Foreign firms struggle to buy parts, materials in Vietnam, plea for more support

By N. Tran Tam, Thanh Nien News

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Le Thanh Hai (L), Ho Chi Minh City's Party chief, talks with a foreign investor at a meeting on March 4, 2015. Photo: Diep Duc Minh Le Thanh Hai (L), Ho Chi Minh City's Party chief, talks with a foreign investor at a meeting on March 4, 2015. Photo: Diep Duc Minh


Foreign investors in Ho Chi Minh City have continued to complain about difficulties in buying parts and materials for production, urging the government to try harder to help its stagnant supporting industries. 
Yutaka Watanabe, general director of Towa Industrial Vietnam, a Japanese producer of precision machines parts used in vehicles, said at a meeting on Wednesday that manufacturers have been facing many troubles looking for materials in Vietnam.
The company, which started operating in Vietnam in 1995, said it has to import most of what it needs from Thailand. 
Importing materials causes input costs to surge by 18 percent, but Watanabe said local suppliers in Vietnam cannot meet the high technical demands required in the precision industry. 
Vietnamese suppliers need more money and the government should provide funding to help them upgrade production capability, Watanabe said, adding that Japan has helped its own businesses that way. 
Vietnam has for years tried to boost investment in supporting industries, which produce materials and components that will be used later in the assembling of finished products.
But somehow there has not been much success. 
Sherry Boger, Vietnam general director of Intel Corp., said foreign firms will not be able to survive on their own in Vietnam and local firms have to help them by providing materials and parts for production.
Yasuzumi Hirotaka, a representative of Japan’s trade promotion agency JETRO in Ho Chi Minh City, said Japanese firms in Vietnam only has an average local content ratio of just above 14 percent, which means more than 85 percent of their materials and parts still have to be imported. 
Other regional countries including Thailand and Indonesia have seen local content ratios surpassing 20 percent. 
Vietnam will be able to pull in more foreign investment if the government can offer better support to its supporting industries, Hirotaka said.  
Red tape
Hirotaka also cited a recent survey by JETRO in which many Japanese firms in Vietnam complained about vague and complicated laws.
They said the legal system in Vietnam is not adequate while tax and customs regulations should be simplified.
He said businesses said the current rules are requiring them to spend so much time working directly with officials.
His comment echoed what many business have said earlier about doing paperworks in Vietnam, a daunting task that may sometimes involve tax and customs officials who cause unnecessary troubles. 
Vu Van Hoa, manager of Ho Chi Minh City Export Processing and Industrial Zones Authority, said at the meeting that starting this year, officials will cut the time for granting investment licenses by up to half.
Le Thanh Hai, the city’s Party chief, said the city is always open for suggestions and will make all the efforts needed to improve its business environment.
Hai said the city will try to reduce red tape and allow businesses to perform more procedures online.
It will also work to improve the attitudes of tax and customs officials, he said.

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