Experts advise on support industries - Experts advise on support industries - Website Ho Chi Minh City
To develop its supporting industries, HCM City needs to identify the main sectors and focus on training, technology, and incentives for their development, experts told a seminar on attracting investment in the sectors last week.
Vu Van Hoa, president of HCM City Export Processing and Industrial Zones Authority (HEPZA), said Viet Nam had not identified key national products to develop a suitable supporting industry development strategy and create mechanisms and policies to support SMEs, and this curtailed the development of supporting industries.
He also blamed it on the shortage of skilled human resources.
"Though Viet Nam has had many policies for attracting foreign investment, developing businesses, strengthening links between companies through industrial parks for financial, technological and human resources support, they have not focused on supporting industries.
"So they have not been effectively promoted."
He called for designating projects to develop supporting-industries industrial parks as "special important infrastructure projects," which are entitled to various tax breaks.
"They should be allowed to enjoy interest subsidies from the demand stimulus fund for land clearance and compensation and building technical and social infrastructure and standardised factories."
He also urged the government to offer the same tax incentives for supporting-industries industrial parks as those given to hi-tech enterprises – a 10 per cent rate for 15 years.
Besides they should be given import duty breaks, longer land lease periods, and financial incentives, he said, while industrial parks should strengthen ties with foreign business groups to attract investment in supporting industries.
The city is building the Viet-Pan Techno Park at the Hiep Phuoc Industrial Park, and it will open in October this year, when it will focus on attracting investment from Japanese SMEs in high-technology supporting industries.
Hirotaka Yasuzumi, managing director of JETRO (Japan External Trade Organisation) HCM City, said the Government must support the development of Vietnamese companies and foster technology transfer to boost supporting industries.
"If Viet Nam has only foreign firms in supporting industries, the country cannot hope to acquire technologies or develop the industry," he pointed out.
He blamed policies that have failed to meet companies' expectations for the lack of supporting industries in Viet Nam.
Poor policies meant companies are unable to raise funds or train human resources, lack incentives, have no forum to compare notes with other companies in the same sectors, and lack large markets, according to Yasuzumi.
He called for certain policies to better support Vietnamese enterprises – like low interest rates (1-3 per cent) to encourage investment, HR development support to receive technologies, and tax breaks.
Besides developing the workforce through seminars, training, and internship; creating a list of outstanding local supporting-industry enterprises; and organising business exchanges, exhibitions, and interactions between supporting industry enterprises, the country also needs to have necessary support policies, he added.
Le Hoai Quoc, president of the Sai Gon Hi-tech Park (SHTP), said attracting investment from multinationals would enable the development of supporting industries.
The SHTP management currently has a programme to develop supporting industries for hi-tech manufacturing, with the first pilot project intended to create the development of a supply chain for Intel's plant at the SHTP.
Similar projects are also planned for subsidiaries of multinationals Nidec Group, Sonion, Datalogic, and Jabil.
Nguyen Anh Tuan, president of the HCM City semiconductor industry association (HSIA), said the government had decided that chips would be in a national hi-tech products list to get priority in investment and development.
HCM City has a semiconductor industry development programme for 2013-2020 aimed at developing an "ecosystem" for the industry comprising human resource development, research and trial production, mass production, market development, and product promotion.
Doan Hong Tam, deputy chairman of the Vie-Pan Techno Park, said Japanese investors in supporting industries are mostly SMEs producing specialised, high-value-added products using complex engineering and technologies.
"We must have appropriate conditions to meet Japanese tenants' requirements including power infrastructure, clean water, telecommunications, skilled workforce, and legal services."
The decision to invest by these firms is influenced greatly by the government's investment promotion agencies and the success of earlier investors, according to Tam.
They normally demand small but fully built plants of around 300sq.m, and tend to invest in parks with full facilities that have predominantly Japanese tenants.
Besides, to attract Japanese investors, the city needs to offer a skilled and disciplined workforce, support with personnel recruitment and training, comfortable housing for professionals and workers.
"They need to be assured of environmental protection, efficient telecommunications, good infrastructure, and facilities such as banks, hospitals, schools, shopping centres, parks, and amusement centres."
Japanese firms also expected Viet Nam to simplify procedures of all kinds, including by having a ‘one-stop service' in Japanese at industrial parks, he added.