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| In the value-added structure of Vietnam’s export products, added value from external factors still accounts for a large proportion. Photo: N.Thanh |
“Highly dependent on external factors”
According to Mr. Ngo Khai Hoan, Deputy Director of the Department of Industry (Ministry of Industry and Trade), the process of industrial development of Vietnam shows that this industry has achieved comprehensive results, contributing to the general socio-economic development of the whole country, creating Vietnam’s position in the global value chain.
However, Vietnam’s industry has become seriously unbalanced, depending heavily on external factors.
Mr. Hoan said heavy industry is the industry that creates the material foundation for the socio-economy, and is the most important driving force for rapid and sustainable industrialization and modernization, but accounts for a low proportion of the economic structure. Besides, domestic production depends largely on imported components and materials, making the added value of domestic industries very low and at the same time vulnerable to political – economic – social fluctuations at home and abroad.
“In the value-added structure of Vietnam’s export products, the value added from external factors still accounts for a large proportion while the proportion of domestic value added is still low, there has not been much change,” said the leader of the Industry Department.
Another important factor mentioned by Mr. Ngo Khai Hoan is that the main actors to create structural and value transformation in Vietnam’s industry are FDI enterprises, not domestic ones. In particular, 100% FDI enterprises are playing a key role in Vietnam’s exports and growth. The connection between FDI enterprises and domestic enterprises is loose, not creating spillover effects between the FDI sector and the domestic economic sector, leading to the situation of “one country, two economies” (the FDI sector and domestic sector).
From a business perspective, Mr. Bui Van Tuan, Chairman of the Board of Directors and General Director of Vina Electric Joint Stock Company, said that Vina Electric is a manufacturer of electrical equipment, but due to the lack of domestic component manufacturers, enterprises must import. This causes costs to increase, thereby significantly affecting the competitiveness of enterprises in the electricity industry market with foreign enterprises in Vietnam.
“The Party and State have many policies to support businesses to access new technologies. However, new technology has a huge investment cost, not all businesses can access it. Enterprises hope that the policy needs to be timely, reduce the barriers of administrative procedures and go deeper into enterprises, not only large enterprises but also small and medium enterprises,” said Mr. Tuan.
Concentrating resources
Ngo Khai Hoan said that the Ministry of Industry and Trade is participating in the development of many important guidelines and policies of the Party and State on industrialization and industrial development, in order to realize the goals of industrialization and modernization of the country at the Resolution of the XIII Congress.
In particular, the most important is participating in the formulation of the Central Executive Committee’s Resolution on the industrialization and modernization of the country and researching and formulating the Law on Industrial Development.
The Ministry of Industry and Trade will advise the Party, the National Assembly and the Government to consider and promulgate major policies on industrial development with orientations such as clearly defining the importance of industrial development in the modernization process of the country, thereby concentrating national resources for industrial development, taking industry as a lever to pull the development of other economic sectors; clearly define the criteria for industrialization as a basis for building specific goals and clear roadmap for the coming period.
Notably, the Ministry of Industry and Trade is oriented to develop industrial development policies with a focus on non-state economic sectors; concentrate resources to promote the formation of large private industrial corporations, play a leading role in the system of domestic industrial enterprises and reach out to the regional market.
Regarding the Law on Industrial Development, the leader of the Department of Industry added that currently, the Government has approved the Dossier to propose the development of the Law on Industrial Development. The Ministry of Industry and Trade is receiving and explaining the opinions of agencies of the National Assembly to continue to complete the Dossier of application for the formulation of the Law on Industrial Development, and report to the Government to submit to the Standing Committee of the National Assembly for consideration, added to the Law-making Program for the 2023 – 2024 period.
Expressing the desire of enterprises with industrial development policies in the future, Mr. Bui Van Tuan said that “State management agencies when formulating policies need to set more specific goals than the following factors: such as issuing to whom, which business object? Policies need to create a “level playing field” for businesses.
Mr. Do Phuoc Tong, Chairman of Ho Chi Minh City Mechanical-Electrical Association, said that currently, the resources of Vietnamese enterprises are not large. The State should have more practical support policies for enterprises; at the same time, there are more preferential policies for enterprises to invest in the field of supporting industries, such as tax incentives, and credit incentives.
“Especially, the State should have an investment fund to serve the development of supporting industry enterprises during the first 5 years after the establishment of enterprises; have more preferential and encouraging policies for enterprises operating in the field of supporting industries to apply new, competitive techniques or have the ability to respond well to market requirements,” said Mr. Tong.