Supporting industries’ products contribute 65% of the domestic demand – that is Dong Nai province’s Supporting Industry development scheme term 2016 – 2025. Accordingly, in order for the supporting industry products to meet the domestic and exported demands and join the global value chain; Dong Nai province’s target is to make Supporting Industry the provincial strength by 2020.
Not parallel with the potentials and advantages
In the current year, Dong Nai is focusing on in depth industrial Developing, which is environmental friendly and have supporting industry in the priority list to increase the enterprises’ input material supply rate and decrease imported material costs. Having land tax incentives, simple licensing policies and convenience area location; there are more and more large scale FDI supporting industries attracted to Dong Nai. In particular, Hyosung Dong Nai Co. Ltd (Turkey) invested 660 million USD in cotton manufacturing; Kenda Corporation (Taiwan) invested 160 million USD to establish assorted rubber tire; SMC Manufacturing Vietnam Co. Ltd (Japan) invested 112 million USD in automatic equipment (cylinders, valves, solenoid valves); especially, there are 2 Korean cotton manufacturers – Kuk II Vietnam Co. Ltd with 56 million USD invested & Dong II Vietnam Co. Ltd with 52 million USD invested. With all these index, we expect to attract more and more investments into supporting industry and hi-tech industry in Long Thanh Hi-tech Industrial Zone.
Workers on duty at an electronic accessories manufactory (Nhon Trach 2 IZ) for Samsung Corporation
The increasing of supporting industry enterprises in variety of fields showed the effect of the provincial investment attracting policies as well as the enterprises’ activeness in following the trends, taking the benefits of tax incentives from the free trade agreements, which Vietnam has been participating in. The increase made a remarkable contribution to the rise of export turnover, materials, accessories and spare parts supply for provincial as well as national complete industrial manufacturing enterprises; it expanded the industrial markets and joined the global value chain; and at the same time, increased the localization rates in some fields such as: electric-electronic, textile, mechanism, timber…
However, the provincial supporting industries still have some limitations comparing to the actual demand and the provincial development potential as they did not meet the markets’ demand or make the motivation for industrial development in depth; this is because the supporting industries are still in small scale with lack of fields that can truly support the main industries. National medium and small scale enterprises encounter many difficulties in contacting and joining the supporting industry manufacturing systems of the large corporations due to the lack of information as well as the labor force to meet the assemblers’ demand; resulting in low proportion in both scale and quantities. The supporting industry productions still have low technological value, they are mostly outsourced and assembled component clusters and simple products. Meanwhile, materials manufacturing (iron, steel, warm tones metals, technical rubber, technical plastic, yarns…) is still underdeveloped and mostly imported. Therefore, the supporting industrial products have low added value, require more work force; and beside, the provincial labor skill is too low that it significantly affects the supporting industry’s productivity and competitiveness in domestic as well as foreign markets.
Promoting supporting industry
By the end of 2016, Dong Nai had nearly 300 supporting industrial manufacturing enterprises, contributing about 25% of the total industrial productions. This result set the provincial turnover record at 2.1 billion USD and put Dong Nai in the top 4 provinces with the highest turnover value. This year, the provincial turnover is predicted to continuously rise due to the improvement in domestic materials supply. However, in order for the supporting industry to be the provincial strength in 2020 and meet 65% of the domestic demand in 2025, it needs to be thoroughly supported. Specifically, supporting industrial zones and clusters need to be formed with numbers of promoting policies especially financial policies, tax incentives and technical and management supports… Creating strategies to invest in science-technology and labor training for supporting industry is the most important solution at the current time since enhancing technology and skill is the key factor for supporting industrial development.
Currently, one of the ways that Dong Nai is using to supporting industry is signing the framework agreement on economic cooperation with some localities, which are advance in supporting industry from Japan, Korea, the U.S, Taiwan… Accordingly, each parties shall discuss and agree on implementing the methods to review the supporting mechanism; cooperate in training and providing labor forces to Dong Nai industries, especially supporting industry. Besides, Dong Nai shall provide small and medium enterprises with supporting policies in access to land, tax incentives, credit incentives, enhancing cooperating venture and technology transferring… At the same time, enterprises shall also be supported in finding output markets by making the supporting industrial manufacturing enterprises database; regularly hold enterprises friendly meetings and brand promotion programs… to improve the relationship between supporting industry enterprises and the other provincial as well as national and international enterprises.
Moreover, administrative reform, one-stop-shop mechanism, procedures and policies and friendly investment environment are being simplified and improved quickly. In trade promotion, provincial and domestic FDI enterprises’ products demands are being exploited; key markets such as: Japan, EU, Korea, Taiwan… and the other partners who have the strength in technologies and finance are being attracted to invest to the province, following the provincial priority.
In 2020, there shall be 20 national enterprises to join the global industrial value chain. According to the scheme term 2016 – 2020, supporting industry development rate shall increase 9%/year; by 2020, the industry shall account for 35% of the all the industries’ production rate, 30% of the export rate and 25% of the labor force rate. In 2020, there shall be 20 domestic supporting industrial enterprises to provide products to FDI enterprises and join the global industrial value chain.
