Creating growth momentum for auxiliary industry after pandemic

Update: 06-11-2021 | 11:24:31

After the period of social distancing for Covid-19 prevention and control, province-based enterprises in auxiliary industry have tried to overcome difficulties and quickly embarked on production and business recovery. The province will further implement solutions to promote and increase the number of enterprises in this field, improving supply capacity and participating in the global production network.

Taking the opportunity

During the Covid-19 pandemic, many factories had to stop production, due to the lack of imported raw materials. Typically, the textile and garment, leather and footwear industries have high export turnover, but their main materials for production are still imported. Similarly, other key industries such as electronics, automobile manufacturing and assembly are also heavily dependent on imported raw materials and accessories. Hence, they also fell into difficulties when the Covid-19 pandemic broke out.

Production at Thien Phien Co., Ltd.in Tan Uyen town’s Phu Chanh Industrial Compound

Foreseeing this, many electromechanical enterprises have found partners to supply province-based FDI enterprises with materials, ensuring their orders, helping reducing export shipping costs during the pandemic. According to Tran Thanh Trong, Chairman of provincial Electromechanical Association, auxiliary industry is identified as an important field, which not only creates a driving force for the development of the domestic industry, but also promotes FDI attraction and improves production value. For better development, enterprises in this field need to be supported to innovate and access capital, especially in the context of supply chains being redesigned, due to the pandemic.

In terms of the current situation of mechanical and electrical enterprises, Mr. Trong said that these enterprises have exported their products directly to many partners in the world, but do not have many partners in the province. Therefore, the association wants industries to promote cooperation, sign agreements, and promote supply and demand for domestic enterprises in auxiliary industry with many FDI enterprises and corporations that have been present in Binh Duong.

Sharing the point of view, a representative of provincial Leather, Footwear and Handbag Association said that the province should have a strategy to develop raw materials and a preferential mechanism on tariffs for investment projects in auxiliary industry. This can solve a bottleneck on the issue of rules of origin, helping enterprises take advantage of opportunities from new-generation free trade agreements (FTAs). Most products require high technology, so enterprises have to import materials from abroad. That is reason why the prices of products, especially for those with big brands are difficult for competition.

In fact, the movement of investors and suppliers to Vietnam is creating a new "playground" for enterprises in auxiliary industry. Catching up the situation earlier than domestic enterprises, FDI enterprises have planned to expand production and invest in technology to catch opportunities. Zheng Xia, Deputy General Director of Thien Phien Co., Ltd. in the Phu Chanh Industrial Compound in Tan Uyen town said that despite facing many difficulties, the company has been proactive to change its strategy with flexible response. Implementing its plan prepared earlier, after the social distancing period, the company has boldly made digital transformation, linked with partners to expand production to meet the needs of the auxiliary industry for garment sector. It is believed that with 20-year experience in auxiliary industry, along with a long-term customer system, the company is able to protect production, overcome the epidemic, and join hands with the province to promote socio-economic development.

Support for connection

Enterprises assess that Covid-19 pandemic will continue affecting many fields and industries, especially the supply of production materials and accessories when the supply chain is disrupted in major markets such as Europe and China. Therefore, promoting the development of auxiliary industry will help enterprises be proactive in material sources, avoiding being dependent on foreign countries while creating more advantages in attracting investment. They also suggested that the Government should continue studying the Law on Supporting Industry and soon submit it to the National Assembly for promulgation to create conditions for enterprises to participate in this field. The Government and enterprises need to go hand in hand with the fourth industrial revolution to support auxiliary industry. In addition, the Government also needs to issue specific directives requiring foreign corporations that are present in Vietnam to increase their localization rate by ordering from domestic enterprises.

Provincial industry and trade sector is speeding up the implementation of the project on "Development of the province’s mechanical industry to 2025, orientations to 2030" and the project on "Development of the province’s wood industry to 2025, orientations to 2030”. Particularly, the province will focus on attracting investment projects from all economic sectors in auxiliary industry in order to increase the quantity and quality of enterprises operating in this field; promoted industrial production under the global value chain, boosting supply linkages in the southern key economic region.

The sector is also coordinating with other sectors to try to set up a project on building a database for industry and trade sector; supporting enterprises in building a management system at requirements of the global production chains in corporate management, production management, creating a basis for connecting enterprises...The database about enterprises will help create connection, helping them become direct suppliers for units that manufacture and assemble finished products, step by step participating in the global supply chain more deeply.

Nguyen Thanh Toan, Director of provincial Department of Industry and Trade: The Resolution No.115/NQ-CP of the Government on solutions to promote the development of auxiliary industry has set a target that by 2025, Vietnamese enterprises will be able to produce auxiliary products with high competitiveness, meeting 45% of essential needs for domestic production and consumption; accounting for about 11% of the total production value of the industrial sector. There are about 1,000 enterprises capable of directly supplying materials to assembly enterprises and multinational corporations in Vietnam. Among them, domestic enterprises account for about 30%.

Reported by Tieu My-Translated by Kim

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Creating growth momentum for auxiliary industry after pandemic

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