s spare parts industry, told the Ha Noi Moi (NewHa Noi) Newspaper that Vietnam can try a Japanese model.
Under this model, small companies can access alot of public support mechanisms including local Kohsetushi technology centresthat provide research, testing, training and guidance for firms for nominalfees. The centres help small firms improve their manufacturing operations,technology and products.
In Japan, the industry is divided into rawmaterial suppliers, machine suppliers, spare parts suppliers, assemblysuppliers and packaging material suppliers.
Each locality would choose a suitable keysector, based on their strengths, to develop the parts supply industry andestablish support centres, he said.
"The centres support businesses inmonitoring the quality of products and connecting with institutes, universitiesand research centres, as well as large importers of spare parts," Sakuradasaid.
Supporting industries are defined as a group ofindustries to supply “manufactured” inputs, which are mostly intermediategoods. In the framework of business, supporting industries manufactureproduction parts as well as tooling to produce those production parts. -VNA
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