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Vietnam shouldn’t continue nurturing ambition of localizing products
Vietnam has been advised to focus on developing supporting industries in order to curb the trade gap.
However, developing supporting industries does not mean that Vietnam needs to reach the localization ratios of 50-70 percent in every product. It would be an ideal scenario, if Vietnam makes less products with less locally made content percentages, but the products still can bring high values.
If just considering the initial investment capital to make the conclusion about the role of a project and its contribution to the national economy, the software technology center of Robert Bosch Engineering & Business Solutions Vietnam (RBVH), which made debut in HCM City several days ago, would not catch any attention from the public. However, experts have every reason to believe that the role of the project and its contribution to the national economy would be much bigger than the initial investment capital of 4.5 million dollars.
Viyay Ratnaparkhe, a senior executive of Bosch, said that Bosch plans to turn up the center in Vietnam into a regional research, development and production base of the group in South East Asia. He said that the software products to be researched and produced in Vietnam will be integrated into the products of Bosch worldwide.
“In other words, Bosch group will act as a big client of RBVH,” he said.
Becoming a part of the production chain of a leading technology and technique group like Bosch, which has the global turnover of 63 billion dollars last year, is really a “golden opportunity” for RBVH. General Director of RBVH Sudhakar Kunte, has committed that the company’s capacity will increase by 10 times with 500 engineers in the next five years. In the immediate time, the company will focus on researching and developing control software products integrated into automobile part complexes, such as diesel system, brake system or safety parts, and the solutions for other high technologies.
Besides, RBVH’s will also develop the solutions to serve the production and business of enterprises. According to Vo Quang Hue, General Director of Robert Bosch Vietnam, the objects of RBVH’s research will be hi-tech products. This is really a good chance for Vietnamese engineers to work together with best experts from Bosch and access the modern technologies in the world.
At the recent annual meeting of ADB, many economists warned Vietnam against the “middle income trap”. What Bosch did and is doing in Vietnam should be seen as a good suggestion about the direction Vietnam should follow to become an industrialized country.
Nearly 20 years ago, Vietnam showed its strong determination to build up two key industries of automobile and electronics. However, with the policies on protecting local production with high import tariffs and encouraging the localization by urging manufacturers to gradually raise the locally made content ratios have just produced simple assembling factories.
Nevertheless, with the removal of the local production policy and the effort to make Vietnam’s economy more deeply integrate into the world, new prospects for the development of the electronic industry have turned up. When a series of assembling workshops, which earned their living mostly on the local production protection, were killed, a lot of big projects with the scale of millions of products a year for export have appeared.
These include the factories and complexes making mobile phones, printing machines, digital cameras and electronic components by big groups like Samsung, Nokia,, Canon, Intel and Nidec. The large projects only undertake a part of the value chain of products. However, the projects have helped attract tens of satellite companies to Vietnam which will make components and accessories to provide to the projects.
Analysts say that the investors would have not come to Vietnam--if Vietnam, like previously, had asked them to commit to gradually raise the localization ratios in products.
Regarding the automobile industry, Tran Ba Duong, Chair of the Truong Hai Automobile Group, said that Vietnam should not strive to successfully make all the car parts and it also should not try to make engines. It is really unfeasible for any one to produce tens of thousands of different components. And even if this is feasible, the cars to be made will not be competitive.
More importantly, he said, Vietnam should strive to join the global value chain by making some certain high quality and reasonably priced products.
vietnamnet, TBKTSG
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