Hanoi Speeding up Development of Supporting Industries, Participating in Global Value Chain

Supporting industries (SI) of Hanoi have been developing over 20 years in most manufacturing industries. However, they have operated spontaneously based on the production needs of each business group, with no specific strategic direction aimed at key industries. This is a major challenge for the development of Hanoi SI.

The automotive industry, one with the best conditions to promote SI due to its large market, has a proportion of sales accounting for only 26 percent of the city’s supporting industries; electronics and informatics was at lower level with 10 percent. Mechanical engineering industry group having a variety of products and many different sub-groups such as power sector (including electrical equipment and instrument), mechanics, materials, spare parts and accessories made up for only 29.16 percent of sales.

In the national strategic industrial policies industrial product development plans for 2011-2015 period with the orientation to 2020, one of the most important tasks of Hanoi agencies of industry and trade is developing products of key industries and supporting industries to create intermediate products with high quality and added value, having a supporting role in the system of industrial production and commodity industry in order to boost economic restructuring and the process of industrialisation and modernisation of Hanoi. To achieve this strategic goal, Mr Nguyen Van Suu, Vice Chairman of Hanoi People's Committee, affirmed that Hanoi has been coordinated, closely linked with provinces and cities in the region to allocate human resources, promote production of supporting industry products. Through exhibitions of SI products, enterprises of Hanoi and the provinces/ cities in the northern region have opportunities to meet and exchange experience and stimulate business and investment cooperation in order to increase valuable commercial transactions with Japanese partners and partners from other countries in the ASEAN region, as well as around the world. Some SI products have high competitiveness compared with imported products, such as products of Export Mechanical Appliances JSC, Hanoi Plastic JSC, Thang Long Metal JSC, and Dong Anh Chain JSC.

To develop Hanoi supporting industries in accordance with above directions, Hanoi City People's Committee has recently completed and submitted to the Ministry of Finance the project "Building and Promulgate Preferential Policies in Hanoi Southern Supporting Industrial Park (HANSSIP) " for the Government’s approval in the shortest time. Accordingly, regarding the field of land, the Hanoi People's Committee proposed lease terms (for secondary infrastructure investors and business) of 70 years, instead of 50 years as under current land allocation decisions. Besides, Hanoi People’s Committee proposed land rent exemption (for all infrastructure investment business) within 11 years from the date HANSSIP was put into operation (now after 7 years). As for business income tax applied for businesses and investors, Hanoi People’s Committee petitioned to issue a preferential tax rate of 10 percent for 15 years (since the first year as businesses have revenue from business activities), exemption of corporate income tax for 4 years and cut by 50 percent the tax in the next 9 years.

At the same time, there needs to be training classes in solutions to enhance competitiveness for SI business, focusing on human resource development and application of advanced management systems. Besides, Hanoi also strengthens organising trade conferences and seminars among manufacturing and assembly enterprises and suppliers of components and spare parts for each sector, industry group, and research organisation related to industrial production in the area.