The localisation rate in Viet Nam – the percentage of a product locally made is too low as the number of Vietnamese part supplying businesses accounted for only 3 per cent of the country’s total, Phan Dang Tuat, former director of the Institute for Industrial Policy and Strategy said.
“We cannot build a part supplying industry with the limited firms,” Tuat , said.
He told a forum on developing the industry, titled ‘Opportunities from Free Trade Agreements (FTAs) to attract investment into industries’ held in Ha Noi yesterday that Viet Nam has 1,383 businesses operating as part suppliers out of a total 500,000 firms, divided into three groups of mechanic, electronics, rubber and plastic.
“Viet Nam should promote the building of a start-up model for companies in the sector. Ministries and agencies should study how to establish more firms in the industry,” he added.
Deputy Minister of Industry and Trade Hoang Quoc Vuong said that under the tariff cut, Viet Nam would have opportunities to improve competitiveness and exports to both traditional and new import markets, on the road map in bilateral and multilateral FTAs with important partners.
Vuong said this would be an opportunity for Viet Nam to participate in global production and the supply chain while making Vietnamese industrial products more diversified.
Sharing ideas, Atsusuke Kawada, Chief Representative of Japan External Trade Organisation (JETRO), said the localisation rate in Viet Nam was much lower than in Thailand, Indonesia and Malaysia.
A report from JETRO showed that the purchase of spare parts of Japanese firms in Viet Nam last year was 32.1 per cent while the rate of 2014 was 22.4 per cent.
However, the rate was lower than those of Japanese enterprises operating in China with 64.7 per cent, Thailand 55.5 per cent, Indonesia 40.5 per cent, and Malaysia 36 per cent.
He also said that the development of the part supplying industry has not seen clear improvement though the country has priorities in this sector and that of the small- and-medium-sized enterprises as well as a policy on human resource training.
He said that the priorities for part supply of household appliances, office machines and automobile industry have been extremely important.
The chief suggested expanding the production scale of automobile spare parts. In addition, the Government should have clear policies in supporting Vietnamese enterprises which produce office equipment such as printers, and household appliances such as refrigerators and washing machines.
Several big producers from Japan have relied on imported spare parts from China. Viet Nam could nurture businesses producing spare parts to reduce imports from China.