Many foreign corporations want to increase the localization rate in Vietnam.

Large foreign corporations such as Samsung and Toyota are looking for domestic suppliers of parts and accessories to increase the localization rate.

The demand for suppliers of spare parts and accessories from foreign corporations is very large.

According to Ms. Nguyen Thi Xuan Thuy - Industrial policy expert, University of Economics - Vietnam National University, Hanoi: "In reality, large enterprises such as Samsung, Toyota and some large corporations that I have had the opportunity to work with all said that they want to find domestic suppliers, and if they cannot find them, they have to look for outside suppliers to make accessories."

Experts say that some large enterprises such as Samsung and Toyota want to increase the localization rate in Vietnam. Photo ST

Agreeing with the view that the demand for foreign corporations to find manufacturers of components and accessories in Vietnam is very large, Associate Professor, Dr. Nguyen Mai - Chairman of the Association of Foreign Investment Enterprises said: Samsung Group, from having only about 10 domestic component suppliers in 2017-2018, now has about 300 Vietnamese enterprises supplying components and accessories, of which about 100 suppliers are tier 1 vendors.

“If domestic enterprises can meet the demand supporting industry "Then foreign enterprises and corporations will have great benefits when investing and doing business in Vietnam, this benefit is much greater than when foreign investors have to bring supporting industrial enterprises from other countries to Vietnam to supply components and accessories for production." – Associate Professor, Dr. Nguyen Mai stated.

Meanwhile, sharing with reporters of the Industry and Trade Newspaper, a representative of a supporting industry manufacturing enterprise that has been “joining hands” with the world’s leading corporations to produce components and accessories for the global supply chain said that the demand for components and accessories for production of foreign corporations in Vietnam is very large and tends to increase, especially in the context of the increasing flow of foreign direct investment (FDI) into Vietnam.

However, according to the representative of this enterprise, not all orders can be met by domestic enterprises because the requirements on delivery time, technology and capital to meet orders are very strict, while the resources of domestic supporting industry enterprises are limited. That is the reason why, even though they are in need of work, enterprises sometimes have to refuse orders from multinational corporations.

It has been proven that if Vietnam has a developed supporting industry, it will not only be a great opportunity for domestic enterprises to participate more deeply in the global value chain, but also help increase the value of export products of the foreign-invested sector. In particular, the development of supporting industry also creates great opportunities for Vietnam to attract foreign direct investment from large corporations, attract high-quality FDI projects, create more space for domestic enterprises to develop, improve competitiveness and contribute more positively to Vietnam's socio-economic growth.

There should be preferential policies for businesses developing supporting industries. HD photo

Need more mechanisms for domestic enterprises to participate in supporting industries

To facilitate industry support domestic development, the government has also had many policies in recent times such as supporting businesses participating in this field. Most recently, in early 2024, Deputy Prime Minister Tran Hong Ha signed Decision No. 71/QD-TTg amending and supplementing a number of articles of Decision No. 68/QD-TTg on approving the Supporting Industry Development Program from 2016 to 2025.

According to the Decision, from 2021 to 2025, the Supporting Industry Development Program will connect and support supporting industry enterprises to become product suppliers for domestic and foreign customers, and promote foreign investment in the supporting industry sector.

These include activities such as: Surveying, assessing needs, developing standards and quality control regulations for supporting industrial products; organizing assessment and confirmation of supporting industrial enterprise capacity; consulting and providing technical support to supporting industrial enterprises; selecting and recognizing enterprises with qualifications and scale meeting international requirements; organizing forums between Vietnamese supporting industrial enterprises and domestic and foreign enterprises; promoting foreign markets, participating in production chains, etc.

The policies for developing supporting industries are quite diverse, but according to economic experts, the implementation of preferential policies for supporting industries in practice still has many limitations. Some conditions for enjoying incentives in the regulations are quite strict and not really suitable, making it difficult for businesses to access and meet the requirements to enjoy the policies.

Besides, a limitation in Vietnam's foreign direct investment attraction policy is that there is no binding and no encouragement for foreign enterprises to increase the spillover effect for domestic enterprises.

Regarding this issue, Ms. Nguyen Thi Xuan Thuy said: There is an existing problem that some Vietnamese enterprises are operating in the supporting industry sector but after a while, they eventually switch to operating in the real estate sector. Through that, we can see that the problem here is not necessarily the supporting industry enterprises, but the macro policy is having problems, causing the real estate industry to generate "too terrible" profits.

According to Ms. Nguyen Thi Xuan Thuy, many businesses said they really want to operate in the supporting industry sector, but they cannot do so because it is not profitable, while access to capital and technology is very difficult.

Foreign enterprises want to find suppliers in Vietnam but cannot. However, according to Ms. Nguyen Thi Xuan Thuy: That search is completely proactive on the part of the enterprises, so it has not brought much efficiency.

For this search to be truly effective, Ms. Nguyen Thi Xuan Thuy proposed: The authorities need to really get involved, proactively call on all foreign-invested enterprises that are looking for Vietnamese suppliers, gather them into one program and have policies to connect with the domestic business sector, then the opportunities for domestic supporting industry enterprises will be huge.

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