VietNamNet Bridge - Businesses have asked the Ministry of Science and Technology (MST) and relevant agencies to count on ‘brain content’ when calculating the localization ratio in electronic products.

The localization ratio is understood as the proportion of locally made components in one product. The government of Vietnam encourages enterprises to increase the localization ratios in products, especially IT ones, to help develop Vietnamese technologies and create more jobs. 

However, analysts commented that the current policies do not encourage businesses to make investment in research and development (R&D) to increase the localization ratio. 

As the taxes on component imports are even higher than the taxes on CBU imports (complete built unit), businesses would rather import CBU products for domestic sale rather than import separated components for domestic assembling.

Vietnam’s electronics industry is described as the ‘screwdriver industry’, in which Vietnamese enterprises import components and accessories from China and then ‘screw’ the components in Vietnam to create finished products.

In general, the localization ratio in electronics is very low: only simple accessories and packages can be made in Vietnam.

Therefore, scientists have applauded the plans by some Vietnamese enterprises to design and manufacturer DVB-T2 set top boxes, a device needed for digital TV, to provide to people under the national TV digitalization program. 

They said that the government needs to create most favorable conditions for the pioneering enterprises to implement their plan, because this will help develop the nation’s electronics industry.

However, a question has been raised about the percentage of locally made content there would be in the set top boxes to be produced by the enterprises.

Under current regulations, the localization value is calculated based on the value of the hardware components used in one product.

VNPT Technology now assembles DVB T2 in Hanoi from the components imported mostly from Japan, South Korea, Taiwan and China, while chips and rams from the US.

A senior executive of VNPT Technology said that the localization ratio of the company’s products could be 50 percent or even higher if counting the ‘software’, or the ‘brain content’ of the products.

“The ‘Vietnamese value’ in the products not only includes the value of the made-in-Vietnam hardware components in them, but also the Vietnamese intelligence used to design the hardware, software and applications,” he said.

Nguyen Manh Tien, sales director of ST Microelectronics in Asia Pacific, agreed that the brain content in products is much more valuable than the value of hardware components.

Tien said that any products, whether or not they are made in Vietnam or any other countries, must be considered as ‘Vietnamese products’ if they are designed by Vietnamese and their copyright belongs to Vietnamese.

Buu Dien