Policy incentive boost for high tech projects

Creating favourable conditions for foreign investors may help spur the growth of support industries  
Photo: Le Toan

Latest statistics show that in the first six months of the year, Samsung Electronics Vietnam (SEV), a subsidiary of the South Korean global giant Samsung, earned $11 billion from exporting handsets and vacuum cleaners against its 2012 full-year export figure of $12.6 billion.

During the same period, the US-owned Intel shipped abroad $956 million, while the Tien Son facility and the Que Vo facility of Japan’s Canon reporting figures of nearly $192 million and more than $491 million, respectively.

According to Professor Nguyen Mai, deputy chairman of the State Commission for Cooperation and Investment, now the Ministry of Planning and Investment, these figures have contributed to Vietnam’s surging export value and reflect that Vietnam has pursued the correct path in terms of attracting foreign investment.

However, large foreign investors are also major importers. In the first six months of the year, SEV imported $9.3 billion. Intel also racked up $855 million in imports, while Canon’s facilities in Tien Son and Que Vo imported $104 million and $203.4 million in value respectively.

However, in terms of added-value brought to Vietnam’s economy in the first six months, SEV contributed $1.7 billion, Intel $101 million and Canon over $348 million from its two mentioned-above facilities.

SEV added value to Vietnam’s economy last year totalled some $1.15 billion, with Intel providing $200 million and Canon $777 million.

Mai, however, claimed these added value figures were below expectations. For instance, in the case of SEV it only accounted for around 10 per cent of the company’s total export value last year and about 15.5 per cent of its total export value in the first six months of this year.

“Vietnam’s economy would gain more, and the added value figures could increase, but this heavily depends on the performance of Vietnam’s support industries,” said Mai.

SEV general director Shim Won Hwan said SEV wanted to hike the rate of localisation and added value but Vietnam’s support industries and firms were still unable to meet Samsung requirements.

“SEV has around 60 suppliers but there are only five Vietnamese suppliers which do not give us electronic devices but are more likely to provide less valuable inputs such as packaging or foam boxes,” Shim said.

In Canon’s case, its localisation is mainly in the mechanical engineering segment, which has caused problems, as it is extremely hard to source Vietnamese electronic component suppliers. In a recent forum, Canon Vietnam’s LBP Purchasing Division general manager Okada Kinya voiced the photography giant’s intention to source Vietnamese electronic part suppliers for the company, but no Vietnamese candidates seemed capable at present. It appears that spurring support industry development is the only way to help foreign invested businesses increase their added value and make a greater contribution to Vietnam’s economy.