The Capacity of Vietnam’s Supporting Industries and Its Economic Autonomy
Overview of Supporting Industries
The capacity of Vietnam’s supporting industries serves as a crucial barometer for the country’s economic autonomy. Over recent years, this sector has witnessed significant advancements, though various challenges—especially technological bottlenecks—remain.
Supporting industries supply essential components, materials, and technical processes to key manufacturing sectors, functioning as the backbone of modern industry. They are vital not merely for their contribution to domestic markets but also for their role in integrating Vietnam into global supply chains.
Historical Context and Evolution
Three decades ago, when Foreign Direct Investment (FDI) first made its way into Vietnam, the landscape was drastically different. Domestic firms struggled to supply even the most basic components, compelling many FDI enterprises to import items like screws and rubber gaskets.
Today, however, the supporting industries landscape in Vietnam has transformed remarkably. The sector has grown in both scale and sophistication, with notable increases in the number of enterprises and technological advancement.
Mechanical firms, particularly in regions like Bac Ninh, Ho Chi Minh City, and Dong Nai, have made substantial investments in modern machinery—incorporating ERP management systems, CNC machines, welding robots, and automated production lines into their operations.
Advancements in Technology and Collaboration
One of the most striking improvements in the industry has been the ability to produce technical plastic components, moulds, and precision metal parts that adhere to international standards. Crucially, collaborations, such as the establishment of smart factory training programs through the Ministry of Industry and Trade and Samsung Vietnam, have elevated the technological capabilities of hundreds of domestic supporting industry enterprises. This initiative has notably increased the smart factory maturity levels from 0.9 to 2.1, reflecting effective technological transformation.
Currently, Vietnam boasts nearly 7,000 supporting industry enterprises spanning five main sectors: mechanics, automobiles, electrical-electronics, textiles-garments, and high technology. Approximately 300 of these firms are part of supply chains affiliated with heavyweight FDI groups like Samsung, Toyota, Honda, and LG. Some local companies have even mastered the production of high-tech components, showcasing their increased capabilities and potential.
Technological Bottlenecks and Challenges
Despite these advancements, the supporting industry in Vietnam remains a weak link in global value chains. A significant number of enterprises still focus on simple processing that yields low added value. Many lack the necessary capabilities in design, manufacturing, and core technology mastery. This deficiency perpetuates reliance on outsourced technology, which hinders the development of unique brands and limits localization efforts.
For instance, localization in the mechanical and automotive sectors ranges from 30% to 40%, primarily concerning simple components. In contrast, the electronics sector sees localization rates of merely 5% to 10%, where critical components like chips and sensors continue to be imported. The textiles and footwear sectors also exhibit a heavy dependence on imported raw materials and technical accessories.
Experts consistently highlight that enhancing technological capacity and fostering innovation are pivotal to overcoming these constraints. Unfortunately, many enterprises underinvest in research and development, machinery, and technical human resources, ultimately diminishing productivity and quality. As global supply chains increasingly demand compliance with rigorous international standards regarding quality, environment, and social responsibility, mastering advanced technology becomes essential for deeper integration.
Collaborative Strategies for Development
To effectively nurture the growth of supporting industries, coordinated efforts are necessary among the state, businesses, research institutes, universities, and industry associations, positioning enterprises at the core of these initiatives.
Proposals for improvement include establishing a dedicated supporting industry law that provides incentives for credit, tax breaks, land use, and research and development efforts. Additionally, the creation of techno parks that integrate production, research, training, and technology transfer could be a game-changer.
In the short term, the implementation of Decree No. 205/2025/ND-CP could provide essential financial support and facilitate technical training and the establishment of innovation centers, further consolidating the sector’s capabilities.
Strategic Importance and Future Directions
Developing supporting industries transcends mere market necessity; it is a strategic undertaking aimed at cultivating an independent, self-reliant modern industrial base intertwined with national defense and security.
The Ministry of Industry and Trade actively continues nationwide programs to bolster the capacity of supporting industries. This includes the establishment of modern support centers focused on testing, quality control, and technology transfer, as well as creating partnerships with major corporations to refine production processes and integrate domestic enterprises into global supply chains.
In summary, while Vietnam’s supporting industries have made impressive strides, sustained efforts directed towards overcoming technological and developmental challenges will be crucial for the future.