What's Happening?
Vietnam is focusing on enhancing its supporting industries to reduce import dependence and boost industrial growth. The Ministry of Industry and Trade (MoIT) highlights the importance of these industries in supplying components and technical processes to major manufacturing sectors. Despite policy support, challenges persist due to the limited capacity of domestic firms, affecting their ability to capitalize on foreign direct investment opportunities. Localisation rates remain low across various sectors, including textiles, machinery, and electronics. Efforts to improve equipment localisation have shown progress, with companies like Truong Hai Group advancing in design and assembly processes. The MoIT plans to refine policies to attract investment and establish industrial clusters to enhance competitiveness.
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Why It's Important?
Strengthening Vietnam's supporting industries is vital for reducing reliance on imports and enhancing the country's industrial competitiveness. By increasing localisation rates, Vietnam can better integrate into global supply chains and attract foreign investment. This focus on self-reliance is crucial for sustainable economic growth and resilience against external economic pressures. The development of supporting industries also aligns with Vietnam's broader goals of industrialization and modernization, contributing to its global integration and economic stability.
What's Next?
The MoIT intends to advise the government on policy refinements to attract investment into supporting industries and raise localisation rates. This includes establishing industrial clusters led by key enterprises and supported by comprehensive services. The government has issued new decrees to strengthen support for research, application, and technology transfer in priority products, aiming to boost the capacity of domestic firms and ensure compliance with localisation commitments.
Beyond the Headlines
The focus on supporting industries reflects Vietnam's strategic approach to economic self-reliance and competitiveness. The balance between incentives and penalties for foreign-invested enterprises underscores the need for effective policy mechanisms to ensure compliance and cooperation with domestic firms. This development also highlights the broader economic shifts in Southeast Asia, as countries seek to enhance their industrial capabilities and reduce dependency on external markets.
