Hanoi (VNA) - Vietnamese businessesoperating in support industries have been developing in both quantity andquality in recent years, with improved production capacity and increasingengagement in global production chains.

In a recent report submitted to the NationalAssembly Standing Committee and legislators, the Government cited statisticsshowing that companies in support industries account for nearly 4.5 percent ofall manufacturing and processing businesses and have created more than 600,000jobs, equivalent to 8 percent of the workforce in the manufacturing and processingsector. Their net revenue now tops 900 trillion VND (38.9 billion USD), or about11 percent of the sector’s total.

Some Vietnamese enterprises boast relativelygood capacity in producing moulds, bicycle and motorbike components, electricalcables, plastic and rubber components, and tyres, meeting domestic demand and therequirements of foreign importers.

The report noted that support industries play a decisiverole in restructuring the economy, improving workplace productivity and skills,and promoting the competitiveness and quality of Vietnamese goods and theeconomy.

Given this, the Ministry of Industry and Tradehas provided advice to the Government and the Prime Minister and issued drasticdirections to boost the role and stature of support industries, in line withPolitburo Resolution No 23-NQ/TW, dated March 22, 2018, on orientations for buildingthe national industrial development policy to 2030 and vision to 2045.

The ministry is also working to set up threetechnical centres for supporting industrial development in the northern,central, and southern key economic regions.

These centres will help industrial producers andenterprises in support industries carry out innovation, transfer technology,improve productivity and quality, increase added value in their products, andtake part in global supply chains, according to the report.

However, the Government also pointed out thatamong the 1,800 or so manufacturers of spare parts and components nationwide,only 300 have joined the production networks of multinational corporations.

Production management capacity and technology atmost Vietnamese firms in support industries also remains limited, it said,adding that domestic firms have met just 10 percent of domestic demand for productsmade by support industries.

There is still a “very large” gap between theneeds of multinational corporations and the capacity of domestic businesses,the Government acknowledged.

It said that in order to develop local supportindustries, it is necessary to overhaul existing mechanisms and introduce moremodern versions that better reflect Vietnam’s global integration commitments andcreate the conditions necessary for enterprises in support industries to grow.

New investment management and attractionpolicies should also be introduced to ensure that foreign-invested enterprises areconnected with and transfer technology to domestic companies, the reportsuggested.

In addition, there is a need for thecontinuation of efforts to develop “downstream” industries that turn out orassemble products, for sectors such as energy, precision mechanics, andmechanical engineering.

To do so, the Government must adopt appropriatepolicies to protect the domestic market and create a healthy businessenvironment to facilitate the manufacturing of industrial products, accordingto the report.

It added that support policies should focus oncertain enterprises in key “downstream” industries, such as automobiles,electrical and electronic appliances, textiles and garments, and footwear, tohelp them become comparable to the regional competitors so they can fuel thegrowth of businesses in local support industries.

Flexible and appropriate tariff policies onimported components and spare parts also need to be adopted, to help enterprisescut down on production costs and improve product competitiveness.

“Downstream” industries are important to thedevelopment of support industries and in attracting multinational corporations tolarge-scale projects in Vietnam, the Government noted./.