Priority for Supporting Industry Development

According to statistics, most materials, components and accessories used for industrial production in Vietnam are imported. Especially, in the manufacturing industry, imported raw materials account for 89 percent, metal components (87 percent), electrical and electronic components (47 percent), plastics (78 percent), packaging, sponge and carton boxes (45 percent). In the garment and textile industry - the vital industry of the city as well as the country by production value and export turnover), only 3 percent of companies have supporting facilities while 97 percent are primarily serving as subcontractors for foreign companies. Besides, they have to import 70 percent of materials and accessories and all of machines, parts, chemicals and dyes used for weaving and spinning.

 

As an important industrial centre of the country, Ho Chi Minh City accounts for nearly 30 percent of the country’s industrial value and 46 percent of the southern region. Its industrial production value keeps growing but, according to local authorities, its production scale, products and competitiveness are still limited. Although industrial companies pay attention to upgrading equipment, the effort is not synchronous. Technological lines of many sectors are out of date, making production costs higher and competitiveness weaker. This is really a big challenge for the city in the process of industrialisation. The development of supporting industries will entail an increase in added value of industries and a reduction in dependence on imported materials. However, the localisation rate of many industries remains highly dependent on foreign materials, particularly automotive, footwear and apparel.

 

Not only HCM City, developing supporting industries remains a daunting challenge for the country because the outputs are placed under very high competitive pressures from imported products. In addition, due to limited financial capacity and costly investment for production lines, many Vietnamese companies do not choose to develop supporting industries.

 

Mr Nguyen Van Lai, Director of HCM City Department of Industry and Trade, said: HCM City will apply many practical, localised solutions to develop supporting industries in the coming time. Incentives for this kind of projects include land, location and rentals. They can use infrastructure, public utilities and other services in industrial zones. Hi-tech projects are provided more supports like human resource development.

 

Besides, the city is applying tax incentives to encourage the development of mechanical supporting industries in accordance with Government Decision 10/2009/QD-TTg dated January 16, 2009, the Ministry of Finance Circular 214/2010/TT-BTC dated December 28, 2010, and Government Decree 87/2010/ND-CP dated August 13, 2010. Accordingly, businesses will be granted tax reliefs and exemptions on imported machines, equipment, specialised transport means, and materials local companies have not been able to produce. Additionally, the city will have solutions to develop domestic suppliers; encourage foreign investment; deploy supporting industry development; and cooperation from now to 2015, and vision to 2020.