Vietnam auxiliary industry: reasons for slow development!

However, auxiliary industry of our country is developing slowly, most of the products of auxiliary industries still have to be imported.

Going in the back’s one means going back

Perhaps the failed strategy localization of automobile industry of Vietnam is a most evidence indicates, auxiliary industries do notdevelop as expected. After 10 years of work, the localization rate of automotive industry is very lowThe rate of localization of Honda Vietnam is the highest but also only reached 10%, next Toyota Vietnam (7%). Two companies Daewoo Vietnam and Ngoi Sao reached 4%. Suzuki is the lowest (only reached 3%) and Ford Vietnam: 2%.

The same for the textile and footwear section. Although industrial production for raw materials in recent years somwwhat developed, but the industry still depends largely on the importation of foreign materials. In which, textile imported about 80% of the demand for polyester fiber, footwear industry imported about 85% of chemicals and other auxiliary materials for shoes, shoe nose and other accessories.

Assessment of current status of Viet Nam industries, Mr. Takao Fujii – Director of human resources cooperation Vietnam - Japan center, said: Vietnam depends too much on importing most raw materials, spare parts, producting products need many labors. The quality products are produced by foreign companies, while the products of enterprises in the country only provide domestic consumption market. The cause is the insufficient domestic business confidence and a sense of accumulating skills in the business such as advanced features required, quality, price, delivery time, service, speed, etc. Another reason is from the middle managers, technical managers, highly skilled workers are shortages and they are not stable. Besides the above reasons, Mr. Nguyen Van Tuat - Deputy director of Southern Southern for supporting small and medium enterprises - added a cause that enterprises Vietnam also have a habit of something like self-provide from A to Z, they don’t want cooperate, link with foreign partners.
 
Mr. Yoshida - representative of Japan overseas Cooperation Organization (Jetro) in Ho Chi Minh - warned: auxiliary industries of Vietnam only meet part of the needs of Japanese companies. Failure of auxiliary industries in Viet Nam can lead to the consequences that since 2018, when ASEAN applies free duty policy (according to an agreement on general tariff by ASEAN), the top Japanese manufacturer will choose the way to import car and resell units instead of importing individual components and produce in Vietnam, because import costs will cause higher.

Policies inneed to be promoted!
 
Auxiliary industries is a section that manufacture all industrial products with support roles for the production of the finished product, often produced in small scale, so the small and medium enterprises have more opportuinities to join the auxiliary industries.

Currently there are 450,000 businesses, small and medium enterprises occupy 90%, contributing over 40% of GDP, over 50% of employment in all enterprises. Mr Tuat said: Currently, small and medium Vietnam businesses have difficulties. That is: small scale, backward technology, the ability to request administrator, repository access capital, unstable association with large enterprises. Therefore, we need investment policy to develop small and medium enterprise through developing auxiliary industries in three directions: enhanced capital access of financial support, solving difficulties about production and improving competitiveness.

At the scale of macro-planning, compared with some developed countries, Vietnam appears to be slow the foot when not enacting legislation on industrial support, but only in the process of building decree incentives development of auxiliary industries. This delay has prevented the competitiveness of many industries being limited. However, the construction of decree to support industrial development is still that small and medium enterprises concerned.

Meanwhile, look into Japan, right from the middle50th decades of the century, they have made policy to develop auxiliary industries with proper direction, goals in each period. As Mr. Hirohiko Sekiya - CTA Department of International Cooperation Research Institute belonged to the Japanese economy, from 1956 Japan has enacted legislation to promote industrial manufacturing, edited in 1961 and 1966. With this law, Japan has applied policies to support specific auxiliary industries priority to improve international competitiveness. Specific: in the period 1956 - 1960, 294 companies, ¼ belonged tool machinery industry loaned to replace obsolete media. In the period 1961 - 1966, automotive components industry was supported to reduce approximately 30% of car components. In the period 1966 - 1971, automotive components sector continues to be supported, resulting in market share of Japanese market cars the world has increased from 3.6% in 1965 to 14.2% in 1970 and 17.9% in 1975.

From the Japanese experience, there is hope to draw useful lessons for the developing auxiliary industries of our country support in its first step.