In the last months of 2023, a lot of supporting industry giants have announced their strategies to penetrate the Vietnamese market, given the fact that the country has become a strategic destination in the global supply chain.

A stronger supporting industry and focus on boosting localisation rates is deemed a prerequisite to help brands increase production and also reduce costs.

Lacking initiatives and preparation, it has been challenging for Vietnam’s enterprises to join global supply chains, according to the Vietnam Confederation of Industry and Commerce (VCCI)’s latest study.

Currently, Vietnam needs a lot of medium-sized enterprises to participate in the production of raw materials and increase the competitiveness of industries, instead of depending on imports.

An online conference will take place from July 5 - 6 to connect Vietnamese and Japanese businesses in the support industries, aiming to help domestic firms seek partners and boost exports.

Disbursed foreign capital reached over US$1.6 billion in January, up 6.8% year on year. This is a good sign for Vietnam as it has received more attention from foreign investors, with the expectation of becoming the world's new production center.

The Ministry of Industry and Trade and Samsung Vietnam on February 22 signed a Memorandum of Understanding on cooperation in smart factory development.

Vietnam is a destination for many multinational corporations but the supporting industry is less developed.

According to the Ho Chi Minh City Business Association, it is very urgent to remove difficulties for enterprises in the supporting industry in particular and small and medium enterprises in general.

Only a few spare parts are produced domestically, forcing domestic manufacturing and assembling enterprises to import automobile spare parts from other sources, experts said.

The urgent need to enhance competitiveness in global value chains means minimising reliance on imports, according to industry insiders.

The Ministry of Industry and Trade (MoIT) said that, while most sub-industries are covered by laws, activities in the processing and manufacturing industry have not had specific regulations.

Automobile sales in Vietnam are forecast to reach 1 million units a year by 2025, opening up substantial opportunities for businesses to develop a supporting industry for the sector.

The supporting industry has a significant meaning to economic restructuring towards industrialization and modernization. 

After suffering a significant fall in revenue last year, the mechanical engineering industry has high hopes for recovery in 2021, given Vietnam’s good COVID-19 control and participation in free trade agreements.

Current policies have not been attractive enough to persuade investors to pour money into support industries for the automobile industry.

Companies in the supporting industry will get an interest rate subsidy from next year in an effort to promote the development of the part-supply industry.

Vietnam needs to have a law on the supporting industry to aid its development, according to the chairman of the Vietnam Chamber of Commerce and Industry (VCCI).

The local supporting industries have seen positive movements after Vietnam has more thoroughly embraced its diverse new-generation free trade agreements.