Supporting industries: added value is still low in the supply chain

The localization rate of supporting industry products has improved significantly in recent times. However, supporting industrial enterprises are still in the very low value-added segment of the supply chain.

The localization rate has improved

Mr. Pham Tuan Anh, Deputy Director of the Department of Industry (Ministry of Industry and Trade) said at the seminar "Resolving difficulties, increasing support for supporting industries", organized by Industry and Trade Magazine, on September 22.

In recent times, the State's incentive policies and the efforts of businesses have brought positive results in the development of supporting industries. Industrial enterprises support development in both quantity and quality, improve competitiveness and participate more deeply in domestic and global value chains. At the same time, the domestic production capacity of supporting industrial products has been increased, and the localization rate of some industries in Vietnam has improved.

However, our country's supporting industry is still quite young and weak in some sub-sectors. The scale and capacity of supporting industry enterprises are still limited, and the competitiveness of products is assessed as not high.

Mr. Pham Tuan Anh said that in the past 10 years, the supporting industry has had very positive changes. According to data from the General Statistics Office, the number of supporting industrial enterprises is currently about 5,000 enterprises. Supporting industrial products are currently sufficiently supplied domestically and exported to a number of markets around the world such as Korea, Japan, China, the United States, etc. They are electric cable products, gearboxes, plastic components, etc.

In addition, the number of businesses participating as first-level suppliers for multinational corporations is up to 100; Secondary and tertiary supply is about 700 enterprises. In particular, in the electronics field, Samsung currently has about 50 businesses as first-level suppliers and about 170 businesses as second-level suppliers. In the field of mechanical engineering - automobiles, there are currently about 12 businesses participating in providing first-class supplies to Toyota.

Notably, the localization rate of our supporting industrial products has also improved significantly in recent times. “In the fields of textiles, garments and footwear, the localization rate is about 45 - 50%; mechanical manufacturing fields reach 15 - 20%; The field of automobile manufacturing and assembly is 5 - 20%, especially for some vehicle products such as trucks and passenger cars, this localization rate is higher," Mr. Pham Tuan Anh informed.

However, besides positive results, the supporting industry still has many limitations. Supporting industrial enterprises are still located in the very low value-added segment of the supply chain.

Research and development (R&D) at supporting industrial enterprises has also received attention but not really properly.

Although, in recent times, ministries, branches and localities have made efforts to connect domestic supporting industry enterprises with multinational corporations, the linkage between supporting industrial enterprises and FDI enterprises is not yet strict.

Mr. Nguyen Van, Vice Chairman of Supporting Industrial Business Association Hanoi City (HANSIBA) said that in the first 9 months of the year, the operations of supporting industrial enterprises in general and member enterprises of Hanoi Supporting Industry Association have recovered after the pandemic.

However, Mr. Nguyen Van also shared that in terms of competitiveness, domestic enterprises, especially small and medium-sized enterprises, lack capital and technology, and even need support in trade promotion, sales.

Strategy to attract "leading crane"

According to Mr. Nguyen Van, with the support of state agencies, such as the Ministry of Industry and Trade, the Department of Industry, and Hanoi Department of Industry and Trade, businesses must also "be on their own", improve their capacity, and produce better products. Manufactured products must meet the standards of suppliers to ordering businesses.

Mr. Pham Tuan Anh said that in the coming time, in addition to amending policies, the Ministry of Industry and Trade will continue to have solutions to improve capacity for businesses through training and market expansion.

“Particularly for market expansion, in addition to investment promotion, we will coordinate with ministries and branches to build industry-linked industrial parks and clusters and industry-linked areas, in order to make a leading enterprise invest in that, pulling supporting industrial enterprises along, thereby reducing product prices and increasing the advantages of supporting industrial enterprises," Mr. Pham Tuan Anh informed.

In addition, the Government recently issued the Planning for exploration, exploitation, processing and use of minerals for the period 2021 - 2030, with a vision to 2050. In the coming time, the Ministry of Industry and Trade will also soon bring in exploiting and processing minerals which production enterprises currently have great demand but must import them for proactive domestic raw materials; limit dependence on imports, and contribute to reducing the cost of products.

Source: Customs News