Ministry proposes policies to promote supporting industries

The proposed support policies, including an interest rate subsidy of 3 per cent, are expected to create a stimulus to part-supplying enterprises to improve their competitiveness and participate in supply chains of multinational corporations (MNCs).

The Ministry of Industry and Trade has proposed to the Government policies to support enterprises operating in supplying parts and materials for garment and textile, footwear, electronics, automobile production and assembly and mechanical engineering to promote the development of supporting industries in Việt Nam.

The proposed support policies, including an interest rate subsidy of 3 per cent, are expected to create a stimulus to part-supplying enterprises to improve their competitiveness and participate in supply chains of multinational corporations (MNCs).

The ministry said that enterprises must not be subject to global minimum tax to be eligible for the support policies.

The support would include corporate income tax incentives, support in investment promotion, human resource training, research and development, technology application, renovation and transfer and credit support to enable domestic enterprises to become suppliers of MNCs, according to the ministry.

Especially, an interest rate subsidy of 3 per cent would be provided from the central budget through the commercial banks for medium and long-term loans in Vietnamese đồng to invest in part-supplying projects.

The duration of the credit support would be equal to the lending duration but not exceeding 10 years from the date of signing the loan contract. The policy would be applicable to loans which would be signed and disbursed till the end of 2030.

The priority would be given to sectors including garment and textile, footwear, electronics, automobile production and assembly and mechanical engineering, besides others, including moulds, mechanical details with high-quality standards used for electronics, mechatronics, microelectronics, robots, electronic and optoelectronics components, circuits and new materials.

The ministry estimated that there were about 5,000 enterprises operating in the part-supplying industries eligible for the support policies.

The ministry said that it was necessary to amend Decree No 111/2015/NĐ-CP about developing supporting industry in the current context so that part-supplying enterprises of Việt Nam could keep up with the pace of integration with the world, which was critical to increase national competitiveness.

According to Phạm Tuấn Anh, Deputy Director of the Ministry of Industry and Trade’s Industry Department, the ministry would continue to advise the Government to issue policies to improve the mechanism for attracting investment in the supporting industry to increase the local procurement rate. In addition, it was necessary to form zones for supporting industries with spearhead companies which would lead the development.

Statistics of Vietnam Association for Supporting Industries showed that the local procurement rate of Việt Nam remained low, around 5-20 per cent for the automobile manufacturing industry, 5-10 per cent for electronics, 30 per cent for footwear, 30 per cent for garment, 1-2 per cent for high-tech industry in 2022.

To promote the development of supporting industries in Việt Nam, the Government issued Resolution 115.NQ-CP for 2022-30 period which aimed that products of the supporting industries would meet 70 per cent of the demand and account for 14 per cent of the industrial production by 2030.

It was expected that about 2,000 companies would be capable of directly supporting components and equipment for MNCs by 2020.