Vietnam supporting industry needs government support: analysts

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Workers at Samsung Electronics Vietnam check components before assembling them. Photo courtesy of Saigon Tiep Thi

Exports of gadgets like cell phones and computers have surged by up to 97 in the first half, but industry insiders say Vietnamese firms make little value addition.

Cell phones and accessories fetched US$9.9 billion and electronics and computers and accessories, $4.7 billion.

But Le Van Chinh, a technical consultant at Ho Chi Minh City-based Soncamedia, which designs and produces home and communications electronics, said the capabilities of supporting industry companies remains "very low."

His company is willing to pay higher for better quality -- like smoother bolts and plastic sheets -- "but the industry just cannot provide them."

He also complained about late deliveries, saying the vendors are all big producers based in the city.

Executives at chip producer Intel too said they have been unable to find a qualified Vietnamese partner.

"We have worked with many Vietnamese companies in the supporting industry. They showed very good samples, but when it came to actual business, their deliveries were not consistent," one of them said.

Samsung Electronics Vietnam has only five Vietnamese partners in its 60-strong supply chain, and they do simple jobs like packaging and printing.

A company source said production has evolved from cheap cell phones five years ago into smart phones and tablets, but local supporting industry companies have failed to keep pace with the technology.

Le Bich Loan, deputy director of the Saigon High-tech Park, admitted that supporting industries for the electronics sector have failed to keep up with the market's needs.

Insiders said the sector needs a boost through policies.

Nguyen Thi Nhu Phuong of the Vietnam Electronics Industries Association, said the government is actually treating foreign electronics investors better than the local supporting industry.

Nguyen Anh Tuan, chairman of the Ho Chi Minh City Semiconductor Industry Association, said by failing to back the local supporting industry while pampering foreign investors with low taxes and land fees, the government is just giving the latter a chance to make use of cheap resources.

Tuan said foreign giants like Sony, JVC, and Panasonic only use Vietnamese companies to assemble components, generating little value addition.

"When the contracts end, they will leave or change the production methods, leaving Vietnamese companies with little technological know-how."

He said supporting industries in other countries develop into production mode within five or 10 years, but Vietnam's has been stuck in assembling for more than 30 years.

Huynh Ngoc Phien, chairman of industrial zone developer Amata in Dong Nai Province near Ho Chi Minh City, said giant state-owned companies with resources should be investing in supporting industries.

"Private companies that are poorly funded and staffed won't be able to invest in high technologies or attract competent employees."

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