Sai Dong Garment Company works produce shirts for export to the US, the EU and Japan. (Photo: VNA)Formerdirector of the Central Institute for Economic Management (CIEM) Le Đang Doanh told NguoiLao Dong (The Labourer) newspaperthat foreign direct investment (FDI) firms had greatly contributed to Vietnam’seconomic growth, accounting for around 70 percent of national export turnoverwhile domestic enterprises had not yet deeply involved in the global valuechain.
Accordingto the General Statistics Office, in 2016, Vietnam’s export turnover exceeded 175billion USD, up 8.6 percent year-on-year. Of the estimate, the export valueearned by FDI enterprises reached more than 120 billion USD, up 10.2 percentagainst the previous year.
Doanhsaid domestic enterprises had been urged to improve capacity and enhancecompetitiveness right when the contribution of FDI firms in the export valuewas standing at 50 percent. However, until now, when the rate had risen to 70 percent,local firms still remained passive in global value chains.
Exportover the years contributed greatly to the economy - if in 2001, thenational export turnover reached 15 billion USD, then 10 years later, thenumber rose up to 97 billion USD, Doanh said, adding that this achievement waslargely achieved by the FDI sector.
Thesignificant presence of FDI companies in exports partly reflected the low levelof competitiveness exhibited by domestic businesses, he said, adding that amajor part of Vietnamese firms were just joining in the low value outsourcingservice industries.
Accordingto Ngo Duc Hoa, chairman of Thang Loi Textile Garment JSC, all of ThangLoi’s products serving domestic use are self-designed, produced anddistributed. But for the exported goods, the company just provides “cut andsew” services for foreign partners, meaning that the firm creates apparel andaccessories out of materials owned by the foreign companies that contract them.
Thebiggest difficulty textile exporting enterprises is facing is the lack of rawmaterials for production, leading to the only option of importation. Inaddition, Vietnam’s textile and garment industry hasn’t thrived yet, thusgaining low attention from customers.
Dueto the fact that the firm is only hired to “cut and sew” products for foreignpartners, they have to use raw materials supplied by the partners or import thematerials themselves. If an exported T-shirt costs 10 USD, the company has tospend 8.5 USD to import materials and earn only 1.5 USD for processingservices.
"Itis not an exaggeration to say textile enterprises pinch pennies for aliving," Hoa said.
Evenfor high-technology industries such as power, electronic and telecommunication,most of domestic enterprises are hired for providing outsourcing services forexported goods.
Accordingto Vu Thanh Tu Anh from Fullbright Teaching Program, a recent research ofFullbright’s specialist group summarising the 10-year period that Intelinvested in Vietnam showed a number of sad results.
TuAnh said Vietnamese enterprises account for only 3 percent of Intel’s totalexporting value and are involved in some steps of meals provision, gift boxespreparation and security services, which are the services that Intel can’timport.-VNA
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