In the integration trend, each locality often holds a role in the global supply chain. Supporting industry is a link in the supply chain, helping the industry of the country in general and of Binh Duong in particular to grow stronger.
Strategies of developing supporting industries
On January 18, 2017, the Prime Minister signed Decision No. 68/QD-TTg on the promulgation of the program on developing supporting industries from 2016 to 2025. The general objective of the program is to produce export of supporting industries’ products for domestic production and exportation, and participation in global value chains. By 2020, supporting industrial products will meet about 45% of the demand for domestic production and by 65% by 2025. Industries in need of supporting industries are spare parts, textile and garment - footwear, hi-tech, automobile, electronics and informatics.
The needs for supporting industries of enterprises are tremendous. In this photo: Wood production is on-going at an unnamed company in Tan Uyen Town. Photo: Phung Hieu
In the previous years most enterprises in the province have been using imported raw materials to produce finished products. Supporting industries in the province have not met the demand for raw materials for domestic production in terms of both quantity and quality. Dependence on imported inputs and underdeveloped supporting industries has affected the quality of provincial industrial growth.
Currently, Binh Duong is trying to build a long-term strategy for supporting industries, creating momentum for other industries to develop. Upon implementing Decision No. 2751/QD-UBND dated November 26, 2011 of the provincial People's Committee on "Approving the scheme of orienting development of supporting industries in Binh Duong province up to 2020", many projects on supporting industries from big corporations in the world have been deployed in some industrial parks in Ben Cat Town and Bau Bang district with focus on supplying products and accessories for the industries of garment, electronics, components, and automobile.
In fact, the demand for supporting industries of enterprises in the province is very large as Binh Duong is the capital of many important industries such as furniture, footwear, garment, electronics, and automobile. Nguyen Liem, Chairman of Lam Viet Wood Joint Stock Company, said that every year, businesses spend hundreds of millions of dollars to purchase materials for the wood industry. Most of the auxiliary materials such as screws, paints, varnishes, and sanding paper are supplied by importers for distribution in the Binh Duong market. Raw materials in the wood industry account for a relatively high proportion of production costs of wood products (averagely 20-30%). It also shows that if supporting industries develop strongly, Binh Duong would have more budget revenue and businesses would have enough raw materials for production on the spot, saving a lot of time and money.
Diversified needs
Not only the key industries of Binh Duong province such as wood, garment, footwear, automobile and electronics are in great need of strong support from manufacturers of raw materials, non-food items and agricultural products are also in need of support from the supporting industries. Nguyen Quang Vu, Chairman of the Binh Duong Leather and Footwear Association, said that the footwear industry should cooperate with the textile industry to speed up the supply of textile fabrics for footwear, especially shoes and sandals for exportation. With the characteristics of the footwear industry being the source of raw materials, accounting for 60-70% of the cost of products, if domestic auxiliary materials are available, the industry would increase its competitiveness with competitors in the region as our country is losing the advantage of cheap labor.
According to Nguyen Thi Tuyet, Director of Tien Dat Food Company, although the cost of packaging for exporting food does not account for up to 1% of the product value but it required, in the export market, for strict standard types of packaging which sometimes exceeds the ability to supply and produce in the country. The food industry also needs support from domestic producers and suppliers.
In recent years, Binh Duong has made many efforts to attract foreign enterprises to develop supporting industries. At the end of 2016, KOLON signed a memorandum of understanding with the province on the implementation of a US$ 1 billion tire and airbag factory with an investment capital on 42 hectares in Bau Bang industrial park to supply the automobile industry. According to the plan, investors will invest US$ 220 million in Phase I (2017-2018), US$ 600 million in Phase II (2018-2026) and then phase III. Project of Binh Duong Tetra Park Joint Stock Company (Singapore) with registered capital of US$ 124 million in Vietnam – Singapore Industrial Park II, specializes in manufacturing sterile paper packaging from plastic, aluminum to pack food. The result shows that through time, Binh Duong can become a highlight of the country in attracting and developing supporting industries.
Reported by Xuan Vi – Translated by Vi Bao
