Need to change policy lever system

Production activity at Cai Thai company which has been taken part in the supply chain including many big manufacturers such as Sanyo, Maybelline… Picture: N.Hien.

That is one of the highlighted contents in the two new reports of the World Bank. Two reports are titled: Vietnam at the Crossroad: Participating in the next generation global value chains and Researching on improving the competitiveness and linkage of small and medium enterprises (SMEs).

Ms. Le Bich Loan, deputy head of the HCM City Hi-Tech Zone Management Board, said that foreign investors investing in Vietnam always want to take cheap labor and preferential policies of the Government. Normally, these enterprises have already met the supply chain standards before, so most of them will continue to use this available supply chain.

However, Mr. Jang Yoonho, director of partner support, Samsung Electronics Vietnam said that while working with Vietnamese enterprises, the biggest difficulty of Samsung is the technology, capital, and management capacity. Accordingly, Vietnamese enterprises should quickly overcome these limitations. Mr. Yoonho said, in the past, Samsung also had to learn a lot from the developed countries. He suggested that Vietnamese enterprises could link with foreign enterprises to learn their technology. "This learning cannot be overnight, but rather is a gradual process with patience," Mr. Yoonho said.

Meanwhile, Thong Nhat Rubber Company is one of the Vietnamese companies that have achieved success in becoming a supplier of rubber accessories to some foreign automakers. Sharing the experience gained, Mr. Nguyen Duc Hong, deputy general director of the company said that in order to become a supplier to foreign enterprises, enterprises should have quality certificates, each sector has its own the certificate of quality. Not every enterprise knows this. Therefore, the State needs to provide guidance and information to enterprises about what kind of certificates is and how to get it to enterprises.

Mr. Hong said that in the supply chain for foreign companies in Vietnam, geographic distance is the only advantage of Vietnamese enterprises compared to foreign suppliers. Because Vietnamese enterprises can produce and supply on their own land, while foreign suppliers have to move from elsewhere. Therefore, how to have the lowest cost, good quality, stable delivery time and punctual delivery time is what our enterprises need to do if they want to participate in the supply chain for foreign enterprises.

Support Policy towards fragmentation

Over the years, Vietnam has issued many policies and programs to support and enhance the competitiveness of enterprises. However, through a survey of 28 business support programs, the World Bank’s report showed that only eight of these programs took SME as the focus, and the policies were generic and not towards SMEs.

The participation of the private sector in these support programs is low and mainly focuses on credit support. Accordingly, Ms. Asya Akalaque, Acting Director of the East Asia-Pacific Department, Trade and Competition Division, WB, suggests that it is possible to exploit business associations to increase participation of the private sector in SME support programs. These associations may be the focal point between and SMEs in support programs as well as policy implementation; at the same time, be the focal point among enterprises to collaborate in business production and sharing resources.

The World Bank’s report also points out that many corporate support programs fall into out-of-date status as soon as they are issued due to the too long process of construction. Typically, the National Technology Innovation Programs up to 2020, the High Technology Development Program and the National Product Development Program take up to three years to get the approval. With the rapid changes of small and medium enterprises, long delays mean that these policies no longer reflect the changing needs of enterprises.

One of the weaknesses of Vietnam's supporting programs is the overlap between the programs of the ministries. For example, the Ministry of Planning and Investment has an innovative project, while the Ministry of Science and Technology has other innovative projects. In addition, there is the overlap in information-related programs, such as the Ministry of Industry and Commerce has Foreign Market Portal, the Ministry of Science and Technology has Techmart program, the Ministry of Planning and Investment has a business information portal, the E-Commerce and IT Department of the Ministry of Industry and Commerce have e-commerce portal. Although the objectives and target of these informational websites may be different, there are some similarities in information are provided.

Accessing about the report of the WB, Mr. Pham Duc Hieu, deputy head of the Central Institute for Economic Management, acknowledged that the current policy lever system of Vietnam has 2 weak points, they are too general, have not proper targets and the State agencies think fragmentedly, lack of linkage under the chain. Accordingly, Mr. Hieu thinks that Vietnam must build the whole policy lever system but not only “correct”.

Support policies have to change their thinking and support specifically. Currently, courses supporting innovation and training of the workforce are very general and unuseful. While the World Bank’s report indicates that human resources in Vietnam are lacking in two skills, including management and communication with partners. Therefore, the training programs must be very specific and meet the needs of workers. However, the State cannot do this training work for enterprises, but it can provide support policy to encourage enterprises to train.