FDI helps bolster support industry development

Nokia Vietnam illustration photo

“People have said Samsung is only engaged in assembling in Vietnam, but in fact that’s not true. We are making components here and helping to attract scores of satellite production units to the country,” said general director Shim Won Hwan of Samsung’s complex in the northern province of Thai Nguyen in a recent talk with local media.

In fact, eight manufacturing plants are positioned in Samsung’s Thai Nguyen complex.

As well as two handset assembly plants, there is a factory producing vacuum cleaners, another plant producing handset batteries, and four others manufacturing components (LCD touch-screens, cameras, covers, and more for handsets).

“Samsung’s complex is one of the group’s most recent manufacturing bases to feature complete production globally,” said Shim, adding that apart from component production, which will soar after its $1.2 billion second factory goes on-line, Samsung has lured 60 satellite investors to Vietnam.

Of these 60, 45 were from South Korea, 5 from Vietnam, and 10 from other countries, Shim noted.

“This figure will increase in the coming years, once Samsung and its satellite investors have achieved stable operations,” said Samsung Vina deputy general director Nguyen Van Dao.

Chairman of the Vietnam Association of Foreign Invested Enterprises Nguyen Mai said Samsung’s attracting of satellite investors has made a significant contribution to forming and bolstering local support industry development.

Relevantly, at a recent Hanoi workshop, deputy director Duangdej Yuaikwamdee from Thailand’s Reed Tradex, which specialises in hosting support industry exhibitions, said now was the idea time for Vietnam to push up the development of support industries to take advantage of rising foreign capital inflows.

“Vietnam’s export value of electronic items and components jumped 68 per cent in 2012 and 35 per cent in 2013. The respective figures for handsets and components were even more impressive, at 85 per cent and 67 per cent, making Vietnam appealing to foreign electronics and IT investors,” Duangdei added.

In reality, the entry of numerous global leaders is turning Vietnam into one of the world’s major manufacturing bases for electronics products.

Last year, of a total $1.47 in FDI committed to the northern province of Bac Ninh, apart from Samsung’s $1 billion investment, 94 per cent of the remainder was reportedly for electronics manufacturing projects, most related to the Samsung project.

One point that has worried local economists is that local suppliers have proven less competitive than foreign firms.

“The engagement of local suppliers is important for the development of the local support industry. Besides, it will benefit foreign investors through lower production costs,” said Ho Chi Minh City Japan External Trade Organization (JETRO) managing director Yasuzumi Hirotaka.

“Deeper involvement of local businesses in the global supply chain of multinationals will also bring greater benefits to Vietnam’s economy,” said Nguyen Mai.