Vietnam’s supporting industries have undergone substantial change and play an important role in global value chains. Notably, these industries hold promising potential, as a majority of businesses operate within the initial stages of the value chain. We offer a comprehensive view of these supporting sectors, spotlighting key industries like electronics and automobiles, which are prioritized by the Vietnam government.
Vietnam’s supporting industries have significant potential given the rising manufacturing sector and economic growth.
Vietnam’s localization rate at 36 percent is lower than China and India with low rates of procuring local components. Currently, only about 500 firms in Vietnam are engaged in the supporting industry production, accounting for about 0.2 percent of approximately 1 million enterprises. These are concerning figures when compared to other Southeast Asian countries.
In the current context, multinational firms can diversify and source inputs from several locations to reduce reliance from a single specific area and further help to lower costs.
Supporting industries in Vietnam have attracted a substantial percentage of FDI coming into industrial parks (IPs) in the Southern provinces and cities.
In 2021, local IPs attracted US$1.1 billion in capital and investment projects in the supporting industry and other manufacturing enterprises, with over 80 percent of capital and investment projects.
With several free trade agreements (FTAs), Vietnam has established a favorable trade environment for an influx of investment as investors seek preferential tariffs to reduce costs.
By 2030, supporting industry products are expected to meet 70 percent of demand and are expected to account for about 14 percent of industrial production value.
Some 2,000 companies are expected to be capable of supplying directly to assemblers and multinational corporations by 2030. To develop the supporting industry, Vietnam approved Resolution 115/NQ-CP to promote the development of supporting industries for the period 2020-2030. The development of the supporting industries focuses on the following fields:
