Vietnam’s supporting industries can supply cardboard boxes but can’t produce standard wine bottles. This fact shocks Japanese Ambassador Mitsuo Sakaba.

Japanese Ambassador to Vietnam Mitsuo Sakaba.

The Japanese Ambassador uttered “I’m shocked” when he learned about the current state of Vietnam’s supporting industries at the third Vietnam-Japan Economic Forum in Hanoi on March 3. He warned: “The time left for us to struggle for the life of the Vietnamese industry is short”.

In late February 2008, the ambassador visited some outstanding Japanese firms in Vietnam and he realised that Vietnam still had to import many kinds of components from Japan and Southeast Asian countries.

“I was very surprised knowing that Vietnam can only supply cardboard boxes and I was shocked when I heard that Japanese alcohol producers in Vietnam had to import bottles,” he said.

“It is regrettable that Vietnam has no factory that can manufacture glass bottles that meet alcohol producers’ requirements,” he added.

Based on his surveys, the ambassador confirmed that even locally-manufactured components have a low rate of local content.

He warned that the life of Vietnam’s supporting industries will influence the country’s future economic development. This issue is not only related to the trade and investment relations between Japan and Vietnam, but to Vietnam’s position in Southeast Asia.

“You may think that I am magnifying the importance of supporting industries but I think this issue is very important,” he said.

The Japanese Ambassador said that last June a Vietnamese official told him that the Vietnamese government had issued a comprehensive policy to develop supporting industries. Actually, the Vietnamese Ministry of Industry and Trade in July 2007 introduced such a policy. The ambassador said the policy was a good one but had yet to be implemented.

Low labour cost is a big advantage of Vietnam. However, the ambassador said that international competitiveness that relies on low labour costs will gradually decline. It has been easier for foreign companies to enter the Vietnamese market since Vietnam joined the World Trade Organization (WTO) and since Free Trade Area and Economic Partnership Agreements (FTA/EP) take effect.

“If one is unable to produce high-quality, cheap products that meet customers’ needs, one will be rejected from the market,” he said.

He said that a multinational group having many factories in Southeast Asia and following a global business strategy could potentially stop production in Vietnam to import products from Vietnam’s neighbours.

XL