Higher value added activities and boosting linkages between domestic firms with foreign markets and investors can help Vietnam move up global value chains, says two new World Bank Group reports.
Launched at a conference jointly organized by Vietnam’s Ministry of Industry and Trade and the World Bank, the reports – entitled Vietnam at a Crossroads: Engaging in the next Generation of Global Value Chains Report and Enhancing Enterprises Competitiveness and SME Linkages Study – showcase the growth potential of the country’s industries should policy reforms continue.
Several domestic electronics and automotive companies in Vietnam have successfully integrated into global value chains. Generally speaking, Vietnam has specialized in end-production assembly activities that are largely run by foreign firms with weak domestic linkages.
Vietnam can now choose to diversify, says the report, and foster the growth of innovative local firms that can potentially lead to products ‘invented in Vietnam’. A policy framework that aims to strengthen the capabilities and technology of local enterprises is expected to facilitate linkages with FDI firms, and enable them to enter foreign markets.
“Vietnam has successfully integrated into a few global value chains, which has created jobs, propelled economic growth, and reduced the poverty rate,” said Ousmane Dione, World Bank Country Director for Vietnam. “But the country can move further up and strengthen its value addition with policy reforms and initiatives in areas such as transport, services, border procedures and regional integration.”
Two reports offer many ideas on how Vietnam can participate in the next generation of global value chains, and promote linkages between domestic and foreign firms. A higher place for Vietnam in global value chains will help attract more large scale foreign investors, creating more jobs and more opportunities for local suppliers.
Source: SGGP news
