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Viet Nam aims to become regional electronics producer
Viet Nam News asked Viet Nam Electrotechnical Industry Association chairman Hoang Thai An about the challenges and opportunities facing the nation’s electronics manufacturers.
What are the challenges facing the electronics industry since Viet Nam joined the WTO?
Viet Nam businesses, and electronics enterprises in particular, are unable to avoid fierce competition from foreign businesses, which are inherently better developed than ours.
First of all, tax and non-tax barriers have been gradually removed since Viet Nam joined the WTO.
Viet Nam businesses, and electronics enterprises in particular, are unable to avoid fierce competition from foreign businesses, which are inherently better developed than ours. They find difficulties in human resources and lack not only skilled technicians but qualified managers. Incoherence in everything from product standards to management is inevitable.
But the biggest challenge for the electronics industry is capital. Shortage of capital causes difficulties in importing materials in a sector in which most necessary materials are imported. Moreover, rising raw materials costs due to the current economic crisis are posing new challenges to electronics enterprises in controlling costs. Meagre capital also means poor infrastructure, including a lack of qualified testing laboratories and research and development centres.
For these reasons, over 400 enterprises with some 80,000 workers in the electronics industry meet only 30-40 per cent of domestic consumer demand for electronics, a market expected to grow at a rate of about 17 per cent annually.
How can the industry overcome its difficulties?
High domestic demand is a huge opportunity for the development of this industry. We have been building a strategy for 2015-25 in which high quality products and meeting demand are emphasised.
Meeting the high demand for consumer electronics is a movitation for businesses in trying to raise capital, build infrastructure and train human resources.
Electrical equipment such as low-, medium- and high-voltage electrical boxes and electrical wire and cable are also essential and popular products in this industry. Electrical equipment makers still have an opportunity to diversify their product lines with products that save electricity and use energy more efficiently.
And the high demand for electrical equipment used in hydroelectric facilities such as those at Thac Ba, Hoa Binh, Son La, Tuyen Quang, Ham Thuan - Da Nhim, and Yaly, as well as such thermoelectric facilities as Pha Lai, Uong Bi, and Phu My, are another basis for this industry to leverage its expansion into the consumer market.
What’s the potential for electrical equipment exports?
Initially, electrical meters and hydroelectric equipment has been exported to Laos, Cambodia, Iraq, Brazil, and even to South Korea and Japan. The export value of electrical equipment reached US$3 million in 2008. Viet Nam aims to become regional centre for production of electrical equipment by 2025. Over the next 15 years, enterprises in this industry are expected not only to meet domestic demand but also to boost exports.
What’s the industry’s strategy?
I think the most important strategy for these businesses is concentrating on developing human resources. In addition to paying attention to domestic education, we need to seek support from foreign businesses, universities and organisations in order to have experts and technicans with high-skill levels. We also need to promote exchanges of experience and technology with more developed industrial countries such as the US, South Korea, and Japan, so Viet Nam enterprises can have access to modern technology and management systems.
In addition, electrical equipment businesses need to do their best to raise internal and external capital for infrastructure construction. It would not only serves production but also help decrease raw material imports, reducing the costs of electronic products and making them more competitive.
What is your association’s role in assisting enterprises in this sector?
Above all, the association plays a vital role as a bridge for businesses and state administrative agencies, assembling businesses’ proposals to the Government, and disseminating laws and Government regulations to enterprises. We just submitted a tax proposal to the Ministry of Finance for enterprises that make electrical equipment, which helps reduce taxes on imported materials. We have also proposed the Ministry of Industry and Trade ratify regulations letting electrical contractors select their own contractors.
The association is a clearinghouse for problems encountered by enterprises in the sector, co-ordinating with them in seeking resolutions.
Last but not least, the new association’s function is as the international relations department for electrical equipment businesses, assisting enterprises in appealing to foreign sources of capital, technical support and education.
As a first step, 50 students of the Electrical Vocational College received US$5,820 scholarships from the Korea Electrical Construction Association in 2008. In the near future, we will make more effort to support students, engineers and technicians in gaining access to and experience in new technology from developed industrial nations.
VietNamNet/Viet Nam News
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