Hanoi (VNS/VNA) - There remains ample room forVietnamese and Japanese enterprises to foster cooperation in supportingindustries that are increasingly developing and playing an important role in Vietnam'sparticipation in the global supply chain as well as the global value chain,insiders have said.

Untapped potential

"We see high potential in supporting industries in Vietnam,"Yasuo Shimokura, General Director of MISUMI Vietnam - a manufacturer and distributorof standard components for factory automation based in Bac Ninh province told Vietnam News.

"We are now focusing on developing partnerships withVietnamese suppliers that can work as Misumi Vietnam’s originalequipment manufacturers. More and more suppliers are becoming competitive toprovide good quality products with very reasonable prices."

He said: "In addition, I have seen many cases of Vietnameseengineers who worked at prestigious Japanese or European manufacturingcompanies started up their own material processing or machine buildingcompanies. In these 4-5 years, the level of these companies has been steadilyimproving."

"As Vietnam's economy grows, I believe this trend willcontinue and the supporting industries in Vietnam will surely grow and becomestrengthened," the representative from MISUMI Vietnam said.

A representative from TanCo Consulting and Trading JSC in Hanoiagreed.

"Vietnam is a developing country and attracts huge foreigndirect investment from developed countries in Asia and the world, so the demandfor supporting industries is extremely large," he told Vietnam News.

"Foreign investors always want to look for supportingcompanies in many fields to specialise and save costs. The supporting industryin Vietnam is still young, so the potential of this industry is huge," hesaid.

Prospects for Vietnam-Japan cooperation

The representative said Japan is a developed country and is verystrong in engineering and technology while Vietnam is a developing country withan abundant workforce of all ages.

"Vietnamese businesses in supporting industries want tocooperate with Japanese businesses to exchange, learn and exchange techniquesand technology. Thus, I think cooperation prospects between Japanese andVietnamese businesses in this field see positive prospects ahead," hesaid.

Sharing his idea, General Director of MISUMI Vietnam saidcoordination in supporting industries between Vietnamese and Japanese companieshas enjoyed many good opportunities and potential for development.

However, both Vietnamese and Japanese companies in the field andthe Vietnamese Government should facilitate the cooperation, he said.

To attract more Japanese companies in supporting industries tocome and invest in the country, Yasuo suggested that the Stateshould accelerate reform toward a more transparent, fair legal and regulatoryenvironment.

The Japan External Trade Organisation (JETRO) and the JapanInternational Cooperation Agency (JICA) should enhance current activities forbusiness matching between Japanese and Vietnamese companies, he said.

"The quality of the supporting products should be more highlevel," he suggested.

For his part, the representative from TanCo Consulting and TradingJSC said it is necessary to have effective policies from the Government to helpbusinesses in supporting industries especially small and medium-sized onesfurther develop in terms of capital, costs, procedures, taxes, land, technologyand skilled workforce.

"Though Vietnam's policies in supporting industries have beenfully promulgated over the past time, in practice, there are still manyshortcomings."

"Not to mention, the legal documents related to thesupporting industry are only at the level of decrees and circulars, while thesupporting industry is an important area, Vietnam fails to have a law on thisfield."

"Thus, policies on developing supporting industries are there,but they have yet to create a good enough legal corridor for enterprises todevelop," he noted.

Vietnam is now home to about 2,000 enterprises manufacturing spareparts and components. Of them, 300 have participated in global support chains,providing more than 600,000 jobs, according to the Ministry of Industry andTrade (MoIT).

These businesses have continuously tried to improve productquality, strengthen competitiveness, and meet strict market requirements, itsaid, adding that the State has created favourable conditions for supportingindustry firms to  sharpen their competitiveness.

To promote supporting industries, the MoIT has proposed to theGovernment policies to support enterprises operating in supplying parts andmaterials for garment and textile, footwear, electronics, automobile productionand assembly and mechanical engineering to promote the development ofsupporting industries in Vietnam.

The proposed support policies, including an interest rate subsidyof 3%, are expected to create a stimulus to part-supplying enterprisesto improve their competitiveness and participate in the supply chains ofmultinational corporations (MNCs).

The ministry said that enterprises must not be subject to globalminimum tax to be eligible for the support policies.

The support would include corporate income tax incentives, supportin investment promotion, human resource training, research and development,technology application, renovation and transfer and credit support to enabledomestic enterprises to become suppliers of MNCs, according to the ministry.

The priority would be given to sectors including garment andtextile, footwear, electronics, automobile production and assembly andmechanical engineering, besides others, including moulds, mechanical detailswith high-quality standards used for electronics, mechatronics,microelectronics, robots, electronic and optoelectronics components, circuitsand new materials./.