VietNamNet Bridge – Vietnam has missed the opportunities to develop the basic electronics industry. Now it has to create the industry from the very beginning, but with a completely new approach.

No firm foundation, no future

Vietnam welcomed a series of foreign electronics manufacturers in 1995-1998, which it believed would help the electronics industry.

The four big Japanese brands set their foot in Vietnam at that time were Sony, Panasonic, JVC and Toshiba, which then joined forces with Vietnamese partners to set up electronics joint ventures.

Vietnam thought that it would be able to learn experience and receive the technology to be transferred by the big manufacturers, which would help it grow up and become independent.

However, the dream has been dashed. The profits have been pocketed by the foreign partners in the joint ventures, while Vietnamese fledgling enterprises got weaker, and the expected electronics industry has not taken shape yet.

Not many electronics manufacturers plan to make investments in Vietnam now. Only Intel decided to funnel one billion dollars into its factory in HCM City, and Samsung has set up its production base in the north. Meanwhile, other big investors just arrived in Vietnam to explore the market.

Analysts believe that there’s not much hope about a new investment wave in the electronics industry. By 2015, Vietnam would have to remove the tariff barriers under the frame of AFTA – the ASEAN free trade agreement.

It is very likely that foreign manufacturers would leave Vietnam for other regional countries where there are developed supporting industries, to set up their factories. If so, Vietnam would turn into the consumption market for their products, not their production bases.

Joining global supply chain – the best choice for Vietnam

According to Le Van Chinh, technical advisor to Son Ca Media Company, in the current conditions, an electronics factory would only be able to make profits if its products account for 10-20 percent of the total global consumption.

Chinh thinks that Vietnam has missed the opportunity to become a link in the global supply chain. However, there’s still room for Vietnam in the fields of designing or supplying parts or accessories associated with electronic products.

Sharing the same view, Nguyen Van Dao, Deputy General Director of Samsung Vina, also said it’s too late for Vietnam to pursue the plan to develop the basic electronics industry. Without the support of the State, investors find it very risky to invest in the supporting industries. And now Vietnam needs to take the first steps to rebuild the electronics industry.

Ho Le Nghia, Deputy Head of the Industrial Policy and Strategy Research Institute, an arm of the Ministry of Industry and Trade, said that in developing the electronics industry, it’s necessary to encourage the modes of cooperation between domestic enterprises and big groups in production and business.

The government needs to set up the agencies in charge of creating, assessing investment opportunities and giving advices to foreign partners and domestic enterprises. It also needs to create most favorable conditions for the electronics industry develop by offering the incentives which do not violate WTO commitments.

Nghia has suggested building some industrial zones specially designed for electronics enterprises, where specific investment incentives are offered.

Meanwhile, many experts believe that Vietnam should not try to develop the electronics industry no matter what. It would be better to take a shortcut to develop which fits Vietnamese conditions and capability.

Developing information technology is a good choice. This is the field where the players compete with each other with their intelligence, while big investment rates are not required. If following that way, Vietnam would be able to develop and catch up with the world.

Tran Thuy - Phuoc Ha