The underperformance was mentioned by Hirotaka Yasuzumi, managing director of the JETRO office in HCMC at an event held  on June 15 for the office, the HCMC Investment and Trade Promotion Center (ITPC) and Thailand-based Reed Tradex to sign an agreement to organize an exhibition on supporting industries later this year.

 

Yasuzumi said the Government decree on supporting industries issued last year has not borne fruit. As enterprises active in the industries are small and medium and lack capital, they are unable to invest in modern technology and machinery. They have found it extremely difficult to gain access to bank loans.

 

Competent agencies have not worked hard enough, so incentives specified in the prevailing laws have not reached enterprises in supporting industries, according to Yasuzumi.

 

Local firms have not got sufficient backing amid the country’s stronger international integration. Many of them will have to leave the market if they are not supported right now.

 

Yasuzumi said small and medium enterprises (SMEs) in Japan can get loans with an interest rate of below 1% per year. In many cases, borrowers can take out unsecured loans.

 

A JETRO survey showed in the past two years, the ratio of domestically-made parts supplied for Japanese firms in this market has improved compared to four years ago. However, the improvement has been mainly contributed by foreign-invested firms while local enterprises are responsible for 17% in the south and 9% in the north.

 

Meanwhile, the respective ratios of Chinese, Thai and Indonesian firms are 37%, 24% and 20%.

 

Another JETRO survey conducted in 2015 indicated that labor cost accounted for 19% of production costs of Japanese companies in Vietnam, while materials made up 58%. Yasuzumi said if local SMEs can supply more parts, they would help manufacturers reduce costs significantly.

 

The exhibition on supporting industries and an international machine tools and metalworking technology exhibition known as Metalex Vietnam will take place at the Saigon Exhibition and Convention Center in HCMC’s District 7 from October 6 to 8.