Do the Vietnamese still have a chance?

If you want to get over the rapids, you must first get off the boat. Will the next decade reach the goal of industrialization without success?

Liệu người Việt Nam còn có cơ hội?

If local enterprises are not strong enough, we will be still dependent, from the economy to defense. Photo: Le Anh Dung

Do Vietnamese people still have opportunities to develop their industries, especially the manufacturing industry, the foundation for all industries, after signing many free trade agreements (FTAs), widely opening its doors, and with the foreign-invested sector’s segment in the economy increasing?

There is no chance of adequate growth

Foreign investment has contributed to extensive reform, improving policy and behaviors in line with international standards and helping to improve the lives of Vietnamese people.

But it is important to point out concerns related to the door-opening and the domination of the FDI sector in the national economy to see that Vietnamese people and Vietnamese enterprises have not developed or have not had opportunities to develop commensurate with that process.

There are exceptions, for example, the motorcycle industry. Twenty years ago, the Japanese came to Vietnam to form motorcycle joint ventures, which actually import components and machines for assembly. Then, thanks to protectionist policies and tthe large market, they built domestic supply chains so that today, most parts of the motorcycle are manufactured in Vietnam.

But except for the motorbike industry, what industries have developed domestic supporting industries? The localization rate of 9-seat cars in the automotive industry - the industry that receives the most attention, and has the best protection policy - is far from expectations, while the target is 30-40% by 2020.

In 2019, the mechanical engineering industry only met 32.5% of domestic demand, much lower than the target of 45-50%. In the agricultural, forestry and aquatic processing industry, Vietnamese mainly exports raw or preliminary processed products. The shipbuilding industry faces many difficulties. The steel industry has low competitiveness and performs ineffectively.

Meanwhile, FDI is expanding. In 2019, of 19 industries having foreign investment, the processing and manufacturing sector received the highest amount of capital with $24.56 billion, accounting for 64.6% of total registered capital.

The processing and manufacturing industry accounted for a large proportion of the registered FDI capital in terms of both newly-invested projects to expanded ones. In this sector, investment by state-owned enterprises has been shrinking, giving way to FDI.

The FDI sector currently accounts for 50% of industrial production value, 70% of export value and 20% of GDP. This sector grew 9.4% a year, much higher than 6.6% of the private sector and 4.4% of state-owned enterprises in the past decade.

The household-based economy

The domestic private sector accounts for only 9-19% of GDP, the household economy 33% of GDP, the state-owned sector over 32% of GDP. This data shows that Vietnam’s economy is still mainly based on households, still very small and weak.

Vietnamese businesses are less interested in investing in the industrial sector. FDI enterprises’ contribution to industrial production is on the rise, while that of the state-owned sector is decreasing.

 

The efficiency of the majority of state-owned industrial enterprises is low, and many national investment programs and large-scale industrial projects suffer losses. The majority of domestic private industrial enterprises are small and medium enterprises with limited capacity.

If local enterprises are not strong enough, we will be still dependent, from the economy to defense.

Let’s have a look at the market to see what industrial products are made by Vietnamese? What are the Vietnamese-branded industrial products that are exported and can compete in the world market?

Let’s see how many Vietnamese businesses in many fields have been acquired through merger and acquisition (M&A) deals in recent years.

It is the law of the market when it has integrated and opened that the import of components and raw materials at cheaper prices is natural, and it is natural for business owners to sell their businesses to foreigners when they make profits.

But why do Vietnamese people not rise above the value chain? Why can't Vietnamese enterprises have M&As in foreign markets?

Businesses must be cherished to develop

Resolution 23-NQ/TW dated March 22, 2018 of the Politburo stated: “The development of our country's industry over the past years has not yet met the requirements of national industrialization and modernization, mainly developing under short-term goals, and lack of sustainability; internal strength of the local industry remains weak, heavily dependent on foreign invested enterprises; technology level is outdated, and slowly renovated; product quality and labor productivity in the industrial sector are still low, industrial development has not closely linked with other economic sectors; focus is too much on cheap labor, not making good use of the advantages in the period of the golden population structure...”.

This resolution shows that we must cherish each business to help them develop.

Prime Minister Nguyen Xuan Phuc said at the recent National Assembly session: “The biggest challenge right now is not escaping the middle-income trap andthe biggest risk is not lagging behind in terms of economic development; our biggest challenge is the lack of will to rise and the biggest danger is the lack of determination to take action."

If you want to get over the rapids, you must first get off the boat. Will the next decade achieve the goal of industrialization without success?

Tu Giang

Unfinished dream to become a 'dragon'

Unfinished dream to become a 'dragon'

Vietnam’s industries, especially the processing and manufacturing industry, are developing. 

Outsourcing no more

Outsourcing no more

When we only dominate the processes of assembly, we are lost at the most important stages of the value chain, from invention to design to distribution...

 
 

Other News

.
Passing the Coast Guard Law, China ‘probes’ the new US administration
Passing the Coast Guard Law, China ‘probes’ the new US administration
MARITIME SOVEREIGNTYicon  05/02/2021 

China’s Coast Guard Law took effect only two days after Mr. Biden took office as US President.

2021 Tet: clay-made dishes, giant Mexican yams
2021 Tet: clay-made dishes, giant Mexican yams
FEATUREicon  04/02/2021 

The dishes on Vietnamese people’s offering trays for Tet days made of clay have attracted buyers. Many original products have been created to celebrate the nation’s traditional Tet.

The Party General Secretary with wit, simple lifestyle
The Party General Secretary with wit, simple lifestyle
FEATUREicon  04/02/2021 

The top leader of the Party and State of Vietnam is indeed an outstanding politician in terms of qualifications, solid political courage, and high prestige, who has a very simple lifestyle.

Party Secretary General, State President Nguyen Phu Trong and determination to clean and purify the apparatus
Party Secretary General, State President Nguyen Phu Trong and determination to clean and purify the apparatus
FEATUREicon  03/02/2021 

The disciplining of a series of high-ranking officials, including incumbent and retired ones, shows that the fight against corruption and wrongdoings in the last five years has been accelerated 

Making cars and smartphones, Vietnam moves to top ASEAN countries
Making cars and smartphones, Vietnam moves to top ASEAN countries
FEATUREicon  03/02/2021 

Vietnam’s industry has seen the fastest upward movement in ranking in global competitiveness among Southeast Asian countries, coming closer to the top 4 ASEAN countries.

Flower markets see peak activity on pre-Tet days
Flower markets see peak activity on pre-Tet days
FEATUREicon  02/02/2021 

Flowers and ornamental trees sourced from China are overwhelming Vietnamese flowers at traditional and online markets. Japanese orchids are selling like hotcakes despite high prices.

Ministry of Construction to reduce housing prices, paving way for VND20 million/m2 apartments
Ministry of Construction to reduce housing prices, paving way for VND20 million/m2 apartments
FEATUREicon  04/02/2021 

The Ministry of Construction (MOC) has joined forces with a number of ministries and branches to draft a government resolution on solutions to encourage the development of low-cost commercial housing projects.

Billionaires win big on pre-Tet days
Billionaires win big on pre-Tet days
FEATUREicon  03/02/2021 

The enterprises of billionaires Pham Nhat Vuong, Ho Hung Anh, Nguyen Dang Quang and Nguyen Thi Phuong Thao have reported good business results for 2020.

General Secretary Nguyen Phu Trong: "What I do not polish myself"
General Secretary Nguyen Phu Trong: "What I do not polish myself"
FEATUREicon  01/02/2021 

Mr. Nguyen Phu Trong has been re-elected as the General Secretary of the Party Central Committee for the 2021-2026 term. 

MIC outlines plan on preparing human resources for national digital transformation
MIC outlines plan on preparing human resources for national digital transformation
FEATUREicon  30/01/2021 

The Ministry of Information and Communications (MIC) is building a plan to develop digital human resources for national digital transformation.

Govt seeks 7.5-8% annual growth in next 25 years via digital transformation push
Govt seeks 7.5-8% annual growth in next 25 years via digital transformation push
FEATUREicon  02/02/2021 

To become a powerful and prosperous country by 2045, Vietnam needs to obtain a GDP growth rate of 7.5-8 percent per annum for the next 25 years. Only digital transformation can helps make this a reality.

Digital transformation opens up new development space
Digital transformation opens up new development space
FEATUREicon  29/01/2021 

"Like exploring new lands, the expanded cyberspace will open up a new development space for the country,” Minister of Information and Communications Nguyen Manh Hung said at the 13th National Party Congress on Thursday morning (January 28).

Vietnamese-made games now played around the world
Vietnamese-made games now played around the world
FEATUREicon  31/01/2021 

To create a level playing field and help Vietnamese develop games reach the world market, it is necessary to have more reasonable policies, experts say.

Vietnam takes advantage of opportunities in digital economy
Vietnam takes advantage of opportunities in digital economy
FEATUREicon  04/02/2021 

The government, businesses and the public are enjoying many benefits from digital transformation activities.

Education Minister outlines 9 achievements, 5 problems in educational sector
Education Minister outlines 9 achievements, 5 problems in educational sector
FEATUREicon  28/01/2021 

After seven years of implementing Resolution 29 on reforming the education and training sector, Vietnam has gained several outstanding achievements.

Vietnam stands at turning point to recover and make a breakthrough
Vietnam stands at turning point to recover and make a breakthrough
FEATUREicon  29/01/2021 

The 13th National Party Congress is taking place in the context of unpredictable changes in the world, as the Covid-19 pandemic is dividing many countries, the global economy is experiencing negative growth and ongoing trade and economic conflicts.

13th National Party Congress: Hanoi, HCM City aim for digital government
13th National Party Congress: Hanoi, HCM City aim for digital government
FEATUREicon  28/01/2021 

Hanoi and Ho Chi Minh City both plan to develop synchronous, inter-connected digital, IT, and data infrastructure, creating a foundation for digital economic and social development.

Digital transformation: smart homes invented by Vietnamese
Digital transformation: smart homes invented by Vietnamese
FEATUREicon  02/02/2021 

The digital transformation process is being carried out throughout Vietnam, from large enterprises to small shops.

UNESCO expert: Vietnam education reform on right path, recommends better allocation of funds
UNESCO expert: Vietnam education reform on right path, recommends better allocation of funds
FEATUREicon  28/01/2021 

Dominique Altner, Senior Program Specialist at IIEP (International Institute for Educational Planning), spoke to VietnamNet about the development of Vietnam’s education system in the last five years.

Local specialties reach global market on e-commerce sites
Local specialties reach global market on e-commerce sites
FEATUREicon  02/02/2021 

Displaying local specialties on e-commerce platforms has proven to be the quickest way to increase the value of Vietnam’s farm produce and introduce it to international customers.

 
 
 
Leave your comment on an article

OR QUICK LOGIN