Increasing business readiness for 4.0 era

The Fourth Industrial Revolution is now bringing immense prospects to Vietnamese enterprises to conduct digital transformation and smart production. 

Kieu Nguyen Viet Ha, vice head of the Planning and General Affairs Division under the Ministry of Industry and Trade’s Department of Science and Technology, writes about the businesses’ opportunities in this hallmark revolution and support from the state.

Increasing business readiness for 4.0 era

Smart production requires highly-skilled and properly trained employees in order to prosper 

Over the past few years, Vietnam’s industrial production has been developing quantitatively and qualitatively, with industrial sectors’ structures changing positively. The industrial sector’s competitiveness has gradually improved, with the lead of some key products. There have been some strong economic groups that could compete on the global stage.

Kieu Nguyen Viet Ha, vice head of the Planning and General Affairs Division under the Ministry of Industry and Trade’s Department of Science and Technology
However, the sector is also facing some problems. For example, the labour productivity of the economy in general and of the sector in particular remains low, especially in manufacturing and processing.

Industrial production depends largely on foreign-invested enterprises and on a big volume of imported goods. Meanwhile, technological transfer from these enterprises to Vietnamese businesses is also limited.

Reports from the Ministry of Science and Technology show that the majority of technological transfer contracts are focused on technological process transfer (73 per cent), technical assistance (77 per cent), training (71 per cent), and technological transfer (13 per cent). The total factor productivity’s contribution to the country’s GDP is about 29 per cent only.

Vietnamese enterprises are facing increasing pressure in competition and development amid the trend of developing and applying achievements of Industry 4.0. In fact, Vietnam’s readiness for Industry 4.0 remains limited now, both in the whole economy and in enterprises.

According to the Readiness for the Future of Production Report 2018, by the World Economic Forum and consultancy firm A.T. Kearney, Vietnam was ranked 40th in tech and innovation in the list of nascent nations with Industry 4.0.

In terms of human resources, Vietnam was ranked 70th, in which the indexes on high-skilled labourers and the university quality were also low, at 81st and 75th.

Regarding enterprises, a recent survey by the Ministry of Industry and Trade showed that the majority of industrial enterprises are at the starting point towards an Industry 4.0 future.

Enterprises’ ability in accessing Industry 4.0 is constrained by some obstructions. For example, they have no specific strategy on approach to Industry 4.0, including strategies on their own development and on digital transformation, investment, and technological renovation. Moreover, the ability in data digitalisation and connectivity within businesses and between them and their partners remains limited.

Also, not many can develop their own smart products, which are the basic foundations for them to collect information and then develop new products and business models. Corporate and technological governance models from Industry 4.0 are applied on a very small scale.

Besides, enterprises are also limited by a lack of a strong ecosystem that can help them conduct digital transformation, while their own capacity for this job is weak. Also, consultancy units lack the tools and standards to provide enterprises solutions.

Effective tactics

To weather all difficulties and turn challenges into opportunities for development, Vietnamese enterprises need to increase their readiness for Industry 4.0, in addition to support from state agencies.

Firstly, they need to build up their own digital transformation strategy, which needs to take into account their current capacity and the requirements of smart industrial development. Besides, the strategy also needs to specify priorities and identify challenges of enterprise development, and take into account the effectiveness of digital transformation.

To support enterprises in this digital transformation, many nations and international organisations have built up sets of indexes on assessing enterprises’ readiness for Industry 4.0.

For example, while Singapore has devised its Smart Industry Readiness Index and Indonesia has its Industry 4.0 Readiness Index, the German Engineering Federation has developed the Smart Industry 4.0 Readiness Online Self-Check. In addition, PricewaterhouseCoopers also has the Industry 4.0/Digital Operations Self-Assessment.

These tools will help raise enterprise awareness, assess their development situation, and propose digital transformation roadmaps. The construction or selection of an approach method or a tool suitable to Vietnamese enterprises is one of the big priorities for the state. This process needs to be conducted based on specific experiments and assessments for different enterprises in different sectors. This is also an urgent need for consultancy firms that provide digital transformation solutions for enterprises.

 

Secondly, businesses need to materialise their digital transformation strategies soon by focusing on technological investment and renovation, in which digital transformation is one of the first steps in constructing a smart factory.

Enterprise investment should be focused on enhancing digitalisation in collecting, linking, sharing, and processing data. The application of new technologies and establishing governance systems based on data in the whole factory’s operation process and supply chain is necessary to improve enterprises’ operations.

The state’s support for enterprises in this stage is creating a fairer and more favourable business and investment climate, so that enterprises can further develop. Policies on financial support in enterprises’ investment and innovation activities need to create breakthroughs that can assist enterprises in applying high technology from Industry 4.0.

Enterprise-support programmes via information provision and connecting businesses with able solution providers, creating big models in digital transformation, and developing smart factory models are important tools to spur the development of enterprises across the country.

Besides, the state would need to introduce solutions to improve the capacity of scientific and technological organisations, developing innovation centres, and then forming a network to support enterprises in digital transformation.

Specifically, such a network is aimed to support enterprises in human resources training, provide them with consultancy in digital transformation, and to implement scientific research activities with a focus laid on researching, applying, and transferring Industry 4.0 technology to industrial manufacturing sectors.

A flexible foundation

Thirdly, businesses also need to develop smart products and new business models based on data which can create new values. This is a higher level of enterprises. Via the integration and supplementation of new functions to collect information and data from users and customers, enterprises can grasp changes in product consumption, and therefrom can perform timely and suitable adjustments.

Industry 4.0 technology is creating numerous opportunities for enterprises to form a flexible production model in which products can be customised for each individual customer. With this strong foundation, services that are based on data and new business models will be formed and developed, helping further promote enterprises’ development.

Here in Vietnam, the state’s role is to develop a management mechanism suitable to the digital business climate, making it favourable for innovation. The state needs to soon enact a pilot institutional framework which can control technologies, products, services, and new business models created by Industry 4.0. Furthermore, the state should also construct experimental areas for technological firms based on advanced models in the world.

Lastly, it is necessary to develop highly-skilled human resources that can meet the requirements of smart production at businesses. There should also be a suitable organisational structure in enterprises in order for them to supervise and implement their digital transformation plans and strategies.

Enterprises must be prioritised in training with the supplementation of new skills suitable to Industry 4.0. Such skills include data analysis, software usage, information security, automisation, IT, and a good command of systems.

In addition, businesses also need to develop a system with indexes used for following and assessing digital transformation.

New requirements from enterprises will force educational and training activities to renew both in content, curriculums, and form. The state needs to give incentives and favourable mechanisms to individuals, organisations, and enterprises engaging in educational and training activities which can create products in service of the digital economy. Besides that, the state also needs to boost vocational training and support labourers in skill training when they change their jobs.

Thus it can be said that Industry 4.0 is bringing enterprises both challenges and opportunities. Whether they can lag behind or move forward largely depends on their mindset and actions.

Actively joining Industry 4.0 is both an objective requirement and an urgent and long-term strategic duty for the whole political system and the entire society. It closely links with the country’s international integration, and is now being materialised by concrete actions from the government and localities. VIR

Kieu Nguyen Viet Ha

Improving frameworks in order to reach the Industry 4.0 peak

Improving frameworks in order to reach the Industry 4.0 peak

New disruptive technologies associated with Industry 4.0 are changing how companies do business, and so finding a mechanism to adapt these new technologies to modern development needs is imperative. 

Vietnam ready to embrace Industry 4.0

Vietnam ready to embrace Industry 4.0

Vietnam is taking strong actions to speed up the application of Industry 4.0 technology, making changes in fields of production, business, cultural and social life, as well as national defence and security.  

 
 

Other News

.
Gov’t support aids automobile industry
Gov’t support aids automobile industry
BUSINESSicon  14/10/2020 

The domestic automobile industry was forecast to thrive, given the Government’s supports in tax policies for imported automobile components coupled with the increasing income of citizens.

Vietnam Airlines reports huge losses
Vietnam Airlines reports huge losses
BUSINESSicon  14/10/2020 

Vietnam Airlines Group, listed as HVN on the HCM Stock Exchange, earned nearly VND24 trillion (US$1.04 billion) in total consolidated revenue in the first nine months of this year, marking an estimated loss of VND10.75 trillion, 

Vietnam to increase imports of coal and gas
Vietnam to increase imports of coal and gas
BUSINESSicon  14/10/2020 

The latest data from the ministry sent to the National Assembly shows that Viet Nam is transitioning from an energy exporter to a net importer.

Coastal developers prepare for good upcoming times
Coastal developers prepare for good upcoming times
BUSINESSicon  14/10/2020 

In anticipation for the world eventually opening back up for travellers, developers are exploring the high potential of Vietnam’s world-renowned coastal urban areas.

Tax relief should not be “One size fits all”
Tax relief should not be “One size fits all”
BUSINESSicon  14/10/2020 

The Private Economic Development Research Board, under the Advisory Council for Administrative Procedure Reform, has proposed a 30% reduction in corporate income tax for all businesses this year.

Big investors pour money into IZ projects as land fund declines
Big investors pour money into IZ projects as land fund declines
BUSINESSicon  15/10/2020 

The land rent in some industrial zones in Hai Phong, Bac Ninh and Hai Duong has increased by 20-30 percent.

Vietnam urged to develop night-time economy
Vietnam urged to develop night-time economy
BUSINESSicon  14/10/2020 

Vietnam has missed some economic development opportunities and should not ignore the chance to grow the night-time economy, according to economist Tran Dinh Thien.

Tra fish swimming back to local market
Tra fish swimming back to local market
BUSINESSicon  14/10/2020 

Turning away from the uphill battle in exports due to COVID-19, tra fish producers have set an eye on the domestic market.

Investors find VN ports, logistics attractive
Investors find VN ports, logistics attractive
BUSINESSicon  13/10/2020 

With its annual growth of 12-14 per cent, the logistics sector, especially seaports, is becoming attractive to both domestic and foreign investors,...

Vietnam continues reform as part of EVFTA deal
Vietnam continues reform as part of EVFTA deal
BUSINESSicon  13/10/2020 

Viet Nam is continuing its institutional reform commitments made in the historic EVFTA in an aim to boost exports of agricultural products and...

VN to set new regulations for overseas investment
VN to set new regulations for overseas investment
BUSINESSicon  13/10/2020 

Individuals will no longer be allowed to invest in real estate abroad if a new draft decree issued by the Ministry of Planning and Investment is approved.

Tax cut welcome but not enough: businesses
Tax cut welcome but not enough: businesses
BUSINESSicon  13/10/2020 

The Government's 30% corporate income tax cut was a step in the right direction but it could have been more inclusive by offering support to small businesses that were in desperate need of cash due to the difficulties caused by the COVID-19 pandemic.

Vietnam expects to welcome more investors next year
Vietnam expects to welcome more investors next year
BUSINESSicon  13/10/2020 

Vietnam is still regarded by investors as an attractive destination thanks to its stable politics and macro economy, favourable geographical location, and advantages in land and human resources.

Long Thanh Airport project awaits disbursement of funds
Long Thanh Airport project awaits disbursement of funds
FEATUREicon  13/10/2020 

The government’s report to the National Assembly on the implementation of the Long Thanh International Airport project on October 9 shows that little has been done over the last five years.

HCM City tightens licensing of condotels, resort villas
HCM City tightens licensing of condotels, resort villas
BUSINESSicon  14/10/2020 

Local authorities have been asked to carefully consider the granting of new licenses to projects with condotels, following many problems that have been discovered.

Vietnam invests $12 billion abroad, telcos earn biggest profits
Vietnam invests $12 billion abroad, telcos earn biggest profits
BUSINESSicon  14/10/2020 

The total outward investment capital registered so far has reached $12.2 billion. The national oil and gas group PetroVietnam, the mililtary telco Viettel, and the Vietnam Rubber Group (VRG) are the biggest outward investors.

Experts unhappy with cement exports, but industry says unavoidable
Experts unhappy with cement exports, but industry says unavoidable
BUSINESSicon  12/10/2020 

In the first eight months of the year, cement companies exported more than 23.5 million tonnes of cement and clinker, an increase of 13.7 per cent year-on-year.

Half of local businesses use IFRS
Half of local businesses use IFRS
BUSINESSicon  12/10/2020 

More than half of companies in Vietnam have been adopting international financial reporting standards to meet investors’ expectations and improve their corporate governance, a survey showed.

Party Resolution boosts marine economy and defence
Party Resolution boosts marine economy and defence
BUSINESSicon  12/10/2020 

The sustainable development of the marine economy in association with the consolidation of defence and security is among the important sections of a resolution from the Communist Party of Vietnam

Japanese enterprises want to expand supply chains in Vietnam
Japanese enterprises want to expand supply chains in Vietnam
BUSINESSicon  12/10/2020 

About 15 out of 30 Japanese firms with overseas production bases say they want to expand and diversify their supply sources in Vietnam, according to a survey by the Japan External Trade Organization (JETRO).

 
 
 
Leave your comment on an article

OR QUICK LOGIN