IFC promotes Vietnamese supplier linkages with multinationals

Accordingly, a new programme to help local Vietnamese companies become suppliers for multinational enterprises, while enabling existing suppliers to expand their business and share of added value has been launched by IFC, a member of the World Bank Group, in partnership with the Vietnam Industry Agency under the Ministry of Industry and Trade.

Multinational enterprises (MNEs) have invested heavily in Vietnam, and there is an opportunity to substantially increase local sourcing. Impediments have included the lack of local suppliers who meet the necessary global standards.

The two-year Vietnam Supplier Development Programme aims to help domestic suppliers throughout the value chain in targeted sectors to meet the requirements of MNEs, including quality, price, and delivery, among others. Subsequently, they can be linked to MNEs for future supply opportunities.

IFC will create new programmes in different business segments in case this one is successful

“The ability to gain new business locally with MNEs is a first step to increasing the competitiveness of participating local companies,” said Do Thang Hai, Deputy Minister of Industry and Trade. “The intention is to move companies up the value chain over time so that they can develop more sophisticated products and become globally competitive.”

Over the next two years, the programme will work with eight leading MNEs in the automotive, electronics, energy, and household appliance sectors, namely Bosch, Canon, Datalogic, Denso, Ford, General Electric, Panasonic, and Toyota.

They have been identified based on their interest in sourcing locally and assisting local companies in finding business opportunities. 45 local companies, who are wholly or largely Vietnamese-owned, have been selected to join the programme based on recommendations by participating multinationals and various business organisations.

“We are happy to work with local companies who could compete with suppliers from other countries,” said Masahiro Yamamoto, director of Corporate Planning, Panasonic Vietnam. “We expect this programme to help us get in business with some potentially long-term partners and promote our local sourcing.”

Designed in close consultation with MNEs, the programme will provide free in-depth business reviews for suppliers. It will also look at the totality of a business to identify areas for improvement, and ascertain specific actions to build supply capabilities and improve long-term competitiveness. Further, efforts will be made to link companies more effectively with potential buyers.

“Large foreign direct investments into Vietnam with the operations of global leading firms have brought opportunities to promote the Vietnamese supporting industry and facilitate local producers’ increased participation in the global value chain,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Lao PDR. “This programme aims to help participating Vietnamese companies to find new business opportunities from these MNEs and, subsequently, widen international markets, expand high-value production, and create more jobs.”

Based on the success, subsequent programmes in the future will potentially cover other sectors and MNEs, giving more companies a chance to participate. The programme is implemented in partnership with the Vietnam Industry Agency, with support from the Swiss State Secretariat for Economic Affairs (SECO).