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A mid-year industry report by the Vietnam Economic News (VEN) indicated that the country needs to have more locally produced content in the production of electronic products. Until 1994, the range of Vietnamese electronic products was extremely limited, a few audio and video products, and they were assembled from imported parts, VEN said.

Viettronics, Hanel and Tien Dat were in the old days the 'big names' in Vietnamese electronics. They made loudspeakers, magnets, capacitors and a few other things, the parts all imported.

After 1994, foreign companies started coming to Vietnam and some set-up plants in which electronic products were assembled and sold in the domestic market. Parts and components continued to be imported. Almost no one made any kind of electronic components inside the country - these businesses could be counted on one's fingers. Those few businesses that did were special indeed. Two were Orion-Hanel (TV picture tubes) and Viettronics (circuit boards). Foreign companies like Fujitsu, Did Electronics Vietnam Co. Ltd, Nidec Copal Vietnam Co. Ltd (Japan), Digisensor Co. Ltd (Switzerland) and FAB-9 Vietnam Co. Ltd (USA) produced electronic components in Vietnam but exported almost all of what they produced. Because of the improper tax policies, made-in-Vietnam components were exported, and then perhaps imported (back into Vietnam) by electronics assemblers in Vietnam, according to VEN.

In recent years, Canon begun assembling printers while Intel broke ground on a plant that is to make semiconductor chips in Vietnam. This is expected to encourage more foreign businesses to make electronic parts and components in Vietnam to supply the assemblers. The report said that supporting industry development in Vietnam is very important because it would in turn lead to a growth in the domestic electronic industry.

Of the various kinds of industrial products, electronic products have the least amount of Vietnamese-made parts inside them. Lots and lots of household appliances are assembled in Vietnam but only about 20-30 percent of the components of the items are manufactured in Vietnam, and this local content is mostly packaging and very basic plastic or mechanical parts. Color TVs are the exception, having 60 percent local content because Vietnamese-made picture tubes are used.

The Vietnam Electronic Industries Association (VEIA) surveyed almost 100 companies and found that less than 10 percent make a part or component, and of those that did, they were almost all FDI companies. This utter lack of a support industry discourages foreign electronic businesses which might otherwise consider investing in Vietnam, VEN lamented.

According to the report, local and foreign experts agree that the local content in products assembled in Vietnam product is low because basic infrastructure required for industrial manufacture in Vietnam is not adequate to even make transmission wire or screws. Increasing the local content of products that are assembled in Vietnam is about the only way to increase the added value of Vietnamese products. Experts say that Vietnamese electronic product production will remain a simple assembly process and not be highly profitable until the added value of its products is improved considerably. This means using more locally produced content.

Source: Vietnam Economic News (2007)

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