Electronics sector strives to attract FDI
(VOV) - Product restructuring imbalances and general underwhelming competitiveness means the electronics sector needs to unite if breakthroughs in attracting FDI are desired.
At the recent 18th World Electronics Forum, the Vietnam Electronics Enterprises’ Association (VEEA) said that since 2005, the electronics sector—one of the ten largest in terms of Vietnam’s exports—has posted annual export turnovers exceeding US$1 billion.
Over the past three years, export turnover has increased from US$3.4 billion in 2010, to US$6.98 billion in 2011, and to US$20.5 billion in 2012.
Computer and related component exports hit US$7.9 billion in turnover and mobile phones and components US$12.6 billion. Crude oil’s export turnover was surpassed for the first time.
Deputy Prime Minister Nguyen Thien Nhan said that although the electronics industry has recorded notable achievements, its assembly outsourcing foundations mean its products have little added value. Support industries have developed slowly and are yet to meet manufacturers’ requirements. Excluding foreign-invested enterprises boasting huge capital resources and advanced technologies, Vietnam’s electronics enterprises have limited financial capacities and technologies that struggle to compete in the global value chain.
Impressive export turnover and innovative products have allowed FDI enterprises to punch above their weight in Vietnam’s electronics industry. Although the number of FDI enterprises amounts to only one-third of electronics enterprises in Vietnam, they control up to 80 percent of the domestic market share and contribute more than 90 percent of the sector’s export turnover.
There is an imbalance in product restructuring between consumer electronics products and specialised electronics products. There is also an imbalance between product assembly and the production of spare parts, components, and materials.
The number of enterprises focusing on spare part, component, and material production is one fourth of the enterprises specialising in product assembly. Localisation rates stand at just 20–30 percent, thanks mostly to packaging, plastics, and mechanics.
The rate of investment for technology upgrades remains at a low 0.3–0.5 percent of total revenue compared to 5 percent in India and 10 percent in the Republic of Korea.
VEEA President Le Ngoc Son said Vietnam’s electronic sector boasts great potential to develop if it can overcome persistent shortcomings and seize the opportunities arising from international integration and globalisation.
According to Deputy Planning and Investment Minister Nguyen Van Hieu, the State has offered incentive policies to the hi-tech industry—especially in electronic and information technology commodity production—in order to encourage foreign investment in Vietnam.
Hieu cited Canon Group’s investment in what will become the world’s largest production printer complex, spanning across Hanoi, Bac Ninh, and Bac Giang. Nidec Group has also decided to invest US$1 billion in the south during the next five years.
Kyocera Agency will invest nearly US$400 million in building its own telecommunications and electronics equipment and manufacturing factory. Other Japanese companies are also investing heavily in Vietnam. Many spare parts and components manufacturers have identified the Vietnamese market’s advantages, fuelling the new Japanese investment wave. Vietnam has entered the world electronics industry’s spotlight.
Deputy Minister of Information and Communications Nguyen Minh Hong pledged the Ministry will make great efforts to perfect its development policy mechanisms and implement the Government initiatives designed to encourage local and foreign investors to support Vietnam’s booming electronics sector.