Developing supporting industries for the billion-dollar export commodity groups

Many multinational electronics corporations, including Samsung, have chosen Vietnam as an investment destination. Photo: Samsung

Opportunity when export value is highest among commodity groups

According to the latest data from the General Department of Customs, from the beginning of the year to mid-October 2024, the export value of computers, electronic products and components reached US$55.29 billion, an increase of US$11.67 billion, equivalent to an increase of 26.7 percent compared to the same period in 2023. The export value of phones of all kinds and components reached US$43.94 billion, an increase of US$2.31 billion, equivalent to an increase of 5.6 percent compared to the same period last year.

Combining these two commodity groups, the export value is double the third commodity group of products, which is machinery, equipment, tools and spare parts; and more than three times that of the textile and garment group. Therefore, the Government has also identified this as a key industry in the modern economy and has a strong impact on other industries.

Do Thi Thuy Huong, Executive Board Member of the Vietnam Electronics Industries Association, forecasts that the electronics and components sector will grow to US$120 billion. However, the problem is that Vietnamese electronics enterprises still focus on processing and assembling, and have not focused on creating supply chains or developing segments such as design, research and development (R&D), distribution, etc. to create higher value-added products, creating spillover effects for other supporting industry enterprises to develop together.

Regarding this issue, Dr. Mac Quoc Anh, Vice President and General Secretary of the Hanoi Association of Small and Medium Enterprises (HANOISME) said that the number of supporting industrial enterprises for the electronics industry is currently modest, accounting for only 36 percent of enterprises participating in the supply of supporting industries. Meanwhile, electronic products are constantly changing in technology, with new products being launched every 3-6 months, which will create conditions and many opportunities for enterprises supplying components.

Furthermore, a series of large electronics enterprises have, are and will invest in Vietnam. For example, after investing US$1.5 billion to build a production facility, Foxconn will invest an additional US$300 million in the factory under construction in Quang Chau Industrial Park (Bac Giang). Pegatron is expanding its second project on electronic components with a total investment of about US$481 million in Hai Phong. Pegatron will continue to invest in a third project with a scale of US$500 million in the period of 2025-2026... These projects further expand the development potential for enterprises in the electronics support industry.

Lack of capital, policy and inadequate human resources

In fact, the supporting industry sector in general and the supporting industry for the electronics industry in particular still face many difficulties in development. The support policy for the electronics industry is currently only Decree 111/2015/ND-CP of the Government on the development of supporting industries, so the full potential and opportunities have not been exploited.

Sharing about the difficulties of enterprises, Mr. Lai Hoang Duong, Chairman of the Board of Directors of Thanh Giong Communication and Computer Joint Stock Company, said that to operate in the electronics industry, enterprises need a lot of support from the State to access the electronics industry and semiconductor chip manufacturing technology. For example, to access nanotechnology, enterprises need support such as purchasing patents to be able to meet market demand.

In addition, many businesses also said that they still have difficulty finding investment capital, while industrial equipment for modern electronics production is very expensive. At the same time, the issue of intellectual property protection also causes many businesses to have a "headache" in responding to procedures and registration...

In order to overcome the above difficulties, Dr. Mac Quoc Anh recommends strengthening links and cooperation with partners in countries with core industries such as the US, Japan, South Korea, etc. Along with that, policies need to have more specific regulations on receiving advanced science and technology transfer, helping businesses quickly access technology and improve competitiveness.