Foreign-invested enterprises (FIEs) have not been able to connect with small and medium-sized enterprises (SMEs) in the country and exist as “oases”, making it difficult for local businesses to participate in supply chains.

Over more than a third of a century, Vietnam’s industry has only basically reached the level of assembly and processing, making value-add quite small, according to Dr. Vu Tien Loc, President of the Vietnam International Arbitration Center (VIAC).

Vietnamese enterprises cannot supply the necessary materials and spare parts to FDI enterprises, who have said it is difficult to find suppliers in the country because local businesses do not meet the necessary standards or have the technologies needed to become suppliers. Most raw materials and supplies must still be imported.

Vietnam is preparing for a third wave of FDI and anticipates making breakthroughs. With advantages in a young and large workforce, socio-political stability, and a favorable geo-economic position, it is connected to other economies around the world. It also has large export markets from signing new-generation free trade agreements (FTAs).

However, Dr. Loc said enterprises are still not fully prepared in terms of human resources, infrastructure, and institutions to upgrade Vietnam into a developed country with top quality and added value.

“Vietnam needs a new phase of investment cooperation, towards a higher stage of the supply chain,” he emphasized. “This would be suitable both for FDI enterprises and for Vietnam.”