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Opportunities and challenges in Vietnam's electronics post-COVID-19

Source:Int'l Metalworking News for Asia     Date:2021-04-27
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Article By: Kathryn Gerardino-Elagio


Before COVID-19, the largest disruptions to work involved new technologies and growing trade links. The pandemic, for the first time, elevated the importance of the physical dimension of work. Many look at the pandemic’s long-term influence on supply chain and the potential for a broad recovery led by enhanced productivity and innovation. 

 


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Do Thi Thuy Huong


During an industry presentation for Ringier Trade Media's Virtual ASEAN Electronics Manufacturing Event, Mrs. Do Thi Thuy Huong, Executive Board of Vietnam Electronic Industries Association (VEIA) shared the opportunities and challenges in Vietnam’s electronics industry post-COVID-19.


According to her, new consumer habits and behaviours were formed after COVID-19. "The epidemic is reshaping the global supply chain, following the trend of supply shifts to reduce dependence on China.,"  explained Mrs. Huong.


She mentioned the trend of protectionism continues to increase in the context of the US-China trade war becoming more complicated and deepening, especially the impact of the COVID-19 pandemic. Meanwhile, types of economic linkages continues to be promoted, such as new generation  of free trade agreements (FTAs).


Opportunities for Vietnam’s electronics industry

Vietnam has many advantages. The transformation brought by COVID-19 will open up  big opportunities for the country if it can  can leverage its advantages and take appropriate measures to minimise disadvantages.

 

Mrs. Huong disclosed the opportunities for Vietnam's electronics industry as follows: 1) Chance to increase exports to the US and EU due to the post-COVID 19 supply chain adjustment. 2) Increasing FDI attraction: the trend of shifting investment and production capital from China to other countries, creating possibilities for Vietnam to increase FDI attraction, especially in the electronics sector. 3) The countries to promote bilateral and regional economic links, so the ratification process of CPTPP, EVFTA takes place more ugently. 4) Increasing export potentials to difficult capital markets, such as the US and Europe.

 

Challenges in Vietnam's electronics industry

Mrs. Huong revealed that the changing habits and methods of consumption in a normal state requires Vietnam to promptly adjust policies in supporting businesses and atrracting foreign investment to ensure selective FDI flows. Priority is given to advance technology, sustainability and spillovers to the Vietnamese economy.


"The risk of falling further behind due to the rapid development of Industry 4.0, forced development based on innovation and creativity; low-cost labor and the availability of natural resources are no longer advantages," she detailed.


Mrs. Huong divulged that if Vietnamese enterprises do not have enough resources (human, finance, technology ) to receive foreign direct investment (FDI) flows with advanced technology value, there is a risk that Vietnam will be a place for FDI enterprises to consume non-renewable resources (land, electricity, water etc.) and competition in the labor market. She also said that there is risk of low and medium technology transfer into Vietnam.


In addition, non-traditional security challenges, for instance climate change, unsustainable exploitation of natural resources will also have a strong impact on Vietnam’s goals of sustainable development, she stated.


What should the Vietnamese electronics  industry do?

Mrs. Huong commented, "It is important for the government to focus on investment in growth drivers, for example SME development, especially in the manufacturing sector, start-ups, innovation, and middle and high technology in the electronics indutry."

 

She said that enterprises need to improve competitiveness; promote solutions to support enterprises, especially export enterprises; improve productivity, competitiveness and improve business environment; promote supply chain linkage application in the country; and connecting domestic enterprise with FDI enterprises of the electronics industry.

 

Mrs. Huong pointed out that policies should pay attention to infrastructure development. Administrtive reform, judicial reform, improving domestic business environment, enhancing national competitiveness.

 

"The policy must take advantage of the opportunity of shifting production to Vietnam to promote Vietnamese business to grow, actively participate in the supply chain in a higher technology position. The policy need a strategy to attract FDI to selectively, focus on and favor FDI into high industry, innovate, and closely link with the domestic economy. At the same time, there is a policy of effective preventing low-quality investment flows, bringing risks to the environment and technology," she stated.

 

Lastly, associations must strengthen connections, support businesses to access support resources from the Government and international organisation (in technology, business capacity, building, international marketing). Support businesses in understanding and applying policies, Mrs. Huong finally said.


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