Supporting Industrial Development Policy

In response to inquiries from delegates regarding policies supporting industry development during the June 4 afternoon session, Minister of Industry and Trade Nguyen Hong Dien explained that the Ministry has concentrated on three main areas: parts and spares for all types of machinery and equipment; the supporting industry for the high-tech industry; and supporting industry for the textile, apparel, and footwear industries. This is based on the Prime Minister’s directives and Decision No. 68/QD-TTg on supporting industry development in the period of 2016-2025.

After six years of implementation to achieve 45% or more of the demand for domestic production, we have achieved certain results. Accordingly, metal components meet about 85-90% of the needs of motorbikes, 15-40% of the needs of components for automobile production (depending on the type of vehicle), and 40-60% for machines, agriculture, and movers. As for the textile, garment, and footwear industries, domestic enterprises meet about 40-45%.

However, the Minister confirmed that some products, such as electronics, information technology, telecommunications, and specialized electronics, are less than the overall target, with domestic production meeting only about 15%. Domestic high-tech industries can only meet about 10%.

The Minister confirmed that recent results have contributed to gradually reducing reliance on imported foreign raw materials and spare parts, increasing the contribution proportion of the processing and manufacturing industry in the country’s overall industrial and economic structure, and contributing to the development of Vietnam’s key industries.

Minister Nguyen Hong Dien explained that the state’s investment support resources are still limited and difficult to access, which is why supporting industrial products is lower than the target. FDI attraction policies have not encouraged or mandated the association of foreign-invested enterprises with domestic enterprises, resulting in the current situation. The mechanical support industry faces significant challenges in attracting investment because capital is abundant but the market is small, and Vietnam is a latecomer, making it difficult to compete with other developed countries. Furthermore, policy implementation is not well coordinated across levels, sectors, localities, units, and businesses. “Therefore, the policy exists, but we cannot access or implement it,” the Minister stated.

In terms of future solutions, the Minister stated that to achieve the goals, policies, such as researching and developing the Law on Key Industrial Development, must be completed simultaneously. Increase resource allocation at the central and local levels to focus on developing supporting industries; Close coordination between the central government, localities, and businesses to implement favorable policies; Set aside enough resources for the 2025 Supporting Industry Development Program and continue to implement it in the next phase. At the same time, the Minister believes that it is necessary to train and provide quality human resources to support businesses, as well as strengthen the program of activities to support improving production capacity, for Vietnamese supporting industry enterprises to compete with imported goods.

Delegate Ho Thi Kim Ngan (Bac Kan) questioned the above content further, asking the Minister of Industry and Trade to state his views and solutions to the fact that the supporting industry currently has approximately 1,500 enterprises, primarily operating in the fields of mechanics, electricity and electronics, plastics, rubber, and chemicals. However, the business’s revenue declined significantly last year, and it is currently experiencing two major bottlenecks in capital and costs. Meanwhile, a large and rapid influx of supporting industries from various countries is occurring in Vietnam. This demonstrates that supporting industry enterprises have not yet grown sufficiently to participate in the global manufacturing supply chain.

Responding to delegates, Minister of Industry and Trade Nguyen Hong Dien stated that foreign investment businesses coming to Vietnam always seek support from businesses “of the same generation” as themselves. These are experienced businesses that meet product quality and environmental standards while also offering competitively priced products.

Meanwhile, Vietnam’s supporting enterprises are still in poor health. Although there are mechanisms, they cannot be accessed. “So clearly, this is a difficult issue that we must address,” the Minister stated. According to the Minister, regaining market share for domestic supporting businesses requires a review of the legal system to ensure that the state’s mechanisms and policies are implemented. Domestic companies can absorb and grow from it. Local governments must also provide the best possible conditions to assist companies in obtaining premises, infrastructure, capital assistance, or training to develop human resources… The Minister specifically stated that to attract foreign investors to Vietnam, the Foreign Investment Law and several related laws must be amended, with binding mechanisms replacing incentives. As a result, foreign-invested enterprises are forced to cooperate and associate with domestic enterprises, eventually localizing their production industry. Throughout the implementation of these solutions, we will continue to summarize to see if there are any additional solutions or experiences.


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