The Japan International Cooperation Agency (JICA) and the Japan ExternalTrade Organisation (JETRO) recently announced a report on investmenttrends of Japanese enterprises in Vietnam and a handbook on thesupporting industry.
According to JETRO's survey, in thesupporting industry, although the localisation rate of Japaneseenterprises in Vietnam has reached 32.2 percent, up 4.3 percentagepoints compared with the year before, this level is still low comparedto 64 percent in China, 53 percent in Thailand, 42 percent in Malaysiaand 41 percent in Indonesia, said the Vietnam Business Forum on March13.
Supporting industry is considered to play a very importantrole in the development of Vietnamese economy. But despite the fact thatinvestment in high-quality machinery and equipment is crucial forsuccess, many small and medium businesses have yet to overcomedifficulties in this area such as accessing formal sources like bankloans.
Yasuzumi Hirotaka, CEO of JETRO Ho Chi Minh City,suggested that attracting only FDI enterprises in developing supportingindustry is not advisable, it’s also important to simultaneously developVietnamese companies, expanding the domestic market.
Regardingsupporting industry, JICA also published the handbook on Vietnam’ssupporting industry to aid small and medium enterprises working inVietnam’s supporting industry.
There are two main reasons behind the supporting industry in Vietnam having difficulty in getting loans.
Thefirst one comes from the banks. According to the State Bank of Vietnam(SBV), the credit risk assessment of small and medium enterprises insupporting industry is still uncommon. On one hand, enterprises of thesupporting industry are subject to fluctuations in the supply chain ofglobal and domestic manufacturing, on the other hand, the investment insupport machinery and equipment requires technical characteristics andspecialities which many banks right now are not confident to handle.
Thesecond reason stems from enterprises itself. The majority of businessesin the survey share common obstacles such as lack of a good businessplan, insufficient financial information and lack of collateral.
Accordingto Manabu Tsurutani, Chief Advisor of the Small & Medium EnterpriseFinance Programme (SMEFP III), this situation can be resolved throughcoordination between banks, supporting industry enterprises and thirdparties such as machinery sellers.
Third parties can make up forbanks’ shortcoming in giving loans to small and medium enterprises. Inreturn, banks can help machinery companies accelerate the process ofcredit assessment and apply better loan conditions so that thesesuppliers can serve customers with better total solutions, includingfinancial solutions.
“Handbook on Vietnam’s supporting industry”provides the basis for cooperation between banks and third-parties tosolve difficulties, to promote Vietnam’s supporting industry’sdevelopment. It’s assessed that the publication of the handbook duringthis time will be a good motivation, creating a solid ground for theinnovation of Vietnam’s supporting industry.
In recentyears, Japan has always been one of the leading investors in Vietnam.Accumulation by the end of 2013 shows that registered investment fromJapan to Vietnam was 34.58 billion USD, of which investment in 2013alone reached 5.747 billion USD.-VNA
According to JETRO's survey, in thesupporting industry, although the localisation rate of Japaneseenterprises in Vietnam has reached 32.2 percent, up 4.3 percentagepoints compared with the year before, this level is still low comparedto 64 percent in China, 53 percent in Thailand, 42 percent in Malaysiaand 41 percent in Indonesia, said the Vietnam Business Forum on March13.
Supporting industry is considered to play a very importantrole in the development of Vietnamese economy. But despite the fact thatinvestment in high-quality machinery and equipment is crucial forsuccess, many small and medium businesses have yet to overcomedifficulties in this area such as accessing formal sources like bankloans.
Yasuzumi Hirotaka, CEO of JETRO Ho Chi Minh City,suggested that attracting only FDI enterprises in developing supportingindustry is not advisable, it’s also important to simultaneously developVietnamese companies, expanding the domestic market.
Regardingsupporting industry, JICA also published the handbook on Vietnam’ssupporting industry to aid small and medium enterprises working inVietnam’s supporting industry.
There are two main reasons behind the supporting industry in Vietnam having difficulty in getting loans.
Thefirst one comes from the banks. According to the State Bank of Vietnam(SBV), the credit risk assessment of small and medium enterprises insupporting industry is still uncommon. On one hand, enterprises of thesupporting industry are subject to fluctuations in the supply chain ofglobal and domestic manufacturing, on the other hand, the investment insupport machinery and equipment requires technical characteristics andspecialities which many banks right now are not confident to handle.
Thesecond reason stems from enterprises itself. The majority of businessesin the survey share common obstacles such as lack of a good businessplan, insufficient financial information and lack of collateral.
Accordingto Manabu Tsurutani, Chief Advisor of the Small & Medium EnterpriseFinance Programme (SMEFP III), this situation can be resolved throughcoordination between banks, supporting industry enterprises and thirdparties such as machinery sellers.
Third parties can make up forbanks’ shortcoming in giving loans to small and medium enterprises. Inreturn, banks can help machinery companies accelerate the process ofcredit assessment and apply better loan conditions so that thesesuppliers can serve customers with better total solutions, includingfinancial solutions.
“Handbook on Vietnam’s supporting industry”provides the basis for cooperation between banks and third-parties tosolve difficulties, to promote Vietnam’s supporting industry’sdevelopment. It’s assessed that the publication of the handbook duringthis time will be a good motivation, creating a solid ground for theinnovation of Vietnam’s supporting industry.
In recentyears, Japan has always been one of the leading investors in Vietnam.Accumulation by the end of 2013 shows that registered investment fromJapan to Vietnam was 34.58 billion USD, of which investment in 2013alone reached 5.747 billion USD.-VNA
