Dong Nai Supporting Industry: both insufficient and weak

Dong Nai has three developed industries which are able to push supporting industries including mechanics, electricity – electronics and garment - footwear. These three sectors account for a big portion of industrial production values. According to the Department of Commerce, in 2010, three sectors accounted for 48.85 percent of total production value of the whole industrial sector and supporting industry of these three sectors accounted for 48.8 percent of total production value of the three sectors and 18.7 percent of the total production value of the whole industrial sector.

However, the average growth rate of the supporting industry sectors in the 2006-2010 period reached 13.03%, lower than the growth rate of the whole industrial sector (up 18%) and lower than the average growth of these 3 sectors (20.3%).

Supporting industries in Dong Nai are currently undeveloped

Specifically, SI of the engineering for the 2006-2010 period had the average annual growth rate of 24.8 percent per year, lower than the growth rate of the mechanical engineering in the same period (25.7 percent per year), accounting for  43.9 percent of production value of mechanical industry, mainly in areas of foreign investment.

SI of the electricity - electronics for the 2006-2010 period had the average annual growth rate of 12 percent per year, lower than the growth rate of electronics in the same period (18.8 percent per year), accounting for nearly 60 percent of the production value of the whole electricity – electronics sector.

SI of garment - textile - footwear for the 2006-2010 period had the average annual growth rate of 5.5 percent per year, lower than the planned targets (11.3 percent per year), accounting for nearly 23.6 percent of the production value of the whole garment - textile - footwear sector.

Generally, SI of the 3 above-mentioned sectors have had some development, supplying spare parts and components for industrial sectors in the local province in particular and in the country in general, contributing to the growth of export turnover, improving the localization rate of some products such as motorcycles, cars and electricity - electronics products ... Besides, the development of supporting industries has contributed to form a link between domestic enterprises and FDI ones. However, the current SI in Dong Nai are mainly Japanese spare part suppliers, followed by Taiwan firms and eventually domestic enterprises. SI and the main industrial sectors in Dong Nai fail to find a connection with each other towards specialization and cooperation in production. Moreover, businesses fail to calculate the profit from the investment costs so they do not really take part in the “game”.

Enterprises in supporting and primary industries lack connection with each other

Chau Minh Nguyen - Deputy Director of Industry and Trade Department said that the current weak-points of the SI sector were still too small and categories failed to meet the development needs of key sectors and that SI had low level of technology, mainly processing and assembly of component clusters, mainly simple production. SI which produce such materials as iron, steel, nonferrous metals, technical rubber ... were underdeveloped, mostly imported, so they had low added values, intensive labour use, generally low skilled workers, which all affected the productivity and competitiveness of Vietnam's SI in the market, he added.

The production connection between producers in the area of ​​SI in the country and foreign businesses were only at the initial stage at narrow scale so domestic firms found it difficult to access and participate in the manufacture systems of SI products of large corporations due to lack of information as well as production capacity to meet the requirements of the assemblies, said Chau .

However, according to Dr. Truong Thi Chi Binh - Director of SI Development Center, Institute of Strategic Industrial Policy Research, Ministry of Industry and Trade, the weakness of SI in Dong Nai itself was a great opportunity for small and medium enterprises businesses in the country to develop competitiveness, increasing competition ability in the market. He pointed out that the key was how to create a mechanism attractive enough to call for investment from enterprises in this relatively new sector.

Reported by Thanh Minh, Translated by Minh Minh