Symbiotic environment - a need to promote win-win formula

Vietnamese firms would have no chance to join their foreign peers’ supply chains once the latter shift their entire value networks to Vietnam, as such, government policies are needed to encourage more local firms to strengthen the linkage between those two sides.

Production at Toho Vietnam in Thach That industrial park, Hanoi. Photo: Thanh Hai

Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc made the statement in a recent conference discussing new opportunities for the business community in a new context.

“A symbiotic environment in this case is necessary to facilitate such cooperation,” stressed Loc, saying this is increasingly important at a time when there has been a growing trend of production chains from multinationals moving into Vietnam.

Loc also pointed out the fact that more than 30 years since Vietnam opening its economy to the world, foreign capital is still concentrated on labor-intensive industries requiring basic skills, including footwear or garment.

“As 67% of machinery and input materials are imported, added-value created from these industries remains modest, while there have been limited spillover effects from high level corporate governance and modern technologies in the FDI sector to the domestic enterprises,” Loc stated.

“If provinces/cities are still focusing on attracting billion-dollar projects and ignore the growth quality, there would be a lack of incentive for Vietnamese and FDI firms to cooperate for mutual benefits,” Loc continued.

While the Covid-19 pandemic is wreaking havoc on global economy, Loc said foreign investors are holding high hope for Vietnam’s investment and business environment.

“Vietnam is fast becoming a top choice for firms looking to diversify  their investment destinations, thanks to the country’s effective containment of the pandemic, political stability and effective anti-corruption measures,” he added.

The VCCI Chairman urged government agencies to push for greater reform in administrative procedures, including a simplification in protocols for business registration, customs process, taxes and social insurance, along with improvements in infrastructure system for greater economic competitiveness.