Enhancing the role of localities in developing supporting industries

The localization rate of many manufacturing industries has increased. Photo: NT

Many localities have proactively launched preferential policies

Sharing at the seminar “Creating attraction for supporting industries: The role of localities” organized by Industry and Trade Magazine on August 29, according to Mr. Pham Tuan Anh, Deputy Director of the Department of Industry (Ministry of Industry and Trade), in recent times, the Government has had many support and preferential policies for businesses.

Specifically, in 2015, the Government issued Decree No. 111/2015/ND-CP on supporting industry development; in 2017, the Prime Minister signed Decision No. 68/QD-TTg approving the Supporting Industry Development Program from 2016 to 2025...

These policies have had a great impact on the practice of the supporting industry. Specifically, supporting industry products have gradually entered the supply chain and achieved relatively high added value. In addition, many industries have increased their autonomy in raw materials, such as: the textile and garment - footwear industry is self-sufficient in about 30 – 45 percent; the mechanical engineering industry is self-sufficient in raw materials about 30 percent; the automobile sector has a relatively large localization rate...

With preferential policies on supporting industries, in recent times, many satellite FDI enterprises have followed large corporations to invest in Vietnam to enjoy preferential policies on policies, taxes and policies related to the environment, which have been issued.

The leaders of the Department of Industry assessed that some localities have great potential for developing supporting industries such as: Hanoi, Ho Chi Minh City, Thai Nguyen, Bac Ninh, Bac Giang, Hai Phong... Recently, based on the general policies of the Central Government, they have proactively issued policies for their own localities. These policies mainly focus on some contents such as supporting enterprises in training human resources, helping enterprises access the global production chain.

For example: Ho Chi Minh City has a policy for priority projects to borrow capital by subsidizing interest rates. Most recently, on July 19, 2024, the Ho Chi Minh City People's Committee also issued Decision No. 42/2024/QD-UBND on implementing the interest rate support policy for investment projects in priority areas of socio-economic development in the area.

Nguyen Trung Hieu, Head of Business Planning Department of Toyota Vietnam Automobile Company, said that Vietnamese supporting industry enterprises have significantly improved in both quality and quantity in recent times.

Accordingly, in terms of quantity, from the initial assessment, there were more than 300 Vietnamese enterprises achieving ISO/TS 16949 certification, so far, this number has reached over 500.

Similarly, the quality of goods has changed significantly. Firstly, Vietnamese enterprises are now not only producing components with low technology content and only need to focus on the strengths of cheap labor, but have moved up the ladder of components requiring higher technology, for example: stamping and forging, or components for new car models.

Notably, according to the representative of Toyota Vietnam, the management level of the leadership class, awareness of issues to improve competitiveness in terms of quality, cost, and delivery capacity has been raised significantly. Many businesses have clearly understood and skillfully applied standards such as 5S or have systems to organize training for employees.

Representing a manufacturing enterprise in the supporting industry sector, Mr. Duong Minh Hai, Production Director of KIMSEN Industrial Joint Stock Company, shared that KIMSEN's products have been supplied to multinational corporations, FDI companies operating in Vietnam and exported. So far, about 50 percent of the enterprise's output is for direct export activities and domestic FDI enterprises.

It needs a localization rate

According to Duong Minh Hai, in order to develop supporting industries, in addition to preferential policies, businesses need connections between the Ministry of Industry and Trade, localities and large enterprises.

Despite many positive results in developing supporting industries, many opinions say that localities are still quite passive in implementing policies for industrial development in general and supporting industries in particular. The development and implementation of policies, developing separate supporting industries, especially the allocation of resources and attracting investment in this field are still limit ed. Meanwhile, the majority of Vietnamese industrial enterprises are small and medium-sized enterprises, and their operations are closely linked to the locality.

The representative of the Department of Industry said that in order to continue promoting the development of supporting industries, the Ministry of Industry and Trade is proposing policies related to market creation, building industry clusters, supporting businesses in terms of credit, etc.

There will be policy mechanisms so that in the process of attracting investment, there must be constraints with foreign businesses in the work of developing the localization rate. At the same time, continue to coordinate with localities to build programs to develop supporting industries in the locality.