Illustrative photo. (Source: VNA)

Hanoi – The government should establish a national steering committee, headed by a deputy prime minister, to promptly resolve problems and challenges facing supporting industries, according to Nguyen Hoang, Vice Chairman of the Vietnam Association for Supporting Industries (VASI).

He made the suggestion at a recent workshop on developing supporting industries at Hanoi Southern Supporting Industrial Park (HANSSIP).

Local content by Vietnamese firms in supporting industries remains low, according to Hoang, around 1 – 2 percent in hi-tech industry, 5 – 20 percent in automobile, 15 – 20 percent in mechanical engineering, 5 – 10 percent in electronics, and 30 percent in footwear and garment-textile.

As a result, Vietnam had to import billions of USD worth of components for production annually, he stressed.

The official further noted that just 0.2 percent of the nearly 1 million Vietnamese enterprises operate in supporting industries, far below that of regional peers.

Minister of Planning and Investment Nguyen Chi Dung said COVID-19 has taken a heavy toll on the global economy over the last two years. Yet the manufacturing and processing’s contribution to Vietnam’s GDP increased significantly to 25.13 percent in 2021 from 6.69 percent in 2020.

However, the supporting industries fail to meet domestic demand since many key sectors in Vietnam, such as electronics, textile-garment, footwear, motorbike and automobile assembly, still heavily rely on imports, raising production costs and lowering added values, Dung said.

Hoang recommended the government to provide exclusive incentives in terms of funding for enterprises in supporting industries and connect domestic producers with major international corporations doing business in Vietnam to help them engage more deeply in supply chains.

The government must also soon develop a law on supporting industries, he suggested.