The government should have concrete policies to attract investment in support industries, a conference has heard in HCM City.
Speaking at the meeting organised on Wednesday by Thailand-based Reed Tradex and the Japan External Trade Organisation, Vu Xuan Mung, deputy head of the Ministry of Industry and Trade’s office in city, said support industries played a very important role in the process of industrialisation and modernisation.
Without the accessories and parts they provide, manufacturers would be in great difficulty, he said.
“Other countries in the region like Thailand, Malaysia, and Indonesia have taken great strides in developing support industries, if we do not strive to overcome difficulties to develop the sector, we will be left behind,” he warned.
Hiroyuki Mizunoe, an expert with the Japan International Cooperation Agency (Jica)’s Support Industry Development project, said Vietnam was now less attractive to Japanese investors than other countries in the region due to the lack of support industries.
According to a survey by the Japan External Trade Organisation, local procurement of industrial materials and sub-components by Japanese companies in Vietnam is only 28.7 per cent, much less than other major Asian countries.
It is 59.7 per cent in China, and 53 per cent in Thailand. The government issued Decision No 12 in February 2011 on developing certain supporting industries, but the policies were disappointing, delegates said.
Nguyen Duong Hieu, chair of Lidovit Trading and Industrial JS Company, said firms in support industries have received no support, and urged relevant ministries and agencies to map out clear policies so that businesses could benefit from incentives.
Tran Ngoc Phuong Hang, director of Phan Sinh Company, which supplies chrome and nickel-plated products to Japanese producers, said: “Despite being in a support industry, we have not received any incentives from the government, from taxes to loan interest rates.”
Local authorities plead ignorance about incentives for the sector in the absence of clear instructions from the government, she said.
Pho Nam Phuong, director of the Investment and Trade Promotion centre of HCM City, said: “The city is fumbling in its efforts to find a direction and policies for the development of support industries.”
Mizunoe said: “There are four things that Vietnam needs to do to develop support industries: develop human resources for them, provide financial backing, draw up concrete plans for their development, and tweak laws to support enterprises better.”
He also urged small firms to strive harder to improve their technologies to raise their competitiveness and use of locally made parts. Chainarong Limpkittisin, managing director of Thailand Reed Tradex Company, said Vietnam’s support industries had development opportunities since many foreign companies, who had plants in Vietnam, expected to collaborate with more domestic spare part suppliers to reduce transport costs and risks.