Electronics industry still hitchhiking

The electronics industry used to be dubbed as a boom and considered the pride in relation to other areas. However, after nearly 20 years of development, this sector lacked made-in-Vietnam products on the market. According to Mr Tran Quang Hung, General Secretary of the Vietnam Electronics Industries Association (VEIA), the electronics industry is dragged down by two typical limitations: Fast-growing but unsustainable infrastructure and foreign-relying software. Besides, software engineers lack top-tier leaders, especially in the fields of system setup, programming, etc.

It is said that the Vietnamese electronics industry is only relying on foreign-invested companies. What is your viewpoint about this?

That’s right! Vietnam is hitchhiking, on in other words, leaning on foreign companies to develop its electronics industry. As a veteran electronics engineer, I still remembered that when we opened the industry for leading foreign companies like Sony and Fujitsu, I, like many others, excitedly believed that electronics industry would accelerate very quickly because FDI companies would help us to jump high. But now, I penetrate the truth that our belief was quite hasty.

Why did I say so? In essence, they came here only to make a profit. They came to enjoy investment incentives provided by the Government like tax reduction and land rents and take advantage of cheap labour to make a thicker profit.

Sony is a typical lesson. They invested in Vietnam to take full advantage of these incentives until Vietnam joined the World Trade Organisation (WTO) and tax incentives were no longer available, they immediately withdrew. During their time in Vietnam, they only trained assembly workers and factory managers to use their production technologies. This “hitchhiking” development model has existed for decades. Vietnam has not made any totally local products or any breakthroughs in electronics industry.

Anyway, the electronics industry contributed US$3 billion to the country’s export turnover last year. Is it not a pride of the electronics industry?

The Vietnamese electronic industry is in name only. The total exports earnings amounted to US$3 billion but Vietnamese-invested companies made up less than US$100 million. Or in other words, more than 90 % of Vietnam’s electronics export value belongs to FDI enterprises.

In fact, FDI companies import parts for assembly only. Money flows into their pockets while we get almost nothing. Vietnam only gets low-paid salaries and land rents. But what we lose most is environmental problems.

We have calculated that foreign-led electronics companies in Vietnam have five extremes: most manpower, lowest pay, most environmental pollution, most land fund, and most electricity.

But, there is no reason why the electronics industry does not benefit from the “hitchhiking” development?

Of course we have but we only learned from assembly, one of the lowest levels of development. There is no major breakthrough. During 15 years of development, Vietnam has not had any typical “Made in Vietnam” products. The clearest evidence is the absence of Vietnamese electronics products in supermarkets. The Vietnamese electronics industry have overestimated the contribution of FDI companies while not knowing that their investments were aimed at taking advantage of preferential policies to make the biggest profit.

Evidently, we learnt certain things from FDI companies like corporate governance, skilled worker training, and others. But, these are not enough to build the electronics industry of our own. Vietnam still lacks leading designers, engineers and experts in this field.

We cannot blame the failure of the Vietnamese electronics industry on the absence of talents as many Vietnamese candidates have won international competitions. Why does the electronics industry use such talents?

It is true that Vietnamese candidates have won in many international competitions but their grey matters have not been brought into full play. Their achievements belong to contest organisers. For example, two Vietnamese engineers have recently won contests in Japan and each earned US$10,000 from their success. We lack mechanisms to protect their achievements. According to organisers’ regulations, they are not allowed to announce their achievements to any other parties. Or in other words, their works are taken away. If they are in the United States, I think, they will become very rich for what they have made. With such a mechanism, in my opinion, the Vietnamese electronics industry will not stay away from the fate of “hitchhiking.”

Do you have any recommendations for Vietnamese electronics enterprises?

I hope Vietnamese companies will stand on their own feet. In the long run, they must have their own vehicle, not hitchhiking any longer. South Korea is an icon for us. They used to “get a lift” from Japan before riding their own vehicles, very good ones.

Furthermore, Vietnamese businesses need to join a global value chain and the electronics industry must identify their phases or products to earn the highest value. They should focus on intensive investments instead of extensive behaviours as now. They had better choose the best fields for them in order to create strongly competitive products.

In addition, while other ASEAN countries put the top priority on the electronic industry, Vietnam has not paid proper attention. Together with efforts of enterprises, the Government’s supporting policies and regulations are an important factor for the sustainable development of this industry. – VCCI

Tags: Vietnam Electronics Industry