Promoting Vietnam's supporting industries to deeply participate in global value chains

Ms. Le Nguyen Duy Oanh

Supporting industry development is important in the process of deeper participation in the global value chain. What are the advantages of the supporting industry in Ho Chi Minh City in particular and Vietnam in general?

Enterprises in the supporting industry in Ho Chi Minh City in particular and Vietnam in general have opportunities to develop, because at present, although the situation of attracting foreign investment of Vietnam faced many difficulties in 2020, 2021 and the first months of 2022, there have been great opportunities in attracting investment, such as large supply chains from countries in the fields of processing and manufacturing which are shifting investment to Vietnam.

Specifically, Samsung Group's investment expansion or PVI Vietnam's new investment in handheld devices, or Apple's supply chain, have moved production to Vietnam. The increased investment opportunities in the manufacturing and processing sector in Vietnam have created great opportunities to develop and join the global supply chain for the supporting industry sector.

In addition, the disruption of the supply chain during the pandemic and the slow recovery of the supply chain in some countries also create opportunities for Vietnamese supporting industry enterprises.

Because enterprises investing in Vietnam, especially those with large export markets from Vietnam to other countries, want to solve difficulties from the supply chain disruption, they must have a localization strategy of supply.

Vietnam has an important political position in Southeast Asia, along with the expansion of bilateral and multilateral economic cooperation, free trade agreements also help Vietnamese enterprises have more opportunities with export markets. Accordingly, our production in general and supporting industry production for the terminal industrial production in particular will have the opportunity to participate in the global supply chain.

Besides opportunities, what are the difficulties and challenges that supporting industry enterprises are facing, especially in the post-Covid-19 period?

The big challenge that supporting industry manufacturing enterprises face is to have better competitiveness to compete with other manufacturing enterprises in the region.

Specifically, in order for enterprises to participate in the global supply chain, enterprises must overcome the requirements and barriers of enterprises in the chain and supply capacity. However, we realize that the supply capacity of Vietnamese supporting industry enterprises is facing difficulties in terms of high-quality human resources to operate and optimize the plant's operations, helping enterprises have better competitive capacity in terms of price and quality.

Besides, before the requirements and opportunities that supporting industry enterprises are available, in order to realize the opportunities, they have certain difficulties in expanding the scale of factory production. Currently, the cost of land to expand factories in Ho Chi Minh City is very high, while preferential policies and support for land and investment premises are not currently regulated by the Government. This will be very difficult if the business is not financially capable. It is difficult to have larger land plots, to build larger factories in Ho Chi Minh City for supporting industry enterprises.

Especially, after the Covid-19 pandemic, the demand for orders for supporting industries has increased, but the challenges of enterprises are also too great when they want to invest and innovate.

For example, Duy Khanh Mechanical Company is also a supporting industry enterprise, during the pandemic, Duy Khanh invested in expanding a new factory compared to the old factory with more than 50 years. However, it takes them 1 to 2 years to implement, then those opportunities are even more challenging for supporting industry enterprises.

Could you tell us about solutions and recommendations to unlock resources for the development of supporting industries?

Enterprises can rely on external resources to develop their internal human resources. Accordingly, the first thing we are doing and together with many other consulting organizations are implementing activities on 5S KaiZen (management model to improve productivity, improve quality, cut costs and improve high morale of employees) in training human resources for enterprises to well implement these tools at factories.

Because, with 5S KaiZen, enterprises have the conditions to apply all other standards as well as other management tools in the factory to operate effectively. In addition, we and the Association of Mechanical and Electrical Enterprises of Ho Chi Minh City to work with a number of enterprises as well as consultants to have an open source of knowledge for the supporting industry. At the same time, develop a vocational training system to provide resources for supporting industrial production as well as find a network of experts. When enterprises need human resource training activities, these experts join to form a network of consultants to support enterprises. This is also an additional resource for enterprises in the process of human resource development, to better meet the demand for supporting industrial production to participate more deeply in the global supply chain.

Thank Madam!