HCMC intensifies connecting FDI with domestic firms

Ho Chi Minh City Department of Industry and Trade yesterday worked with relevant agencies to organize an event to seek domestic support industry suppliers and connect domestic with foreign direct investment (FDI) firms with the attendance of over 100 companies.
Mechanical molds manufacturing at Lap Phuc Mechanic Company (Photo: SGGP)
Mechanical molds manufacturing at Lap Phuc Mechanic Company (Photo: SGGP)

Analyzing support industry development opportunities, Ms. Nguyen Thi Xuan Thuy from Strategy Study Institute under the Research Institute for Industrial Strategies and Policies said that the market capacity of the support industry in Vietnam is very large. Two industries forecast to need lot of support products in the upcoming time are auto manufacturing and electricity-electronics.

Vietnam now has over 20 auto assembly firms, 84 level 1 suppliers and 145 level 2 and 3 suppliers. Meantime, Thailand has 16 auto assembly companies and as many as 690 level 1 suppliers and 1,700 level 2 and 3 suppliers. The number of support industry suppliers in Vietnam is few compared to demand.

Statistics since 2005 until now show that support product suppliers have increased from 256 to over 1,000 companies in electricity and electronics field, estimated to be a key industry gaining some achievements in FDI attraction and exports. Still the industry has in fact stopped at the early stage of the supply chain to make electronic products.

Sharing the same view, Ms. Truong Thi Chi Binh, secretary general of Supporting Industries Business Association, said that surveys indicate that over 90 percent of support industry components in plastics, rubber, electricity and electronics industries are imported. The import ratio is up to 94 percent to electricity and electronics components.

Mr. Nguyen Duong Hieu, director general of Lidovit Trading and Industrial Joint Stock Company, said that domestic firms have yet to meet support product supplier requirements in technology equipment, management and human resource.

Meantime, foreign firms have not connected with domestic companies and used products of suppliers in their supply chains because of stable quality and competitive prices.

Domestic firms are said to improve production capacity to attend global supply chain and increase localization rate.

A representative of the Ministry of Industry and Trade said that domestic firms need to seek foreign markets. In fact, domestic support products might not meet local market requirements but might attend other segments in the world market.

In addition, businesses should standardize requirements in chemical content, technical standards and product safety and quality, environment and energy management systems. They should have long term strategy to develop and take the initiative in connecting with FDI firms.

Mr. Nguyen Phuong Dong, deputy director of HCMC Department of Industry and Trade, said that the agency has built a database on support industry firms and collect information of over 500 businesses.

In the upcoming time, it will work with relevant sides to develop the database to create opportunities for domestic firms to attend global support product supply chains. He suggested businesses to be more proactive to supply their information for authorized agencies.