The surge in foreign investment in Vietnam, which reached US$34.65 billion in the first half of this year, has become a key momentum for the local government. Although the manufacturing sector dominates capital flows, the main challenge is how to connect these investments with the domestic production ecosystem. In line with the mandate of Politburo Resolution 10, Vietnam aims to integrate 10,000 domestic enterprises into the global supply chain, targeting a localization rate of 45-50% by 2030.
To achieve this ambition, quality is the keyword. Industry players are now required to go beyond the basic ISO 9001 standards. Companies such as Hikari Group and JK Vietnam Industrial emphasize that competitiveness is measured not only by production volume but also by quality consistency, compliance with strict occupational safety standards, and cost efficiency through the implementation of methods like Kaizen. Success in meeting delivery schedules and product specifications is the deciding factor for them to upgrade to Tier 1 suppliers for foreign investors.
However, JETRO data shows that Vietnam still lags behind Thailand and Indonesia in terms of local component integration by Japanese companies. One crucial barrier is the reliance on complex components such as circuit boards and motors. The lack of investment in research and development (R&D) has left many local companies stuck in low-value-added assembly work. Therefore, collaboration with universities and research institutions is deemed urgent to foster capabilities in designing more complex products.
On the financial side, funding challenges create a cycle that hinders the adoption of high technology among small and medium enterprises. Specialized credit schemes are needed to break the dependence on outdated machinery. Furthermore, reliance on imported raw materials such as specialty steel and engineering plastics remains a heavy burden. Without mastering the upstream sector or materials industry, the production costs of Vietnamese companies will remain vulnerable to global price fluctuations.
The Vietnamese government is now shifting its focus to developing the Materials Industry Strategy until 2030. This step aims to shift the economic orientation from raw resource exploitation to deep processing. By creating a massive market scale and an integrated industrial ecosystem, Vietnam hopes to build a solid foundation so that domestic supporting industries do not merely serve as complements, but rather become the backbone of the global value chain.
