Vietnamese firms lack capacity to join global supply chains
Vietnamese firms in the mechanical engineering outsourcing sector have low competitiveness when joining global supply chains largely due to their small scale, technological shortages, and low productivity.
HCM City (VNA) – Vietnamesefirms in the mechanical engineering outsourcing sector have low competitivenesswhen joining global supply chains largely due to their small scale,technological shortages, and low productivity.
Statistics from the Ministry of Industry andTrade (MoIT) showed Vietnam has some 1,800 part suppliers. However, only 300firms, or 17 percent of the total, are in the supply chains of multinationalgroups.
Notably in the automobile industry, as aresult of small scale and low localisation rate, manufacturing costs in Vietnamare about 20 percent higher than that of other countries in the region. Thelocal content of cars in Vietnam is just about 7 – 10 percent, compared to theregional average rate of 65 – 70 percent.
The Ministry of Industry and Trade recentlyproposed a 100 trillion VND (4.31 billion USD) preferential credit package forthe development of the country’s supporting industry.
The ministry aims for the Vietnamese supportingindustry products to have high competitiveness, meeting 45 percent of essentialdemand and local consumption, and accounting for 25 percent of total exportvalue by 2020.
The supporting industry plans to meet 70percent of local demand by 2030 and to have 1,000 firms capable of supplyingproducts to assembly companies and multinational groups in Vietnam.-VNA
Vietnam has been interested in joining the global supply chain and management governance, which is considered an effective competitive tool for businesses to control the market, build up confidence among customers and increase profits and connectivity with global partners, said a trade official.
Minister of Industry and Trade Tran Tuan Anh has emphasised the need to change policies and mechanisms to encourage businesses to participate in national, regional and global supply chains.
Only 15 percent of around 8,000 manufacturing companies in HCM City are capable of joining global supply chains but authorities are trying to increase the number.
Vietnam is among the top countries attracting foreign direct investment in the Asia-Pacific region, but the rate of domestic small- and medium-sized enterprises (SMEs) participating in the value chains of foreign-invested companies is rather low, according to the Investment and Trade Promotion Centre of Ho Chi Minh City (ITPC).
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Illustrative photo (Source: VNA) 
