Hanoi (VNS/VNA) - Vietnam's supportindustry is struggling to attract foreign investment as multinational companieslook for alternative options during the COVID-19 pandemic.

That was the message from the VietnamAssociation of Support Industry (VASI) who said most of their members aresmall-scale and they fall short when it comes to meeting demands ofcompanies looking to move to Vietnam.

Truong Thi Chi Binh, VASI vice chairwoman,said just a few domestic companies could meet the workload requirementsdemanded by multinational organisations.

And, as reported by the Nguoi lao dong (Labourer) newspaper,she feels the government should intervene and negotiate direct withinternational firms on behalf of the support industry.

She said there should also be detailed plansput in place offering incentives for medium-sized companies to expand productionmeeting demand of the foreign firms and build effective programmes to encouragestart-up companies in the support industry.

To solve current difficulties caused byCOVID-19, VASI proposed the government cut taxes and fees, and delay payment oftax and loan interest, Binh said, as it would encourage production and businessin the support industry.

In the long term, the State needs to have alegal system and policies in place to encourage development of the supportindustry and cut administrative procedures. It also should build and developdomestic corporations that produce finished products.

Meanwhile, Nguyen Dinh Cung, member of thePrime Minister's Economic Advisory Group, told zingnews.vn theGovernment could set up a special working group to negotiate directly withforeign groups to move investment to Vietnam after the pandemic.

The working group would help local andforeign companies know each other’s demands, he said, which would increasequality and efficiency of investment.

Cung also noted the State should simplifyadministrative procedures, including investment and business procedures, toattract high quality foreign investment.

According to the association, some localenterprises in the support industry have been able to continue production duringthe pandemic.

However, a half of VASI member companies inthe first quarter of this year reduced revenue by 50 percent compared to 2019,Binh said, adding that about 85 percent of them are expected to reduce by 70 percentin the second quarter.

Some companies producing plastic andmechanical components received more orders due to the difficulties insupply from China but as soon as China recovered production, these orders havegradually decreased, she said and the orders are expected to stop completely inthe next few months.

In the future, the global supply chain willstill take time to recovery, which may close the door to exports markets andforce businesses to close./.