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Bring Innovation To The Development Model of the Industrial Sector

​Since 2016, Dong Nai Province has been restructuring the development of the industrial sector for the period of 2016 - 2020 with the goal of upgrading the development model of industrial sector, shifting it towards focusing more on hi-tech industries, industries with high added-production-value, and at the same time ensuring that the requirements for sustainable development are met.


​After 3 years of implementation, the program has positively contributed to the growth of total industrial production value of the entire Province, maintaining industrial sector as the “leader” in promoting economic growth.

 
Support companies in upgrading their technologies
Before 2016, the packing of rubber gloves at Nam Long Co., Ltd., an enterprise specialized in producing rubber gloves based in Long An Commune, Long Thanh District, was done entirely by hand. Therefore, just for packing works alone, the company already needed approximately 20 workers. Although the number of workers was high, the packing still faced many challenges, especially when it came to large orders.
 
In 2017, Nam Long Co., Ltd was allowed to borrow 200 million VND out of a total 700 million VND to invest in an automatic product packing line from the financial support program for construction of technical and equipment demonstration established by the Department of Industry and Trade. This program is one program among a series of industrial sector restructuring programs for the Province.
 
Director of Nam Long Co., Ltd Mr. Le Bach Long said that after receiving financial support to build an automatic product packing line, the production of the Company has been more favorable, with the productivity and economic efficiency have also increased. “The two most evident benefits considered by our Company have been the reduction in the pressure to pay interest for the preferential loans to invest in machinery and the decrease in labor cost due to more advanced production technologies. Compared to manual packing, the number of workers operating the packing system has reduced by more than a half,” Mr. Long said.
 
In the 03 year period of from 2016 to 2018, besides Nam Long Co., Ltd., there were 17 other companies in the Province that also received support from the program to improve their production technology.
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 The agriculture product processing group is placed at the top in terms of technology application to production process. In the photo: The Export chicken processing at Koyu & Unitek Co., Ltd., Loteco Industrial Park, Bien Hoa City.

 
According to the Board of Management of Industrial Development of Dong Nai Province, for the restructuring of industrial sector of the Province, the shift towards high-tech industries, and industries with high added-production-value is the key direction that Dong Nai focuses on.
Following this direction, Dong Nai Province has decided to invest in Long Thanh High-Tech Industrial Park which exceeded 400 hectares in scale, with a total investment of over 6,000 billion VND to attract high-tech investment projects.
 
According to the assessment, regarding level of production technology, the companies in the Province have been categorized as above-average. However, regarding the technology contribution, then the production technology of the companies in the Province has technology contribution factors approaching the advanced level. Notably, a survey on 496 companies working in the supporting industries carried out by the Department of Industry and Trade at the end of 2018 showed that there were 07 companies in the Province that produced high-tech products. Currently, there are 5 companies in the Province that are granted certificate of high-tech industries by the Ministry of Science and Technology.
 
In addition to the high-tech industry, the supporting industry group also saw an increase in number of companies. According to data provided by the Department of Statistics, by the end of 2018, there were about 797 companies in the Province working in supporting industries, which marked an increase of 58 companies compared to 2017, accounting for over 17% of the total number of industrial companies in the Province.
 

"Weak points" in high-tech FDI attraction

At the present, all 05 companies that have been granted certificate of high-tech industries by the Ministry of Science and Technology are companies that have foreign direct investment (FDI), consisting of: Bosch Vietnam Co., Ltd; Tae Kwang Mold Vina Co., Ltd; Fujitsu Vietnam Co., Ltd; Mabuchi Vietnam Co., Ltd. and Muto Vietnam Co., Ltd. However, according to the assessment of the Board of Management of Industrial Development of Dong Nai Province, the direction for attracting FDI companies currently have multiple limitations.
 
This is reflected in the ratio of growth rate and the structure of labor use in the textile - garment industry group, which is one of the five key industry groups. Specifically, regarding only the textile and garment industry group alone, the FDI companies that operate in this industry have an abnormal growth rate compared to the domestic-owned companies with a growth rate of nearly 16%. However, in terms of labor use structure of the textile and garment industry group, the FDI companies account for more than 72% of the total labor force.
 
On a larger scale, the 05 major industry groups consisting of: agricultural product processing; electrical goods - electronics; textile, garment - footwear; mechanics and chemicals, rubber, plastics show that the FDI companies are the most labor intensive yet have low labor productivity and the added value in production is not much different from the domestic owned companies.
 
The explanation for this situation, according to the Board of Management of Industrial Development of Dong Nai Province, is that in fact FDI companies mainly choose to invest in labor intensive industries to take advantage of abundant and cheap labor force. In addition, the FDI companies mainly focus on assembly and processing works that do not require high and strict scientific and technical requirements like textile - garment industry does.
 
Facing this situation, in the recent years, Dong Nai Province has made adjustment to the direction of FDI attraction, shifting towards prioritizing high-tech industries and supporting industries. However, this "change of direction" has encountered many difficulties, especially in terms of the land area reserved for project attraction. Because, now many industrial parks in the Province such as Amata, Thanh Phu and Tam Phuoc ... are having difficulties in site clearance in order to expand. In addition, the limited supply of technical labor for projects is also a reason as to why there are not many high-tech projects in Dong Nai.
 
Encourage and support investment in research, development, application and transfer of advanced technologies
 
According to the Board of Management of Industrial Development of Dong Nai Province, in determining the direction for implementation of Industrial restructuring program for Dong Nai Province in 2019 and 2020, the Province shall continue to encourage and support investment in research, development, application and transfer of advanced technology. Also  important is the task of completing and ensuring effective enforcement of intellectual property law. Establish funds to support innovation and technology application. Provide financial support, access to preferential capital sources in a manner that enhances research activities, facilitates company connection, startup ideas, innovation with investors and investment funds.
 

Quynh Nhi

 

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