One of the solutions to develop the supporting industry mentioned recently is to promote the connection between the FDI sector and domestic enterprises.
According to Ms. Nguyen Thi Xuan Thuy - expert on Industrial Development Policy - University of Economics (Vietnam National University, Hanoi), supporting industry is one of the key areas for Vietnam to attract foreign direct investment (FDI), creating a solid foundation for sustainable economic development and enhancing competitiveness.
 |
| Only about 10% of domestic private enterprises have participated in the supply chains of foreign-invested companies operating in Vietnam. Photo: Quang Thai |
However, in reality, Vietnam's supporting industry is still considered one of the areas with underdeveloped potential. According to statistics from the Vietnam Association of Supporting Industries (VASI), there are currently about 1,800 enterprises producing spare parts and components nationwide, of which about 300 are tier 1 suppliers, mainly concentrated in Hanoi and Ho Chi Minh City, 85% of these enterprises are small and medium-sized.
Citing data from the Vietnam Federation of Commerce and Industry (VCCI), Associate Professor, Dr. Nguyen Mai - Chairman of the Association of Foreign Investment Enterprises said: Only about 10% of domestic private enterprises have participated in the supply chain of foreign-invested companies operating in Vietnam and only about 26.6% of input value is purchased in Vietnam, including FDI companies operating in Vietnam.
The “shortage” of the supporting industry sector has made Vietnam’s investment environment less attractive in the eyes of international investors. At the same time, the spillover effect of the FDI sector into the domestic economy has not been highly appreciated.
In the context of competition to attract FDI in the coming time, it is forecasted to become increasingly fierce due to geopolitical risks, economic risks, technological risks, climate risks and increasing global fragmentation.
Specifically, according to Associate Professor, Dr. Nguyen Anh Thu - Vice President of the University of Economics - Vietnam National University, Hanoi: In the context of globalization, geopolitics has become an important factor in assessing global economic and political stability. The Geopolitical Risk Index (GPR) has skyrocketed from 2023 to early 2024, placing geopolitical issues at the center of the risks that countries and FDI enterprises need to pay attention to when making foreign investment decisions.
In addition, the Chinese economy is in decline, facing prolonged slow growth due to challenges, aging population, high debt level, real estate crisis and delay in reform, affecting the global FDI growth prospects. In that context, to create opportunities to attract FDI, developing supporting industries is one of the important solutions.
 |
| To create opportunities to attract FDI, developing supporting industries is one of the important solutions. Photo: Danh Lam |
Increasing linkages between FDI sector and domestic enterprises
According to Associate Professor, Dr. Nguyen Mai, one of the important goals of attracting foreign direct investment is to increase the relationship between FDI enterprises and domestic enterprises in the global supply chain, rapidly increasing the quantity, scale, quality and socio-economic efficiency of the state-owned economy, collective economy and private economy to build an independent, self-reliant economy, effectively integrating with the world economy.
In particular, increasing the connection between the FDI sector and the domestic enterprise sector is also one of the solutions for Vietnam to develop the supporting industry, in order to achieve the goal of attracting high-quality FDI set forth by the Politburo in Resolution 50/NQ-BCT on the orientation of perfecting institutions and policies, improving the quality and efficiency of foreign investment cooperation by 2030.
The linkage between the FDI sector and the domestic enterprise sector will bring great opportunities for FDI enterprises and domestic enterprises. Specifically, the foreign investment enterprise sector will increase the localization rate in Vietnam, which is more beneficial than having to import components from abroad to meet production activities. As for Vietnamese enterprises, there will be opportunities to participate in the global value chain, access foreign technology, and improve production capacity and skills.
However, one of the reasons why Vietnamese enterprises have not yet been able to connect with FDI enterprises is because the “level” of Vietnamese enterprises is still far behind that of FDI enterprises. This is a barrier that makes it difficult for them to cooperate. In addition, Vietnam still does not have regulations requiring foreign investment enterprises to increase connections and technology transfer with domestic enterprises when investing in Vietnam, which causes some FDI enterprises to invest in Vietnam only to take advantage of cheap labor and preferential investment policies.
To promote the connection between FDI enterprises and domestic enterprises, experts say that Vietnam needs to shorten the gap in qualifications and technology, which is becoming one of the invisible barriers hindering the connection between FDI enterprises and domestic enterprises. In addition, Vietnam needs to create a mechanism to promote the development of the domestic private economic sector, improve competitiveness, thereby narrowing the gap with foreign enterprises. To do so, in addition to support policies from the Government and functional agencies, domestic enterprises themselves need to proactively upgrade their capacity, proactively invest in technology, and improve the quality of human resources to meet the requirements of foreign partners.
Source: https://congthuong.vn/tang-lien-ket-giua-fdi-va-doanh-nghiep-noi-dia-de-phat-trien-cong-nghiep-ho-tro-359286.html
Comment (0)