The Hanoitimes - Increasing cooperation between local enterprises with foreign investors, as well as boosting the linkages between them with international markets; taking part in higher value added activities can help Vietnam move up in the global value chains.
This is the conclusion from 2 reports entitled: “Vietnam at a Crossroads: Engaging in the next Generation of Global Value Chains Report” and “Enhancing Enterprises Competitiveness and SME Linkages Study”, which are launched at a conference jointly organized by Vietnam’s Ministry of Industry and Trade and the World Bank, with support from Australia on September 7.
These reports showcase growth potential of the country’s industries should policy reforms continue, as well as the World Bank’s recommendations to support Vietnam getting closer to its objectives. Specifically, the objectives are to improve inter-ministerial coordination, facilitate information flows and contacts between domestic and foreign-owned firms, and to provide targeted support to strengthen domestic suppliers. A higher place for Vietnam in global value chains will help attract more large scale foreign investments into the country, which can create more jobs and more opportunities for local suppliers.
Vice Minister of Ministry of Trade & Industry Do Thang Hai gave a speech at the conference.
But achieving this goal requires a solid package of reforms and initiatives, such as: Closing the infrastructure gap through greater mobilization of private financing and a more integrated approach to developing transport corridors; Developing competitive services markets and liberalizing regulations on foreign direct investment; Streamlining border procedures to make them more transparent and predictable; and Leveraging engagements with developed countries to ensure strong demand and technology-related investment. The country director of World Bank in Vietnam Ousmane Dione said, Vietnam has successfully integrated into a few global value chains, which has created jobs, propelled economic growth, and reduced poverty, but the country can move further up and strengthen its value addition with policy reforms and initiatives in areas such as transport, services, border procedures and regional integration.
Several domestic electronics and automotive companies in Vietnam have successfully integrated into global value chains. But in general, Vietnam has specialized in end-production assembly activities that are largely run by foreign firms with weak domestic linkages. Vietnam can now choose to diversify, says the report, and foster the growth of innovative local firms that can potentially lead to products ‘invented in Vietnam’. A policy framework that aims to strengthen the capabilities and technology of local enterprises is expected to facilitate linkages with FDI firms, and enable them to enter foreign markets.
According to Mr. Do Thang Hai, Vice Minister of Industry and Trade at the conference, Foreign Direct Investment, or FDI, has brought enormous gains to Vietnam in terms of growth, exports and jobs. The discussion today and recommendations from these two reports offer many ideas on how Vietnam can participate in the next generation of global value chains, and promote linkages between domestic and foreign firms.
Lessons from international and national experience presented at the conference outline the common elements of good programs that link domestic and foreign sectors. These include high-level political commitment and ownership, complemented with sound governance and institutional set-up, as well as an evidence-based strategy to foster linkage programs, a good supplier data base and business-to-business match-making services, and demand-driven supplier development programs.