VietNamNet Bridge - Vietnam is considered a special case in the process of industrialization because it still lacks a cutting-edge industry after decades of development.

The report of the Central Economic Committee at the recent workshop "Vietnam’s Industrial Development Policy by 2035: the situation and direction" acknowledged that the world economic crisis and globalization have revealed the slow development of Vietnam, especially its industry.

Vietnam is falling into the middle income trap. Therefore, Vietnam needs to clarify the objective and subjective causes to supplement and perfect its industrial development policy.

According to the review of Vietnam’s development in the past 30 years (1986-2016), experts found many problems, caused by incompetent policies, scattered and decentralized resources. More frankly, industrial policies were not made based on the facts.

Prime Minister Nguyen Tan Dung has approved the Vietnam industrial development to 2025, with a vision to 2035. Priorities will be given to some selected industries, including processing and manufacturing industry, electronics and telecommunications industries, new energy and renewable energy.

The resulting development of the selected industries is very modest. The manufacturing and electronics industries are mainly led by foreign-invested enterprises. These firms only assemble products, using cheap labor and preferences on land rent, taxation and infrastructure.

The Central Economic Committee said that to be able to identify the key industries of Vietnam, it needs to rely on the analysis of the status and potential of the national economy in the context of competitiveness in the region and around the world.

According to the Committee, on the basis of opinions from scientists, businesses, developing the application of biotechnology in agricultural, fisheries, farming and processing along with the construction of concentrated material areas should be one of the directions of priority.

This is the area where the investment period is not too long and capital is not too large while profit can be earned in the medium term, or even the short-term. This area is also suited to the natural and social potential and advantages of Vietnam.

Textiles and footwear are also industries with competitive advantages in terms of labor, geographical location and the available infrastructure. These are important factors to develop the supporting industry in the fields of textiles and footwear, to create groundbreaking developments in this field.

Currently, the electronic and information manufacturing and assembly industry has reached the high cumulative level as it has attracted a large number of assemblers and manufacturers from Japan, Korea and the US.

There is a great opportunity for Vietnam to develop this industry. The remaining issue is whether Vietnam can create a favorable environment to encourage these businesses to continue investing in depth, to perform more of the stages in the value chain in the territory of Vietnam. At the same time, Vietnam needs to support domestic businesses to raise capacity to learn and become a partner and supplier of foreign investors.

Manpower still a big problem

The Central Economic Committee recognized that infrastructure development and human resource training are the bottlenecks in industrial development.

The committee’s report cited surveys by the Japan Bank for International Cooperation, JBIC, in recent years as saying that the fundamental weaknesses of the business environment in Vietnam are the underdeveloped infrastructure, the lack of management labor, engineers, technicians, trained workers and the absence of the supporting industry. These disadvantages are deeper than the direct competitors like Thailand and China.

"To be able to carry out the transformation of ordinary human resources into high quality human resources requires time as well as the consistency of policies. Taking advantage of the support of strategic partners in the development of industries such as South Korea and Japan in the development of human resources and infrastructure is an approach that should be made in a more profound way," the report said.

According to the committee, many Japanese experts and scholars said that Vietnam is the only country in Asia that can absorb and promote the spirit of Monozukuri production of Japan and become the leading partner of Japan in production technology transfer.

Thus, Vietnam should take advantage of Japan’s policy of building Asian industrial foundation to enhance its technological capacity. Vietnam can use retired Japanese engineers.

In addition, Vietnam needs to promote labor exports, not only manual workers but also talented young engineers to Japan and Korea, who can learn experience and then return home to contribute to the country’s development, the committee said.

Dan Tri