Dr. Huynh Thanh Dien, Lecturer at Nguyen Tat Thanh University: Strengthening connectivity to develop supporting industries

Vietnam is witnessing rapid growth in its manufacturing industries, attracting an increasing number of foreign investors, creating significant opportunities for domestic enterprises engaged in supporting industries to develop.

Dr. Huynh Thanh Dien, lecturer at Nguyen Tat Thanh University (Ho Chi Minh City).

According to Dr. Huynh Thanh Dien, lecturer at Nguyen Tat Thanh University in Ho Chi Minh City, and an expert in corporate governance, restructuring, and policy consultancy, the Southeast region, including Dong Nai, is a major industrial hub. To achieve self-reliance and deeper integration, production sectors must undergo restructuring while enhancing connectivity to strengthen the competitiveness of supporting industries.

Supporting industries hold significant potential for linkage

Q: From a general perspective, how would you assess the current state of Vietnam’s supporting industries?

A: Over the past decade, Vietnam has begun to record a trade surplus, leading to the import of raw materials for production, which itself affirms that the country’s industrial sector is developing."

Vietnam is fully capable of building strong, internationally recognised conglomerates. However, it requires a clear orientation on specific industries; we can no longer focus on low-value-added industries as we did in the past; instead, we must target high-value-added sectors with strong export potential.

Dr. Huynh Thanh Dien

Vietnam’s export industries include computers, components, mobile phones, textiles, and leather footwear. The higher the export figures, the greater the volume of corresponding imports. For example, in the electronics industry, exports and imports are nearly equal. Only in textiles, footwear, and wood products are imports lower than exports. Most components and accessories used in production are currently imported. This means that while these industries attract foreign investment, in reality, foreign firms also import materials into Vietnam for manufacturing and export. Objectively, Vietnam's exports and imports remain heavily dependent on foreign-invested enterprises. They chose Vietnam due to its infrastructure, relatively low labor costs, preferential policies, and the country’s deep integration into the global economy, which enables products made in Vietnam to be exported worldwide.

In reality, some large foreign-invested corporations fail to establish deep-rooted operations due to the absence of supporting industries. This remains a challenge at the national, regional, and local levels in industrial development. However, for Vietnamese enterprises venturing into supporting industries, this actually presents a substantial opportunity.

Q: Could you elaborate on these opportunities, sir?

A: For any producer, the primary concern is customer base. As more large partners and corporations invest and manufacture in Vietnam, they naturally become potential clients for our domestic enterprises to tap into. Foreign corporations come to Vietnam to manufacture, but still have to import components and raw materials. Therefore, if domestic enterprises are able to produce these inputs, it would be highly beneficial and open up greater opportunities for cooperation.

Q: Vietnam is striving to develop “leading enterprises” capable of driving key industries and integrating internationally. What is your perspective on this?

A: In fact, Vietnam has seen the emergence of conglomerates of considerable stature, such as Vinamilk, Thaco, and VinFast. There is tremendous potential to continue developing more such corporations in sectors where the country has strengths.

The key issue lies in establishing effective mechanisms to realise that potential. Many private companies remain publicly unlisted and relatively unknown. Facilitating their access to capital markets will allow them to scale up and contribute more significantly to the economy.

Once such conglomerates grow strong, they will generate a powerful ripple effect throughout the economy. In each sector, many startup initiatives will be nurtured and realized with the support of these corporations. Instead of leaving the startups to "swim on their own," experienced and capable corporations can help them develop strategies and mobilize capital effectively. This is also a way to build a self-sufficient and effective ecosystem of supporting industries and services.

Planning industrial production for effective regional linkage

Q: Turning to regional connectivity in development in general, particularly in supporting industries in the Southeast, what is your assessment?

A: Following recent mergers, the Southeast now consists of three provinces and cities, including Ho Chi Minh City, Dong Nai, and Tay Ninh. This structure makes inter-provincial linkages more feasible. Supporting industries should not be confined to individual cities but must be viewed across the entire Southeast region, the whole country, and even internationally.

Supporting industry enterprises from Ho Chi Minh City and Dong Nai learn about each other's products

The region’s long industrial history has also posed certain challenges. Many investment projects have been operating for over 20 years, making them outdated in the context of new development trends. Although the project owners inject additional capital, these investments are mostly for replacements or upgrades based on outdated production lines and traditional business processes, making them difficult to achieve breakthrough growth. These issues need to be changed, reorganised, and adjusted to ensure proper planning, fully tapping into the potential of each locality, and strengthening connections within a unified whole.

Q: What is most urgently needed at this point, sir?

A: Previously, Binh Duong and Dong Nai were known for industrial strengths, Ho Chi Minh City had a vast consumer market, financial resources, and advanced technology, Ba Ria – Vung Tau benefited from its seaports, while Tay Ninh, Long An, and Binh Phuoc developed light and processing industries. Today, following the mergers, it is necessary to develop a comprehensive industrial plan linking the strengths of the region. Ho Chi Minh City should serve as the centre for high technology and research, while Dong Nai, Tay Ninh, and the industrial centres of the former Binh Duong focus on manufacturing. Together, they can form an ecosystem that spans research, production, and export. The distribution of industries must be recalculated to ensure rational solutions based on each locality’s comparative advantages within the broader context of a common linkage.

Q: In your opinion, which aspects should Dong Nai prioritise following the merger?

A: With the merger of the former Dong Nai and Binh Phuoc provinces, the new Dong Nai enters a stage of development on a larger scale with a long-term vision. The province must proactively seize this opportunity to comprehensively rebuild its investment ecosystem – from reviewing and adjusting industrial zoning, streamlining licensing procedures, and completing the legal framework, to redesigning targeted incentive policies.

By doing so, the new Dong Nai will have the opportunity to establish a strategic industrial growth pole, effectively linking with the Southeast to the south and the Central Highlands to the north.

Q: Thank you very much for your insights!

By: Vuong The
Translated by: My Le - Thu Ha