Poor supporting industries a bugbear for foreign firms

TN News

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Vietnam's supporting industries are underdeveloped, dissuading foreign investors from expanding their operations in the country.

Pho Nam Phuong, director of the Investment and Trade Promotion Center based in Ho Chi Minh City, said many foreign companies in the country are unable to increase the use of locally made parts.

Few domestic suppliers use advanced technologies or are committed to supplying high-quality products, she said.

Hirotaka Yasuzumi, managing director of the Japan External Trade Organization (JETRO), said Japanese firms see the state of the supporting industries as the biggest obstacle to expanding their business in Vietnam.

Japanese firms' use of local parts in Vietnam is a mere 28 percent compared to 60 percent and 53 percent in China and Thailand, he said.

Last year Japan accounted for half the total FDI in Vietnam.

JETRO has been working with local agencies to assist firms operating in supporting industries in the last decade, but the situation has not improved, he said.

Last year the World Economic Forum's Global Competitiveness Report ranked Vietnam 137th out of 144 countries in terms of technological readiness.

The country was ranked 126th in capability to use new technology.

Nguyen Thanh Tam, who is in charge of buying materials at chip maker Intel Vietnam, said companies in supporting industries lack a stable mode of operation.

This badly affects the quality of their goods, he said.

Pham Ngoc Tuan, deputy chairman of the Ho Chi Minh City Association of Mechanical Engineering, said supporting industries are facing many challenges in developing, and many are "shrinking."

Foreign companies, including Japanese camera maker Canon Vietnam, have urged the Ministry of Industry and Trade to draw up plans to develop the supporting industries.

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