Hanoi (VNA) – Very few domestic firms in supportindustries supply parts for FDI enterprises in the electronics industry,according to Nguyen Mai, President of the Vietnam Association of ForeignInvested Enterprises (VAFIE).

Though FDI in Vietnam has almost reached 190 billion USDto date, accounting for more than one fourth of the country’s total investment,its spillover effects on local companies have yet to expand as expected.

“FDI firms themselves want Vietnamese small- andmedium-sized enterprises (SMEs) to be their local suppliers in order to helpthem reduce cost and improve competitiveness. But many problems have remainedto hamper the effective connectivity among them,” Mai said.

Electronics has become one of the economy’s key sectors,making Vietnam among the world’s 12 leading electronic workshops and the thirdlargest one in ASEAN, said President of the Vietnam Chamber of Commerce andIndustry (VCCI) Vu Tien Loc.

The electronics led all industries in export turnover in2017, earning the country more than 70 billion USD, 2.5 times higher than thetextile-garment industry and nearly 5 times higher than the footwear, Locnoted.

The number of electronic firms in Vietnam doubled overthe past five years. The workforce in the sector also tripled, from nearly239,000 workers in 2011 to 611,500 at the end of last year, he cited, addingthat the electronics has maintained a big magnet for FDI into Vietnam.

Despite such success, the VCCI chairman voiced concernover the fact that there is only one Vietnamese company among every 100 largefirms in the electronics industry. Some 99 others are FDI enterprises, he said.These 99 firms contributed to 95 percent of the sector’s export turnover and 70percent of sale revenue of electronic products in the local market.

“Most of FDI firms in the electronics sector are justassembling workshops in Vietnam,” Loc explained, stressing the need to improveconnectivity between the domestic and FDI firms.

The Ministry of Industry and Trade’s Industrial Policyand Strategy Institute (IPSI) conducted a survey last year, interviewing 194domestic manufacturers of mental, electrical, electronic, plastic and rubberyparts. The findings show that there were very few of them supplying parts forFDI producers in the fields of manufacturing, automobile, electronics,industrial machine and others.

To solve this problem, the Vietnam Electronic IndustriesAssociation (VEIA) has been coordinating with the VCCI and the Government ofJapan to carry out several projects to increase the number and the quality ofemployment in the electronics sector and foster cooperation between FDI firmsand local SMEs. These projects have benefited 127 companies through a series oftraining events and policy dialogues.

It could be the start of an era with improvedconnectivity between domestic and FDI firms towards the formation of a betterelectronic supply chain in Vietnam.-VNA