Electronic firms switch to services

The domestic electronics industry is facing big challenges as businesses commence to switch between different strategies, according to the Viet Nam Electronics Association.

Many companies have opted to supply services instead of producing electronic products in order to increase profits, said Tran Quang Hung, the deputy secretary of the association, .

Hung attributed the challenges that companies face to the low tax rate applied to imports, which, for spare parts, is currently around 6 per cent and around 0 per cent for complete products.

Due to the weak support industry and low tax rates, most companies preferred importing and distributing spare parts to achieve higher profits, Hung said.

Chairman of Minh Viet Investment and Industry JSC Nguyen Nhu Thang said that his company has been losing contracts due to many State-owned companies cutting down on expenditure, high banking rates necessitating the import of products, opposed to producing them, in order to meet market demand.

Similar to the Minh Viet Company, many other producers and assemblers have imported volumes 3-4 times higher than the volumes they produce.

Traders believe that the situation would worsen if regional countries cut prices and export taxes.

In May, the General Department of Customs reported that Viet Nam had poured US$471 million into importing computers, electronic products and spare parts, a month-on-month increase of 4.9 per cent.

During the first five months of this year, the country spent $2.23 billion on electronic imports, a year-on-year increase of 25.6 per cent.

China remained Viet Nam’s largest partner, followed by South Korea, Japan and Malaysia. — VNS

Tags: Vietnam Electronics Industry