The Hanoi People’s Committee has issued a blueprint that foresees some 1,000 support industry companies operating in the capital by 2025 with 40 percent capable of joining the global manufacturing network and supply chain.
Processing, manufacturing up four percent
According to Hanoi Department of Industry and Trade Deputy Director Dam Tien Thang, support industries contribute to industrial production efficiency as well as product quality and price. In the era of globalization, support industries create competitive products and form a multi-layer supply chain and manufacturing network composed of multinational groups and Vietnamese companies with foreign direct investment (FDI), as well as manufacturers and assemblers in Hanoi and other localities nationwide.
Therefore, developing support industries will spur the growth of Hanoi’s industries such as electricity, electronics, automobile and motorcycle assembly, manufacturing engineering and high-tech industries. In the first nine months of 2020, despite the heavy impact of the Covid-19 pandemic, Hanoi’s manufacturing and processing sectors grew four percent. Support industries for sectors such as automobile, motorcycle, electricity and electronics had a significant contribution to this growth.
Hanoi’s support industry sector is focused on manufacturing components and spare parts for electricity, electronics, automotive, textile, garment, leather, footwear sectors, and high-tech industries. However, the number of domestic support industry companies remains limited and Hanoi still has to import most types of major components and spare parts for industrial production. The capital’s support industry companies are limited in terms of products, technology level and management skills. Moreover, higher land rent, labor cost and service charges compared with those of neighboring cities and provinces restrict Hanoi’s investment attraction.
Seeking investment waves
Under its support industry development program, Hanoi will carry out 13 activities to connect support industry companies with domestic and foreign customers, helping them attract foreign investment; assist support industry companies in improving management skills to meet the requirements of global manufacturing chains, as well as in human resource training and technological innovation. The program will be implemented with funds from the capital’s budget, contributions of companies and other sources, targeting a 12 percent increase in production value of support industries in 2020.
The Hanoi Department of Industry and Trade is also providing businesses with guidance and support enabling them to benefit from technology transfers. Eligibility for this support is based on seven criteria including labor productivity, product quality, production efficiency and trade results. Priority is given to investment projects in manufacturing prioritized support industry products and key industrial products of the capital. The department has also provided consultancy for the Hanoi People’s Committee on the support industry development program for the 2020-2025 period, focusing on fields in which the capital has advantages.
In the next five years, Hanoi will form a support industry network with participation of businesses nationwide, while at the same time promoting supply chain linkages in the Hanoi capital region, especially in automobile and motorcycle manufacturing, manufacturing engineering, and mobile phones. Hanoi will intensify efforts to draw investment in the South Hanoi Supporting Industrial Park as well as other industrial and high-tech zones in the capital. Construction of technical infrastructure for the Hanoi Information Technology Park and clean industrial zones in Soc Son and Dong Anh districts will be accelerated.
Hanoi expects to have about 1,000 support industry companies by 2025 with 40 percent capable of joining the global manufacturing network. These industries are expected to create about 18 percent of the production value of the capital’s manufacturing and processing industries.