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Japan to help Vietnam SMEs develop supporting industries   2010-01-31 - Thanh Nien

Japan will help provide more technical and financial assistance to help Vietnam develop local small and medium businesses that play a key role in the development of supporting industries, a Japanese economist has said.


Hirohiko Sekiya, senior economist at the Japan Economic Research Institute or JERI, said the Japanese government has approved a grant of 17 billion yen (US$180 million) to finance SMEs in Vietnam over four years from 2009.

Through Vietnamese banks functioning as participating financial institutes, the SME sector has been able to access low-interest 10-year loans and use them to develop supporting industries.

Foreign investors have long complained that Vietnam lacks supporting industries, saying this made it difficult for them to boost their investments in the country.

Vietnam’s electronic, automobile, textile and garments, shoes and high tech industries have remained in their infancy as they had no strong supporting industries which are part of the modern production system that consists of multi-layered processes.

When Samsung Electronics decided to invest $670 million in a cell phone factory in Vietnam it called for investments from its 17 satellite enterprises as it found it difficult to have other suppliers in the country. Samsung shipped its first products last October.

Intel also said it would call for its suppliers to set up their factories in Ho Chi Minh City as satellite producers because the US-based semiconductor maker did not expect much from the country’s supporting industries.

Akito Tachibana, Vietnam Automobile Manufacturers’ Association chairman, blamed the under-development of the car industry in Vietnam on the dearth of quality component makers in the country and low demand in the domestic market.

According to industry experts, SMEs, not big businesses, were the proper vehicle to develop supporting industries in Vietnam.

However, Nguyen Van Tuat, director of the Southern SME Supporting Center under the Ministry of Planning and Investment, said few local SMEs were able to meet the tough requirements of assemblers or final producers.

He said many SMEs were family-run businesses using less advanced technology in production, so they were unable to meet the highly precise requirements asked for by clients.

“They should be helped to develop with support from the government and international organizations.”

Tuat said the ministry planned training courses for SMEs in mechanics and electronics as key disciplines to foster the growth of supporting industries.

Vietnam should also encourage participation by foreign investors in this sector, said Noriyuki Yonemura, chairman of the Japanese SME Consulting and Managing Association.

Yonemura, former head of JERI, said many foreign businesses had experience in supporting industries and would transfer them to the country they invested in, either directly or through cooperation with local partners.

But Vietnam has yet to have a clear policy and plan for supporting industries, he said at a seminar in Ho Chi Minh City last week.

“We have not seen any clear actions from Vietnam while our Japanese experts showed their interest in helping the country,” Yonemura said.

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