The two reports entitled “Vietnam at a Crossroads: Engaging in the Next Generation of Global Value Chains” and “Enhancing Enterprises Competitiveness and SME Linkages” showcase the growth potential of Vietnam’s industries should policy reforms continue.

World Bank Country Director for Vietnam Ousmane Dione said that Vietnam has successfully integrated into a few global value chains, which has created jobs, propelled economic growth, and reduced poverty. But he added that the country can improve further and strengthen its value addition with policy reforms and initiatives in areas such as transport, services, border procedures and regional integration.
The two reports offer many ideas on how Vietnam can participate in the next generation of global value chains, and promote links between domestic and foreign firms, commented Deputy Minister of Industry and Trade Vu Thang Hai. Several domestic electronics and automotive companies in Vietnam have successfully integrated into global value chains but in general Vietnam has specialised in end-production assembly activities that are largely run by foreign firms with weak domestic linkages.
Vietnam can now choose to diversify, says the report, and foster the growth of innovative local firms that can potentially lead to products ‘invented in Vietnam’. A policy framework that aims to strengthen the capabilities and technology of local enterprises is expected to facilitate links with FDI firms, and enable them to enter foreign markets, says the World Bank.
According to the reports, some key recommendations that can take Vietnam closer to its goal are to improve inter-ministerial coordination, facilitate information flows and contacts between domestic and foreign-owned firms, and to provide targeted support to strengthen domestic suppliers.
A higher place for Vietnam in global value chains will help attract more large scale foreign investment into the country, which will help to create more jobs and more opportunities for local suppliers. But achieving this goal requires a solid package of reforms and initiatives, such as closing the infrastructure gap through greater mobilisation of private financing and a more integrated approach to developing transport corridors.
The reports also recommend developing competitive services markets and liberalising regulations on foreign direct investment; streamlining border procedures to make them more transparent and predictable; and leveraging engagements with developed countries to ensure strong demand and technology-related investment.