Perplexity in Supporting Industry Development in Vietnam

For years, the Japanese side has many projects and cooperative activities with Vietnam to develop auxiliary industries. Since February 2008, Japan has given aids of up to US$180 million to finance small and medium-sized enterprises (SMEs) with a focus on businesses operating in supporting industries. Japanese Ambassador Mitsuo Sakaba said Japan has sent its senior experts to Vietnam to organise business training courses for SMEs while continuing to attract Japanese companies in supporting industries to Vietnam.

 

Vietnam has built supporting industry zones in Que Vo district, Bac Ninh province. According to the plan, Kinh Bac City Company will build 10 workshops and will invite foreign enterprises to invest. However, according to Mr Ngo Van Tru, Deputy Director of Heavy Industry Department under the Ministry of Industry and Trade, this is now the initiative from the Vietnamese side, particularly Kinh Bac City, not a Vietnam-Japan coordination in building a model and the Vietnamese Government has not also supported.

 

In Vietnam, at present, industries with high contents of supporting industries and have high prospects for developing supporting industries include garment, textile, leather, footwear, electronics, information technology, automobile manufacturing and assembly and engineering. But, for instance, the garment and textile industry is now heavily depending on imported materials. The Dung Quat oil refinery is now meeting only 20 percent of the demand for polyester fibres while parts and metal items are imported.

 

Currently, VCCI is conducting a survey on demand of Japanese companies and form a list of supporting industrial products Vietnam will need in the next 3-5 years. For example, in the automotive industry, industrial supporting products are bumpers, electric wires and paint. In the next 3-5 would years, according to development plans, Vietnam will have plastic parts, rubber tires, cast aluminium, glass, electrical switches, thermal treatment and coating.

 

Sharing experience in developing auxiliary industries in Japan, Mr Noriyuki Yonemura, Former Chairman of the Japan SMEs Consulting and Managing Association, said: The building of feasible action plans to develop supporting industries should follow three must-be principles; namely practical and transparent plan, the most effective use of resources available and realistic goals.

 

According to him, the first work is to pick up a strategic goal. In Japan, the first category is business operations of assembly plants and subcontractors. The second category is fields designated by the Ministry of Industry and Trade. The next is the level of objectives where the needs of buyers, business objectives and technical specifications of each product are considered. Other factors also need to be considered, including potential supporting industries, business supporting mechanisms, leading companies, favorable business environment, business associations and legal foundation.

 

Mr Masao Higeta, President of Akiba Die Casting. Co.,Ltd, said: Local supporting industries in Vietnam should coordinate with professional companies with practical profound knowledge and experience to obtain the highest results.

 

The Japanese side, in the short term, plans to make a list of supporting industrial products that Vietnam needs. It, in the medium term, will send experts to help complete the legal system, and, in the long term, it will provide the information necessary for amending action plans and other supports. The Vietnamese side will determine which industries need to be developed, perfect the necessary legal system, assess and amend action plans. Japan will also support human resource training, capital, investment attraction and business connection.