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Supporting industries’ time has come in Vietnam
The fact that big production groups like Samsung, Canon and Intel chose Vietnam as their production base for exporting to the world is viewed as an excellent opportunity for Vietnam to develop supporting industries.
At the inauguration ceremony for the $670 million mobile phone production factory of Samsung Electronics Vietnam in late October 2009, Chairman Choi Gee Sung expressed thanks to representatives of the South Korean satellite enterprises’ association, who also attended the ceremony.
The businesses are not only Samsung’s guests, but they are also partners who have followed Samsung Electronics to Vietnam. They will provide components and play a very important role in making Samsung’s Vietnam products become competitive in the world market.
At the opening ceremony, the factory reportedly had a capacity of 18 million mobile phones per annum, a figure which will increase to 100 million after one year. Export revenues are predicted to reach five billion dollars, making it the second largest Samsung factory, second only to the one in China.
The project’s significance is not only the five billion dollars worth of exports each year, or even the 10,000 jobs created, but also that it will help develop Vietnam’s supporting industries, a necessary goal that Vietnam has been pursuing.
To date, 17 satellite enterprises of Samsung have arrived in Vietnam with total investment capital of $300 million. At least another 30 investors are slated to come to Vietnam.
Yoo Young-Bok, Chairman of Samsung Electronics Vietnam, explained that half of the components needed for products will be made by satellite businesses in Vietnam by the end of 2009.
Vietnam has sought to develop supporting industries over the last 15 years. The Government has applied many measures, including administrative orders (setting up required localization ratios) to tax incentives, but results have been modest.
At first investors targeted the domestic market, which remained very small. Every manufacturer could potentially consume several hundreds thousands components a year, but foreign enterprises could not be persuaded to set up these factories in Vietnam.
Over the last five years, however, the situation has changed. Foreign electronics and telecommunications manufacturers like Nidec, Canon and Sanyo chose Vietnam as their production base, followed by US, South Korean and Taiwanese groups.
Once big manufacturers set up their production bases in Vietnam, they brought component producers. Japanese Meiko, for example, runs a $300 million electronic components project. Japanese Hoya’s project, capitalized at $100 million, makes components for computer hard disks and music players.
Most electronics groups set up their factories in the north (Bac Ninh, Vinh Phuc, Hanoi) and the south (HCM City, Binh Duong and Dong Nai).
Thoi bao kinh te Saigon quoted sources as saying that Japan’s leading semi-conductor producer, NEC, the United States’ HP and Taiwan’s Acer all plan to develop chip design and computer assembling centers in Vietnam.
VietNamNet, TBKTSG
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