More connection needed for market expansion

Inadequate legal corridor

Vietnam currently has approximately 100 supporting industry enterprises operating as tier-one vendors for large corporations, and around 700 supporting industry enterprises operating as tier-two and tier-three vendors.

Supporting industry enterprises have grown both quantitatively and qualitatively

Supporting industry enterprises have grown both quantitatively and qualitatively. Many domestic businesses have invested in technology and improved the quality of their workforce to meet the requirements of large domestic and foreign corporations and enterprises operating in Vietnam.

Dinh Hong Luong, Deputy General Director of the PMTT Group, a precision engineering and technology transfer company, said that PMTT Group is currently a manufacturer of components and accessories for companies in the Republic of Korea and Japan. The company also manufactures parts and accessories for VinFast and some components for Viettel Group.

According to Assoc. Prof., Dr. Dam Hong Phuc from the Faculty of Mechanical Engineering at the Hanoi University of Science and Technology, the number of Vietnamese supporting industry enterprises serving as tier-one vendors for large corporations is only one-seventh compared to that in Thailand. The number of Vietnamese enterprises serving as tier-two and tier-three vendors for large corporations is only one-tenth compared to that in Thailand.

Vietnamese supporting industry enterprises are still weak and insufficient to meet practical demand. Although Vietnam has issued quite comprehensive policies regarding supporting industry development, their implementation still shows problems. Vietnam still lacks a specific law providing a strong legal foundation for the development of supporting industry enterprises.

In fact, domestic supporting industry enterprises have to import certain components and accessories from foreign countries to manufacture their products. Tran Van Nam, Chairman of the Management Board and General Director of the MBT Company, believes that the Government should have better support policies to connect domestic enterprises with foreign suppliers.

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Connecting businesses to supply chains

Some supporting industry enterprises expect that relevant authorities provide them with information about the demand of large corporations and foreign companies investing in Vietnam. This will enable them to outline suitable production plans to better meet the demand of supply chains.

Many supporting industry enterprises also expect that relevant authorities assist them in accessing land, factory premises, and capital for production and trade. The supporting industry requires substantial investments but faces slower capital recovery compared to other fields. Therefore, without the Government’s support, there will be fewer businesses willing to invest in this sector.

The Ministry of Industry and Trade (MoIT) has advised the Government on improving supporting industry policies, while implementing programs aimed at connecting domestic supporting industry enterprises with major corporations in Vietnam. For example, there has been collaboration with Samsung Group (Republic of Korea) to implement an improvement advisory program, with the goal of enhancing the competitiveness of domestic supporting industry enterprises.

Pham Tuan Anh, Deputy Director of the MoIT’s Industry Agency, said that there are both short-term and long-term solutions to enhance the capacity of supporting industry enterprises. In the short term, the MoIT is promoting investment domestically and abroad to seek new markets for supporting industry businesses. In the long term, the ministry will continue to advise the Government on issuing policies to improve the mechanism for attracting investment in the supporting industry, with the aim to increase the localization rate domestically.

Supporting industrial zones and clusters should be established with the presence of leading enterprises and service facilities. This fosters the development of a complete ecosystem, providing reassurance for businesses to invest in this field.