Vietnam's processing and manufacturing industries are highly dependent on imported input materials and components because of the country’s underdeveloped supporting industry, especially in key sectors such as electronics, textiles, leather, automobile manufacturing and assembling.

Since the outbreak of Covid-19, many Vietnamese businesses have shifted to domestic suppliers to overcome global supply chain interruptions and save costs. “The move could promote the development of the manufacturing and assembly of finished products, turn Vietnamese key processing and manufacturing enterprises into big groups in the region, leading to supporting industry development,” the MoIT announced.

Moreover, a large number of foreign businesses have flocked to Vietnam to access tax and investment incentives provided by various free trade agreements (FTAs) to which it is a signatory. The MoIT said foreign-invested enterprises operating in Vietnam have restructured the production value chain by turning to locally made supporting industry products.

To improve the production capacity of supporting industry enterprises, the Vietnam Industry Agency (VIA) under the MoIT will focus in 2021 on reviewing large-scale industrial production projects to promptly ease difficulties and create resources of goods for export.

Resolution 115/NQ-CP on solutions to promote supporting industry development, adopted in August 2020, sets a target of meeting 45 percent of the essential needs for domestic production and consumption by 2025 and accounting for about 11 percent of industrial production value. There are about 1,000 enterprises capable of supplying directly to assembly enterprises and multinational corporations, of which domestic enterprises account for about 30 percent.

By 2030, supporting industry products are expected to meet 70 percent of the demand and account for about 14 percent of industrial production value with about 2,000 enterprises capable of supplying directly to assembly enterprises and multinational corporations in Vietnam.

The VIA will carry out procedures for infrastructure investment in two centers facilitating industrial development in the northern and southern regions. It will also cooperate with Vietnamese trade offices in regional markets to exploit the FTAs, promote investment attraction, as well as the global production chain.