Although supporting industry (SI) has been a main force for creating added values and enhancing product competitiveness, this industry is weak. Together with market constraints, resources, technology, and capital constraints are considered as the main obstacles to the development of SI in the country today.
Manufacturing activities in a mechanical manufacturing company in My Phuoc 2 IP, Ben Cat Town.
The growth of SI is not adequate
According to Heavy Industry Department under Ministry of Industry and Trade, capacity and technology of majority domestic SI firms are still limited; satisfy only about 10% of domestic demand for SI products; Main products are simple components and materials with low value in the product value structure. Most SI companies do not have access to and meet the requirements of customers to SI products with relatively high technological content. Some enterprises have been involved in supplying SI products. They only interest in expanding their scale, not focus on advanced technology and machinery.
Binh Duong is considered to be actively supporting the development of SI. However, SI in the province has not met the demand for materials of domestic production. According to statistics, in the last 10 years, every year, enterprises in the province had to spend billions of dollars to import materials, spare parts, components ... for production and business. Tran Thanh Trong, Chairman of Binh Duong Electro-Mechanics Association, said that the number of SI companies in the province was too small, most of them developed spontaneously, fragmentedly, lacked specialization, thus not get high efficiency. Due to characteristics of electromechanical industry, to become a supplier of SI products, businesses must invest more to make products meet the requirements in terms of quality, quantity and competitive prices. However, most SI companies in the province are small and medium enterprises, so it is not easy to access loans.
Wood industry, one of the main industries of Binh Duong, every year, spends hundreds million of dollars to buy materials. It is worth mentioning, raw materials account for a relatively high proportion of wood products’ price (from 20 to 30%). If raw materials are produced in the country, businesses will save much money. Meanwhile, for textile and garment industry, most raw materials used by provincial enterprises have to be imported, so the added value of products is not high. According to Phan Le Diem Trang, Vice Chairwoman of Binh Duong Textile and Garment Association, now foreign partners set strict quality standards, when working with domestic companies. Meanwhile, the gap in quality standards between domestic and foreign enterprises is quite large, so many companies cannot find information on large enterprises, especially foreign companies...
To remove difficulties in capital
Pham Chi Thang, Director of Nam Thien Truong Mechanical Company, said that in order to supply SI products, enterprises must invest heavily in machinery and labors to meet strict requirements of this industry. Therefore, the State should have more open mechanisms to provide enterprises easy access to funds for procurement of modern machinery, investment to improve worker skills...
According to leaders of many enterprises, the State should soon study solutions to support loans, flexible loans terms and limits to suit actual conditions of enterprises; loosen regulations on collateral... so that enterprises easily access funds when needed. Besides, it is necessary to set up a fund reserved for SI enterprises; this should be an open fund to attract all domestic and international funding sources.
Nguyen Van Danh, Director of Department of Industry and Trade, said that the department conducted surveys of business activities in the province to find out the current situation, barriers to SI development, then reported to competent authorities. The department also assisted SI companies lacking of investment capital, facing difficulties in getting loans. Recently, the Prime Minister issued Directive No. 15/CT-TTg on the effective implementation of Law on Support to Small and Medium Enterprises. Hopefully, in the coming time, the State will have more practical support policies for SI.
In order to support business production, Department of Industry and Trade implemented the project of SI development in the province up to 2020, focusing on developing and implementing mechanisms and policies to encourage, attract and support investments for SI development. Department of Industry and Trade is also proposing solutions to provincial People's Committee to supporting production premises with suitable size and reasonable leasing price for SI enterprises in industrial parks. When this zone is formed, it will create favorable conditions for SI enterprises to have production sites, connect each other, especially associate with foreign enterprises; at the same time, to form a network of SI production.
Reported by Tieu My – Translated by Ngoc Huynh
