THE BANK OF VIET NAM MINISTRY OF EDUCATION AND TRAINING

BANKING UNIVERSITY
HO CHI MINH CITY

RESEARCH PROPOSAL
Working Title: RESEARCH ON
DEVELOPMENT OF SUPPORTING
INDUSTRY IN VIETNAM TODAY

Word count: 1943

Students: Group 5
Email: huonglannguyen0107@gmail.com
Class: D16
Lecturers: Lê Hoàng Long
Subjects: Research methodology

Ho Chi Minh City, May 26, 2020

List of groups 5
1. Trương Thị Mỹ Hoa - 030834180081.

2. Lê Duy Hải - 030134180116.

3. Nguyễn Hương Lan - 030834180104.

4. Huỳnh Nhã Thư - 030334180249.

5. Nguyễn Thị Anh Thư -030632162320.

Table of Contents
1. Introduction: ........................................................................................... 3
1.1. Research issues: ......................................................................................................................... 3
1.2. The urgency and contribution of the research topic.................................................................... 3
1.3 Objectives of the study ............................................................................................................... 4

2. Literature review .................................................................................... 4

2.1 Theoretical basis.............................................................................................................................. 4
2.2. The research works have been published abroad. ............................................................................ 5

3. New contributions to the topic ............................................................... 6

4. Methodology ............................................................................................ 6
5. Meaning of research ............................................................................... 7
6. Conclusion ............................................................................................... 7
7. References ................................................................................................ 8

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 1. Introduction:
1.1. Research issues:

Developing supporting industries in Vietnam today.

1.2. The urgency and contribution of the research topic
The term "supporting industry" or "auxiliary industry", referring to industries
that provide inputs for processing and assembly industries, have appeared and been
widely used in Vietnam since 2003. Since then, this phrase has been concerned by the
State, organizations, and businesses, because the localization rate of industries in our
country is generally still short. Therefore, in recent years, the State and organizations and
businesses have made great efforts for the development of supporting industries, but
the results are still limited.
Supporting industry (SI) in our country is only at the early stage of the
development of small-scale production, mainly producing simple details; Low added
value and there is also a difference in auxiliary capacity between domestic small and
medium-sized enterprises in Vietnam and the requirements of global manufacturers.
Currently, foreign investment in this field is mainly from Japan, Korea, Taiwan ....The
investment environment in this field is limited and enterprises have not yet calculated
the profit. Comparing to the investment cost, it is not interested in investing in Vietnam.
Due to the development characteristics with the Government's localization regulations
and the large capacity of the downstream market, the supporting industry for the
motorcycle industry is by far the most successful with the formation of a system suppliers
right inland. During the cooperation process, there was technology transfer from
foreign assemblers to Vietnamese enterprises supplying components. The mechanical
and plastic industries provide components for motorcycles, so there have been
developments in technical, managerial, and labor skills. However, many of the key
components of high value are still implemented by FDI suppliers, and manufacturing
enterprises supporting other industries such as electronics and automobiles are still very
weak. Supporting industries are mostly related to important manufacturing industries
such as automobiles, motorbikes, mechanics, petrochemicals, electricity, electronics,
machine manufacturing, etc. Domestic enterprises that even FDI enterprises face
difficulties due to the limited ability of Vietnamese supporting enterprises, especially
components and accessories, that require high accuracy.
In general, the supporting industry in Vietnam is still weak, inadequate, and
unable to meet the increasing needs of the assembly industry. Exception for few
businesses that have been involved in auxiliary production for assembling companies,

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the majority of businesses still cannot meet the requirements of these companies.
These limitations come from many different reasons, in which the basic reason is that
Vietnam lacks an appropriate, unified, feasible, and appropriate system of policies to
create conditions and incentives to promote public SI in the country.
In the context of globalization and integration with the strong development of
science and technology, all countries tend to integrate into the world economy with the
formation of regional value chains and production networks globally. Therefore, the
development of supporting industries requires countries to take into account a range of
factors, including global economic thinking, placing each country's economy in the
production network. Global production and distribution, which deals with the
relationship between the state, enterprises, and markets.
At present, Vietnam is facing a very important task of modernizing modernization in
the context of integration and implementing commitments of bilateral and multilateral
agreements. To make Vietnam become an industrial country in the context of deeper and
deeper integration into the world economy with the current industrial structure, the current
economic development policies are difficult to rotate. Transfer the current situation if
there are no new breakthroughs in institutions, policies, and supporting industry
development.
In the above context, we have chosen the topic "Development of supporting
industries in Vietnam today" to conduct our research project.

1.3 Objectives of the study

The objective of the study is to determine the role of supporting industries for
Vietnam’s economic development, mainly in connection with Vietnam's global value
chain and production networks. Providing solutions and major recommendations to
develop Vietnam’s supporting industry today.
To accomplish the aforementioned research objectives, specific objectives include:
- Determining the role of supporting industries in Vietnam's economic development.
- Test the impact of the development of supporting industries on Vietnam's
economic development.
- From the research results, propose policy suggestions on the development of
supporting industries in Vietnam.

2. Literature review
2.1 Theoretical basis
Considering the concept and scope of supporting industries, Nguyen Thi Xuan
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Thuy (2005) proposed the definition of supporting industry in Vietnam as a group of
industry activities that provide intermediate inputs (including components, parts, and
tools to produce these parts) for the assembly and processing industry. Some studies have
suggested the concept of "Supporting industries are industries that produce materials,
spare parts, accessories, and semi-finished products to supply the manufacturing and
assembling industry of products. complete are production materials or consumer
products "such as the research of Nguyen Thi Dung Hue (2012), Ha Thi Huong Lan
(2014), ...
Research on the characteristics of supporting industry, according to Hoang Van
Chau (2010) supporting industry has the characteristics of multi-level; Computing
system by the production process, by region and depending on the 3 main industries;
diversification of technology and technological level; attract large numbers of
businesses, especially small and medium enterprises.
Regarding factors promoting the development of supporting industries, according to
the Vietnam Development Forum (2007) factors include market capacity; high quality
industrial human resources; tax incentives; policy environment; information and
awareness gap; industry standards and safety standards; development of raw material
manufacturing industry. Tran Dinh Thien (2012) added the factors that determine the
development of supporting industries including Competitiveness
Regarding the criteria to assess the development of supporting industries, Hoang
Van Chau (2010) offers a set of criteria to evaluate the development of supporting
industries including 5 criteria: the number of SI enterprises; the size of SI enterprises; a
technological level of SI enterprises; the degree of linkage between supporting
enterprises and customers and suppliers; the degree of responsiveness of the
supporting industry to the main product manufacturing industry.
2.2. The research works have been published abroad.
Definition of supporting industry:
Ratana E. (1999) defines SI as an enterprise producing parts and components
used in the final assembly stages of specific industries, such as automotive,
machinery, and electronics. According to Ryuichiro Inoue (1998) in the broadest
sense, the industry supports the production of many parts, accessories, and basic
materials. In a narrow sense, supporting industry can be considered as a process of
transformation of materials including molding and stamping, casting, forging,
stamping, plating, welding, machining, heat treatment, and plastic processing.
In terms of supporting industry development, Keiko Morisawa (2000) argues

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that the expansion of demand for components will be the most important condition for
supporting industry development, following the development of Technical technology,
material industry, and capital mechanisms are also essential requirements. Besides,
according to Ryuichiro Inoue (1998) the development of human resources,
mechanisms, and strategies, policies, and programs; Technological transformation is
also essential for the development of supporting industries in ASEAN countries6.

3. New contributions to the topic

The thesis contributes both theory and practice, clarifies the role of supporting
industry for economic development, mainly associated with participation in the value
chain and global production network of Vietnam. Providing solutions and major
recommendations to develop Vietnam's supporting industry today.

4. Methodology
The thesis has used qualitative methods that combine many different research
methods such as economic model method, economic statistical method, descriptive
statistical method, analytical and general method, ... to clarify the question posed.

+ Scope of the study

The research focuses on the development of the supporting industry and current
policies for the SI of Vietnam. The thesis mainly focuses on analyzing and evaluating
the operation results, the contribution of supporting industries in Vietnam, especially
5 sectors: textile, footwear, electronics - informatics, manufacturing, assembling cars,
and manufacturing machinery.

Individual and group interviews will be selected because they can infer the
contributions of supporting industries in Vietnam. Group interviews are groups of
people at industrial companies, because these people they have been working on will
be people with thoughts and experiences in these industries. They will be the ones
who can have relative results for analyzing and evaluating the role of industry
contribution. Individuals will be students from universities who are exposed to a new
industry. They will have new ways of thinking and will look from many angles to
evaluate contributions and make new and more progressive steps for the industry.

The interviews will be recorded and re-analyzed to give the best and most
complete data.
+ Research questions
- What is the situation of the supporting industry in Vietnam?

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 - How does the development of supporting industries impact economic
development in Vietnam?
- Is the development of supporting industries suitable for the current
Vietnamese economy?
Basic on theoretical and practical analysis of the development of the supporting
industry and the assessment of the status quo and development of the supporting
industry of Vietnam, the thesis offers solutions and recommendations for
development. supporting industry development in Vietnam today.

5. Meaning of research
Supporting industry development is extremely important for the industrialization
and modernization process of each country, especially in developing countries.
Because in these countries, they want to form and develop some modern industries,
especially those such as manufacturing cars and motorcycles; electronic products,
refrigeration, ... effectively, they must successfully carry out the localization of these
industries. To do so, they must develop the supporting industry so that its products can
gradually replace and eventually completely replace imported products.

6. Conclusion
The thesis has studied, synthesized, and explained the basic theories about
supporting industry in Vietnam today, thereby showing that the development of
supporting industry is indispensable objectively in terms of economic integration.
international.
Along with analyzing the concepts of supporting industries in other countries,
the research topic, and the concept of supporting industry of Vietnam, thereby pointing
out the core and basic content to build and develop our country's supporting industry.
Based on the theoretical analysis in chapter 1, the thesis has analyzed and evaluated
the current status of the development of the supporting industry in Vietnam today.
The topic has shown that Vietnam's supporting industry development has been in
recent years and largely still lacking in the number of enterprises, small market share,
the ability to link suppliers and manufacturers. Export is still loose.
The project has assessed the basis for developing supporting industry in
Vietnam, important facilities such as orientation, policy and law; supporting industry
development strategy; supporting industry development potential; and the
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development of multinational corporations. Since then, the project has built a SWOT
matrix so that we can look at our country’s supporting industry development strategy.
The thesis has proposed some solutions and recommendations that are mainly
associated with the domestic and world context in order to develop our supporting
industry today.

7. References
Vietnam Development Forum - VDF (2007), "Building supporting industries in
Vietnam", Prof. Editor-in-Chief Kenichi Ohno, Social Labor Publishing House.
Foreign Trade University (2010), "Supporting industry - experience from other
countries and solutions for Vietnam", State-level science project led by Prof., Dr. Hoang
Van Chau.
Ha Thi Huong Lan (2014), "Supporting industries in some industries in Vietnam",
Ph.D. thesis in economics, major in political economy, Ho Chi Minh National Academy
of Politics.
Nguyen Thi Dung Hue (2012), "Developing supporting industries of Vietnam’s
textile and garment industry in the context of international economic integration",
doctoral thesis in economics, major in World Economics and Economic Relations
International, Hanoi Foreign Trade University.
Ratana. E (1999), “The role of small and medium supporting industries in Japan
and Thailand” (The role of small and medium sized SI in Japan and Thailand), APEC
IDE Research Center, Working Paper Series 98/99 Tokyo.
Ryuichiro, Inoue (1999) "Future prospects of Supporting Industries in ThaiLand
and Malaysia" (The future of Thai and Malaysia supporting industry).