Expected to promote investment inflows into Da Nang and become an important factor in the progress of domestic enterprises, since 2016, investment attraction into supporting industries, especially foreign direct investment (FDI) sources, has recorded many positive results.

In the coming time, the supporting industry will actively contribute to promoting the city’s growth. Production activities are seen at the Apple Film Co., Ltd in Hoa Cam Industrial Park, Cam Le District. Photo: KHANH HOA

Over the 2016 - 2020 period, the total investment capital channeled into Da Nang’s supporting industries was estimated at more than VND9,040 billion. The proportion of added value of supporting industry products in the city’s whole industry increased from 21.4% in 2015 to about 22.5% in 2020, with foreign investors remaining dominant.

FDI projects remaining dominant in supporting industries

According to recent assessment by the municipal Department of Industry and Trade, Da Nang's supporting industry has developed a diversified structure of specific industries and fields, emerging as an attractive ‘magnet’ for both domestic and foreign investor.

In particular, foreign investors outperformed domestic ones in terms of both the volume of projects and the investment value, mainly in the aspects of manufacturing components, spare parts, raw materials and machinery for manufacturing services, finished products assembly and more.

Most of the FDI supporting industry enterprises have participated in the global production and supply chain, and a number of large projects which are expected to come on stream, especially when COVID-19 is totally contained, will make a big change in the proportion of supporting industries in the value-added structure of the local whole industry.

Since 2016, as preliminarily calculated, the Da Nang Hi-tech Parks and Industrial Zones (IZs) have attracted 9 domestic projects worth VND1,402 billion in total and 15 FDI ones valued at a sum of US$311.9 million (equivalent to about VND7,640 billion).

The city currently houses about 110 enterprises operating in supporting industries, accounting for about 6.3% of the city’s total number of industrial enterprises, of which  29 are foreign-invested, making up for about a quarter of the total number of supporting industry firms. Meanwhile, domestic enterprises are active in mechanical engineering, accounting for nearly half of the total number.

Till date, the1st stage of the 170 million US$ Sunshine aerospace components factory, developed by the US-based Universal Alloy Corporation Asia Pte. LTD-UAC, has been the largest project in supporting industries in the Da Nang Hi-tech Park. Meanwhile, the Long Hau JSC-developed hi-tech factory cluster is still the most prominent domestic project involved in this aspect in the Park.

Pham Truong Son, Head of the Authority of the Da Nang Hi-tech Park and IZs, said that municipal distraction is promoting the approval of in-principle investment policy to the implementation of a number of projects with high investment capital in the Hi-tech Park in the field of supporting industries.

Notable amongst them are the US$100 million expansion of Sunshine aerospace components factory, and a US$135 million project to manufacture 3D printers, the design and manufacture of 3D-printed carbon fibre composite materials and 3D printing software, develop by the U.S.-based AREVO Inc.

These projects, once fully operational, are expected to make an important contribution to promoting the growth of the supporting industry and the Da Nand entire industry at large.

Domestic and foreign investment poured into supporting industries is expected to increase sharply, which will create opportunities to promote local production and business. In this image are workers at the A Chau Architecture and Trading Co., Ltd in the Hoa Khanh Industrial Park, Lien Chieu District, Da Nang. Photo: KHANH HOA

Effectively implementing the adopted mechanisms and policies

Mr Bui Le Anh Hieu, the Director of the Long Hau JSC, one of the pioneering investors in providing services to investors in the Hi-tech Park, said that more and more investors from both home and abroad have been interested in pour their investment into Da Nang’s supporting industry, especially after the municipal government issued a beneficial resolution dedicated to this aspect.

Over the past two years, despite the complicated and prolonged COVID-19situation, every month, the Long Hau JSC still welcomed up to 6 investors who planned to rent its ready-built factories for their operations. Till date, Long Hau has leased its factories to 2 Japanese businesses.

Director of the city branch of the Viet Nam Chamber of Commerce and Industry (VCCI) Nguyen Tien Quang underlined a must-do to implement the already-adopted specific policies in a prompt yet effective manner to drive the development of supporting industries as well as support businesses operating in the supporting industries.

According to the municipal Department of Industry and Trade, the municipal government has approved mater plans for driving the growth of the support services sector by 2030, with a vision to 2045.

In more details, the 2021 – 2025 period will see a combined total of more than 150 businesses involved in the support services sector, at least 10% of which will be fully capable of directly supplying their products to manufacturing and assembly companies operating in the city. Also, the support services sector will account for about 30% of the added value of Da Nang’s processing and manufacturing sector, and at least one multinational corporation specialising in manufacturing finished goods will pour its money into the city.

Meanwhile, over the 2026 – 2030 period, there will be more than 300 providers of business support services in Da Nang, at least 15% of which can directly supply their products to the city-based manufacturing and assembly companies.The support services sector will account for about 40% of the added value of Da Nang’s processing and manufacturing sector.

By 2045, focus will be on attracting multinational corporations to seek investment chances in the city, increasing the proportion made by the support services sector in the value-added structure of Da Nang’s processing and manufacturing sector. Also, supportive company numbers deeply penetrating in the production and supply networks of multinational corporations and global value chains will be promoted.

At the same time, the municipal administration will pilot a number of specific support policies for supporting industry enterprises in the Supporting Industrial Park of the Da Nang Hi-tech Park.

Reporting by KHANH HOA- Translating by A.THU