Quickly remove 'bottlenecks' in supporting industry development

Many "bottlenecks"

One of the major requirements and orientations for industrial development in Nghe An is to prioritize investment and attract projects that are driving forces and leading the industry; projects must have modern technology and equipment for deep processing, bringing added value and high intellectual content; limit processing and exporting raw products. Along with that, priority is given to supporting satellite enterprises and supporting industries to attract local workers...

However, for a long time, the province has not attracted key industrial projects. Supporting industries are still underdeveloped, so there are few opportunities for local enterprises to participate in the global production and supply chain brought by FDI enterprises. Up to now, except for the cement and beer industries, which have a number of supporting enterprises supplying items such as packaging, casings, and transportation, other industrial products do not have supporting enterprises that meet the requirements.

High-quality material production line of Trung Do Joint Stock Company in Nghi Van commune (Nghi Loc). Photo: Nguyen Hai

For example, Trung Do Joint Stock Company, which used to produce granite tiles and ceramic tiles, had to struggle to find equipment suppliers from other provinces to repair them whenever the equipment line broke down. Even components such as belts and packaging for tiles and tiles had to be ordered from Hanoi and Nam Dinh. Currently, large-scale artificial sintered stone products have been introduced, but construction equipment and adhesives all depend on outside companies, so product prices have increased, causing difficulties for businesses.

Textile and garment is one of the key industries of Nghe An. However, while the number of garment factories in Nghe An is quite large, satellite and supporting enterprises are too few. Industries such as weaving and dyeing in Nghe An are still "lowland areas". The whole province currently has only 1 yarn factory of Hoang Thi Loan Textile and Garment Joint Stock Company with an output of 20,000 tons of yarn/year; 1 embroidery facility (Lac Son Industrial Park, Do Luong District) and about 18 other hand-woven facilities. There is only 1 yarn factory - the production line of Vinh Yarn Factory, invested in since the 90s of the last century.

Yarn production line at Hoang Thi Loan Textile Joint Stock Company. Photo: Thu Huyen

Difficulties in raw materials have caused the textile industry to remain in a vicious circle, having to import cotton to spin yarn, then sell the yarn and then import fabric. A representative of Prex Vinh Company Limited said: The garment industry is having to import 60-70% of raw materials, most of which are from China. Our textile industry is strong in yarn and sewing, but lacks the weaving and dyeing stage, forcing companies to export yarn to China and then import fabric. This problem has caused the textile industry of the whole country in general, and Nghe An in particular, to have to import a large amount of raw materials, reducing its competitive value.

In addition, the demand for replacement of machinery components in garment companies is currently very large, but all companies have to import from abroad. Plastic products supporting the textile industry such as plastic tubes for the textile industry, synthetic fibers, hangers, labels, logos, zippers, buttons for the garment industry; pins, plastic clips or chemical products for the textile industry such as dyes, auxiliaries, basic chemicals, biological products are all being imported from abroad.

The supporting industry for the textile and garment industry is still lacking and weak. In the photo: Production at the branch of Hanoi Textile and Garment Corporation, Nam Giang Industrial Cluster, Nam Dan. Photo: Thu Huyen

In a scientific conference on Nghe An industry until 2030, Dr. Le Xuan Sang - Deputy Director of the Vietnam Economic Institute said that textile and garment is an industry group that needs to have supporting industry, because currently in the province there are many garment projects invested in, in which some enterprises invest in production lines with quite large scale,... Having to import most of the raw materials and accessories makes the added value of this industry not high, it is necessary to attract many supporting industry projects to reduce trade deficit.

Mr. Hoang Minh Tuan - Head of Import-Export Management Department, Department of Industry and Trade said: Nghe An textile and garment industry is a key industry that creates many jobs, bringing high export turnover to the province. However, enterprises are mainly processing, the source of raw materials must depend on imports. If this gap is not overcome, it will be very difficult to proactively source raw materials to take advantage of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership such as CPTPP, EVFTA.

Need to have attractive policies

In recent years, the Party and Government have paid attention to and directed the development of the supporting industry. Many policies and programs have been issued to encourage the concentration of resources for the development of the supporting industry, such as: Decree No. 111/2015/ND-CP of the Government on the development of supporting industry; Resolution 23-NQ/TW of the Politburo on the orientation for building a national industrial development policy to 2030, with a vision to 2045. Most recently, Resolution 115/NQ-CP of the Government on solutions to promote the development of supporting industry with many new policies, which are expected to create strong stimulus for supporting industry and processing and manufacturing industry in the coming time...

Up to now, the whole country has only 5,000 enterprises operating in the supporting industry sector, accounting for 4.5% of the total number of enterprises in the processing and manufacturing industry. In that general picture, Nghe An's supporting industry is both weak and lower than the national average, accounting for a small proportion of the province's industrial production value. The number of supporting industry enterprises in each industry and field is still small. These enterprises are weak in terms of capital capacity, technology, production capacity, and limited in market scope, only able to participate in a number of fields that do not require high technical and production skills.

Transporting cans for production at Hanoi - Nghe An Beer Joint Stock Company in Nam Cam Industrial Park. Photo: Thu Huyen

The development of supporting industry is facing many barriers in technology and cost, the market connection between suppliers and demanders. Support policies, quality of human resources and planning as well as technical infrastructure; the supply capacity of the supporting industry is still very limited. The ability to connect with domestic and foreign enterprises to provide raw materials, components and spare parts is weak.

Dr. Le Xuan Sang - Deputy Director of Vietnam Economic Institute

Dr. Nguyen Xuan Thanh - Director of Nghe An Center for Industrial and Trade Support and Consulting said: One of the current limitations is that the support policy for supporting industries still has many shortcomings. Although the policy does not distinguish between types of enterprises, FDI enterprises investing in supporting industries are not entitled to support according to Decision No. 39/UBND. The reason is that these enterprises have enjoyed incentives on land lease and other tax exemptions and reductions, so they are not entitled to the above policy.

For the above reasons, the annual budget of about 2 billion VND to support supporting industries and satellites is very difficult to disburse. The province's already weak supporting industries are even more difficult.

Nghe An is striving for an average increase in the value of supporting industrial production of 9-10% per year, accounting for 10-12% of the total industrial production value by 2025. Gradually increase the proportion of export turnover of supporting industrial products in the total export turnover of goods of the province. In the period of 2018-2025, strive for an average increase in the number of enterprises of 3% per year, by 2025 supporting industrial enterprises account for 10-12% of the total number of enterprises of the entire industry. There are 20-30 supporting industrial enterprises located in the province participating in supplying FDI enterprises and participating in the value chain of corporations.

Carton packaging production line at Thien Phu Joint Stock Company, Nghi Loc. Photo: Thu Huyen

One of the major requirements and orientations in industrial development of Nghe An is to prioritize investment and attract projects that are driving forces and leading the industry. Increasing the localization rate by developing supporting industries and satellite enterprises so that small and medium enterprises can take advantage of opportunities to participate in the global production chain of FDI enterprises is the current issue.

To focus resources on the most potential areas, bringing the highest investment efficiency, it is necessary to have orientations, goals along with a system of mechanisms, policies and promotion solutions from the State management agency. The goal of Nghe An's industrial development in the coming years is to both prioritize industries with competitive advantages and focus on shifting the structure to areas with high science and technology content, increasing the proportion of exported industrial goods, promoting the final product manufacturing industries...

Source: https://baonghean.vn/som-thao-go-diem-nghen-trong-phat-trien-cong-nghiep-ho-tro-post278892.html