The Ministry of Industry and Trade will propose to build a credit package of 100 trillion VND (4.4 billion USD) for developing the support industry for industrial sectors, especially automobile production.

Thaco car factory in Quang Nam province. (Photo: nld.com.vn)

By the end of the year the ministry will submit a project to support and promote automobile manufacturing in Vietnam.

Le Ngoc Duc, General Director of Hyundai Thanh Cong, told the Nguoi lao dong (Labour) newspaper that in a small market, any support from the State is necessary.

"The small market volume is the biggest difficulty for the domestic support industry to manufacture components that could compete in price with the products made in larger markets,” Duc said.

Vietnam's automobile industry was entering a golden period despite the car ownership rate per population was still low in comparison with other countries in the region, Duc said.

"The State has had many policies to support the automobile industry, but they are not strong enough and not close to reality so it has not been successful,” he said. 

“If State management agencies seize the current opportunities and have suitable policies, the domestic automobile industry still has a chance to succeed."

According to Duc, the supporting industry is an important sector and needs special policies. If this industry is firm, the assembly and finishing stages will be much easier creating higher value.

Vietnam has 358 manufacturing companies related to cars, including 50 assembling enterprises and 45 producing bodies and chassis.

The number is much lower than thousands of Thai automobile part manufacturers. Therefore, this project has a great meaning supporting and motivating domestic enterprises, experts said.

However many feel support packages for businesses should be considered carefully because there are many examples that they do not help in some cases.

Companies need a favourable business environment, overall support from established enterprises, access to bank credit, tax support and land.

Do Phuoc Tong, Chairman of the HCM City Mechanical and Electrical Enterprise Association, said this credit package focused on the automotive, electronics, textile, footwear and material industries but not the basic industry being machine manufacturing.

He said every manufacturing company needed machines so the State should pay attention to the machine manufacturing industry that is foundation of industrial production.

According to Lam Dieu Tam Hieu, Deputy General Director of KIZUNA Company, the core of the industry is manufacturing so the State should have supports for enterprises to have efficiency in production, creating quality products.

To have efficiency in production they need space and a good working environment. Many small and medium sized enterprises want to start or expand production but they are struggling to find a suitable space because they do not have financial ability to buy land.

He believes they need financial support to rent workshops or to own a large part of workshop space.