Not only providing screws, plastic molds, etc. to develop supporting industries, policy changes must create conditions for industrial enterprises to support innovation and access to capital, especially in supply chain context is being redesigned as a result of the Covid-19 pandemic…

Supporting industry development is identified as an important solution for Vietnam to improve the quality and competitiveness of the economy.

Despite actively opening to welcome many processing and manufacturing industries “poured” into Vietnam, Vietnam’s supporting industry still only stops at providing screws, plastic molds, etc. to foreign partners. Therefore, the development of supporting industries is identified as an important solution for Vietnam to improve the quality and competitiveness of the economy.

To achieve this goal, the Ministry of Industry and Trade is developing a draft Decree amending and supplementing Decree 111 on the development of supporting industries in a synchronous, comprehensive and strategic direction. Around the story of supporting industry, Vietnam Economic Review/VnEconomy had an interview with Ms. Vu Thu Nga, Deputy General Director of Deloitte Vietnam.

Ms. Vu Thu Nga, Deputy General Director of Deloitte Vietnam.

If the supporting industry is considered an important solution for Vietnam to improve its quality and competitiveness, the legal corridor is considered a solution to help the supporting industry “take off”. How do you evaluate the policy of supporting industry development, especially in the last 2 years?

In 2020, the Government issued Resolution 115/NQ-CP on solutions to promote the development of supporting industries. This can be considered as the first comprehensive policy document on the policy of supporting industry development.

Recently, Decree 57/2021/ND-CP was issued to help remove obstacles on tax incentives for enterprises with projects to produce priority industrial products established before 2015.

Efforts to perfect the legal corridor for supporting industries gradually have positively effects on psychology and investment decisions, expand production and business of supporting industry products, attract many businesses to participate, thereby contributing to the promotion of domestic supporting industries.

However, a few regulations still reveal certain limitations in the implementation process, posing requirements that need to be revised to match reality, ensuring consistency and synchronization with the provisions of the law on investment, tax and support for small and medium businesses.

The most recent move is the fact that the Ministry of Industry and Trade is drafting a Decree amending and supplementing Decree 111 to consult widely with organizations and individuals, at the request of Resolution 115.

This shows that the Government is making efforts to promote the development of the production of supporting industry products through the revision of many important strategic, comprehensive, and synchronous policies.

In your opinion, how should the development policy of the “supporting industry” change to help this industry “boost up”?

Currently, the Ministry of Industry and Trade is drafting a Decree amending Decree 111. In my opinion, the process of amending and supplementing the Decree should pay attention to the following 5 issues.

Firstly, it is necessary to clearly stipulate that product processing activities, supporting industries prioritized for development are on the list of which are also eligible for preferential treatment. During the consultation process, Deloitte Vietnam realized that many outsourcing enterprises are understanding that Decree 111 only applies incentives to production activities, so they face many difficulties in applying for certification and applying incentives.

Second, it is necessary to review and re-evaluate the supply chain and value chain to add new “supporting industry” products to the list that should be prioritized for development to suit the actual situation.

Third, several provisions in the Decree need to be revised to be consistent with regulations on investment and tax. For example, regarding the objects of incentives, it is recommended to amend and clarify the criteria “expanding investment projects with an increase in production capacity of at least 20%” to ensure compliance with the provisions of the corporate income tax law.

Fourth, consider adding preferential policies to support businesses such as credit support, environmental protection support, legal support, assessment, inspection, and quality certification.

Fifth, research on amending and supplementing preferential conditions to be more selective to attract quality and effective “supporting industry” projects, ensuring “green” and “clean” development goals of the Government.

For example, export potential, application of production processes, modern quality management system, meeting national and international standards, advanced machinery and technological equipment, quality of human resources. …

The above-directed policy changes will create conditions for businesses supporting industries to innovate, access capital, improve competitiveness to participate more deeply in the global value chain, especially in the context of the supply chain being redesigned because of the Covid-19 pandemic.

That is from a macro perspective. From a micro perspective, how do businesses themselves need to change to adapt to the development of the supporting industry, madam?

I think that stricter requirements on technology, production process, labor quality… in order to enjoy preferential treatment supporting industry will also bring many challenges for businesses, especially Vietnamese enterprises.

Therefore, enterprises need to actively review current conditions to assess their ability to enjoy incentives under the supporting industry category and have an action plan to improve the conditions to increase their ability to meet.

At the same time, enterprises need to study changes in policy, consider the impact on their chances of enjoying incentives, supporting industries, and come up with necessary solutions and strategies to apply incentives suitable supports.

Problems and difficulties in practical application and corresponding policy recommendations should also be reflected and proposed to the Ministry of Industry and Trade and business associations so that the policy on development of the supporting industry can be timely revised and highly practical supplement.