HCM City promotes supporting industry – hi tech link - HCM City promotes supporting industry – hi tech link - Website Ho Chi Minh City
Ho Chi Minh City is seeking to boost ties between the supporting industry and high technology sector, as well as support the development of both, towards luring more foreign investment, according to the Vietnam Investment Review (VIR).
The city’s Department of Industry and Trade, HEPZA (the industrial zone watchdog) and Saigon Hi-Tech Park (SHTP) signed separate deals last week to carry out a plan to accomplish this goal. SHTP, which is already home to the 1.04 billion USD Intel chip factory, and HEPZA will join forces to take measures under the leadership of the city government.
The signing was part of a workshop held by the municipal People’s Committee to call for more investment into the two sectors. Deputy Chairman of the municipal People’s Committee Le Manh Ha told media at the event that the southern economic hub has not borne much fruit in terms of developing support industries serving hi-tech over the past 10 years.
Now the city’s government has set aside Hiep Phuoc Industrial Park (stage 2) in Nha Be district and Le Minh Xuan 3 Industrial Park in Cu Chi for support industry firms. In Hiep Phuoc, Vie-Pan Techno Park is currently under construction and once complete will be a 31 million USD industrial zone for Japanese support industry companies primarily supplying hi-tech companies. Vie-Pan is listed in Japan’s national strategy to support Japanese small- and medium-sized enterprises.
Vie-Pan Techno Park’s Vice Chairman Doan Hong Tam said the park’s unique business model of providing pre-fabricated workshops and investment procedure services has gotten the attention of numerous Japanese companies.
Yasuzumi Hirotaka, Managing Director of the Japan External Trade Organisation’s Ho Chi Minh City office, said that in order to develop support industries in Vietnam, the Government must support the development of local companies and foster technology from overseas. “If we attract only foreign-invested support industry companies, technology transfer will be limited and little will be accomplished in terms of developing Vietnam’s support industries.”
Hirotaka listed six main reasons for Vietnam’s underdeveloped support industries: “Enterprises have not been able to access capital, personnel training is not meeting demand, Vietnam lacks incentive policies, there isn’t a development playground for companies in the same sector. Where are excellent Vietnamese enterprises? There is no big market.”
At the seminar, corporate representatives said Vietnam did not have a national development strategy for the support industry, and therefore its development was slower than expected.
SHTP Management Board Chief Le Hoai Quoc said most of its corporate tenants were using products provided by foreign suppliers, mainly from Japan, the Republic of Korea, Taiwan, Malaysia, Thailand and Singapore. At the billion dollar Intel project, the American giant divides materials into direct and indirect. At present, Intel is focusing on buying only materials produced in Vietnam, but so far has only been able to source 10 percent of what it needs while importing the rest.
“Intel is facing difficulties in seeking qualified suppliers here. Because what they want to buy are indirect materials and the number of orders isn’t stable. Therefore local suppliers do not want to invest in new equipment and technology to only supply Intel. For direct materials, Intel still has no long-term plan for local orders,” Quoc added.
According to SHTP, so far Intel has disbursed 280 million USD into its Vietnam project.
The 100 million USD Jabil Vietnam project, which produces computer, storage, telecom, and healthcare equipment as well as many other hi-tech products, has disbursed 47.8 million USD thus far, while Japanese-invested Nidec Copal Precision Vietnam has released 35.1 million USD of its 100 million USD commitment.
Quoc said Jabil Vietnam was one of only a few cases at SHTP where a producer had increased its local material sourcing. The firm’s number of local suppliers has risen from zero in 2010 to more than 200 now, supplying more than 10 percent of its total input.