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Japan promotes VN support industries
The Japan International Co-operation Agency (JICA) is working to support the growth of support industries in Viet Nam. Viet Nam News discussed the effort with JICA representative Murooka Naomichi.
What are the biggest challenges facing Japanese industrial producers operating in Viet Nam in finding qualified suppliers? What needs to be done?
According to various Japanese companies, it's been very difficult for them to obtain proper information about Vietnamese suppliers. The Ministry of Planning and Investment and the Viet Nam Chamber of Commerce and Industry (VCCI) have databases on Vietnamese suppliers but the information is limited and out-of-date. Some Japanese companies have to spend a lot of time and money to find local suppliers. Therefore, in the short term, it is necessary to design a database on Vietnamese suppliers, which will be updated in a timely manner.
There is also a big gap between the requirements of Japanese industrial producers and the capacities of Vietnamese suppliers in terms of product quality, prices and delivery times. According to Japanese industrial producers, there is great difference in production models between Japan and Viet Nam. Japanese producers always have close and long-term co-operation with suppliers in the continuous process of product improvement - a so-called "integrated production model" - while Vietnamese suppliers provide products in the form of module production. According to Japanese companies, most Vietnamese suppliers cannot provide products in accordance with their technical and quality requirements. High cost and failures to make timely delivery are other serious issues that must be addressed by Vietnamese suppliers.
What are the specific problems in the development of support industries that need to be addressed in the short term? How can JICA help?
Taking an overview of Viet Nam's support industries, there are various Government agencies and ministries involved, but there is no agency with the power to effectively co-ordinate all stakeholders in formulating concrete action plans and carrying them out. In the short-term, it is necessary for the Government to work out regulations to assign a key agency with the power to facilitate the formulation of the action plans for the development of support industries.
Another issue to be addressed in a timely manner is to identify a list of strategic industries and products for the development of support industries. As it is ineffective to invest in an overly wide range of industries and products, it is necessary to consider factors such as long- and medium-term industrial development strategy, competitive advantages, the availability of raw materials, etc., to decide on key industries and products.
The development of support industries should focus on three major industries, including mechanical, electrical and electronic spare parts. Also, Viet Nam's first oil refinery came into operation this year and the country plans to build more refineries in the future. Viet Nam has a great potential to develop industries that use petroleum products.
JICA has a co-operative programme on the development of small- and medium-sized enterprises (SMEs) and support industries, which is based on four pillars: policies and systems, finance, human resources, and skills and know-how. Besides various channels to support the Government of Viet Nam in terms of policies and systems, including policy dialogues and seminars, JICA provides technology and management advices to SMEs, especially senior Japanese volunteers who visit enterprises and give them advices on improving productivity and quality.
How is JICA helping the development of support industries?
As companies in support industries are mainly SMEs, technical co-operation and development of human resources must be included in JICA's support to the development of Viet Nam's support industries.
In the first phase of the Japanese Senior Volunteer Programme, for instance, JICA co-operated with the VCCI in organising survey visits to 50 companies operating in support industries in both the north and south to grasp their current situation and study their needs for technical support.
In the second phase, JICA has co-operated with business groups to provide technical support to selected SMEs in support industries through dispatches of Japanese senior volunteers who are former leaders of various famous companies in Japan. It is expected that with the support of senior volunteers who have rich experience in many industrial sectors, the selected companies will be able to develop sustainably and become good examples for others. These efforts are designed to develop support industries from the grassroots level.
The HIC-JICA Project of 2000-05 also indirectly contributed to the development of support industries by upgrading the technological skills of prospective engineers by: i) providing intensive engineering education, ii) teaching the skills demanded by support industries, iii) upgrading technology and reducing information gaps through business arrangements, iv) supplying production engineers to domestic support industries, and v) causing positive spillover effects on other educational institutes.
The HaUI-JICA Project of 2009-12, meanwhile, is indirectly contributing to the development of support industries by supporting the Ha Noi University of Industry in developing its education/training capacity to meet the demands of the industrial sector.
With JICA's support, the TAC Ha Noi Project also supports the Technical Assistance Centre in Ha Noi under the management of the Ministry of Planning and Investment's Enterprise Development Agency, providing training and consultation to SMEs in Viet Nam.
What are some of the biggest improvements that JICA's support has effected?
Regarding policy, JICA has supported policy dialogues, forums, seminars and workshops on the development of support industries with the participation of high-ranking Japanese officials, policymakers, academics and business representatives, contributing to improved understanding of Vietnamese leaders on the importance of support industries and the need for favourable policymaking.
By now, over 100 companies in support industries in Ha Noi and HCM City have been visited by senior volunteers, of which nearly 20 have been provided with technical support. It is expected that the number of companies receiving support from Japanese senior volunteers will increase in the future.
What should be done to further help domestic suppliers enhance their capacity?
The lack of qualified engineers and skilled workers who are able to research and apply new technologies and techniques or produce sophisticated spare parts and components for the development of support industries is one of the most serious issues facing Vietnamese suppliers. Therefore, it is necessary for the Government to promulgate policies and provide proper investment in the development of vocational training, including the establishment of a national skill-testing system and support from developed countries with advanced technology in building vocational training institutions.
Most Vietnamese suppliers are also facing issues of capital for the purchase of equipment and technology transfer. It is very hard for them to access low-interest loans. Therefore, the Government should formulate incentive policies to support these suppliers.
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