Shortages leave firms on back foot

Businesses based in Saigon Hi-tech Park (SHTP) raked in $1 billion in 2011 export value, doubling 2010’s figure and aim to reap $6.5 billion from exports by 2015 with $6 billion coming from US-based Intel, according to SHTP Management Authority.

Production materials account for around 60 per cent of product value, however, in fact SHTP’s businesses mainly source materials from foreign suppliers in the global supply chain, according to the authority.

SHTP Research and Development Centre director Le Phan Hoang Chieu said in the past six years the zone investors had ramped up efforts to team up with local material suppliers to boost localisation of some materials, but their efforts yielded little outcomes. In fact less than 5 per cent of materials are produced locally and mainly involve packaging, plastic items and some assembling, testing and equipment maintenance instruments.

Chieu ascribed the poor scene to local firms’ inability to meet products’ quality and delivery requirements.

To hike localisation, SHTP would set aside a five hectare patch for supporting industry development, according to the authority’s deputy chief Le Bich Loan. The project will get underway right in 2012 and last until 2015.

Besides, SHTP will host workshops to increase contacts between hi-tech firms based in the zone and other local firms, and join efforts with Intel to push up training in industries and opening a specific website on supporting industries.

Reality shows that it is not easy to reap success with supporting industries promotion plans. Director Truong Thi Thuy Lien at Lien Phat Company - the developer of a 16ha garment and footwear accessories centre based in southern Binh Duong province’s Di An district with over VND190 billion ($9.04 million) investment - said the centre was no longer up and running.

In a related development Lien said in February 2012 a group of 20 Italian firms would meet Lien Phat to negotiate on setting up an institute on fashion design whose core functions would be training on designs and making footwear models for sale to local firms or serving export producers.

Industry experts assumed that since competition was mounting up in both export and local markets the state needed to scale-up efforts to lure investors into supporting industries development to support firms.