Low domestic value-added
According to preliminary data from the General Department of Viet Nam Customs under the Ministry of Finance, from the start of the year through September 15, the export turnover of the electronics sector surpassed 159 billion USD (with computers, electronic products, and components accounting for 110.6 billion USD, and phones and components for 48.5 billion USD).
Meanwhile, import turnover stood at over 182 billion USD (dominated by computers, electronic products, and components at 174.9 billion USD, and phones and components at 7.48 billion USD). In just over nine months, the sector’s total trade turnover has already exceeded the projected full-year figure for 2025 by more than 15 billion USD.
However, despite a trade surplus of over 41 billion USD in the phone category, the sector as a whole recorded a trade deficit of approximately 23 billion USD, driven by a significant shortfall in the computer, electronic product, and component category (amounting to 64.3 billion USD).
Data from the World Trade Organisation (WTO) indicates that the share of domestic value-added in Viet Nam’s export sectors remains low relative to the region: the electronics sector stands at approximately 27% (compared to 52.2% for Thailand, 61.2% for Indonesia, 68.8% for the Republic of Korea, and 75.3% for China).
Other key sectors, such as plastics and rubber, textiles and garments, and footwear, show reliance rates of approximately 40%, 36%, and 34%, respectively. Consequently, Viet Nam’s export growth is driven more by imported components and raw materials than by domestic value chains. Participation in global value chains remains limited, leaning towards backward linkages with a relatively low level of domestic value-added.
Domestic supporting industry products consist primarily of simple components and parts, characterised by low technological content and a modest share of total product value.
Pham Van Quan, Deputy Director of the Department of Industry under the Ministry of Industry and Trade
According to the Ministry of Industry and Trade, there are currently some 7,000 enterprises in the supporting industry nationwide. While approximately 30% of these participate in global value chains, only around 5% supply components to foreign-invested enterprises (FIEs) operating in Viet Nam.
Certain domestic firms — such as Viettel, Vingroup, THACO, and Hoa Phat — have grown robustly, emerging as “anchors” in basic industries, materials, mechanical engineering, and manufacturing. They have begun to develop internal supplier ecosystems that extend to satellite enterprises. Nevertheless, the number of supporting industry enterprises remains limite, with slow growth in both numbers and scale.
Pham Van Quan, Deputy Director of the Department of Industry under the Ministry of Industry and Trade, noted that domestic supporting industry products are still largely confined to simple components and parts with low technological content and minimal value within the overall product structure.
As a result, while significant opportunities exist in sectors such as automotive, electronics, textiles, and footwear, domestic enterprises currently lack the capacity to supply the inputs required by manufactures within these production chains. Many of Viet Nam’s key industries remain heavily dependent on imported raw materials, components, and parts.
Enhancing endogenous capacity
Nguyen Thanh Nghi, Politburo member, Secretary of the Party Central Committee, and Head of the Party Central Committee’s Commission for Policy and Strategy, stated that in restructuring the growth model, the supporting industry is not a peripheral component; rather, it serves as a fundamental pillar for building national industrial capacity.
A robust industrial sector is not measured solely by the scale of production or the export of finished goods; more importantly, it is defined by the ability to master materials, components, equipment, technologies, designs, standards, and technical services—the elements that generate high added value.
The supporting industry must truly become the foundation of a modern industrial sector, contributing to increased productivity, higher value addition, and greater economic competitiveness. It must strengthen national autonomy and resilience, while simultaneously providing the groundwork for Viet Nam to participate more deeply — and at a higher level — in the global value chain.
Regarding breakthrough solutions to develop the supporting industry, Dr Vu Manh Hung, Director of the Department of Sectoral Economics under the Party Central Committee’s Commission for Policy and Strategy, proposes the following: First, continue to strengthen the Party’s leadership and build a unified understanding that the development of the supporting industry is a national strategic task.
Simultaneously, shift the mindset — moving away from a primary focus on localisation rates towards building industrial and technological capabilities. This involves increasing localisation rates while emphasising domestic value-added, the mastery of technology, research and development (R&D) capacity, product design, and the positioning of Vietnamese enterprises within the supply chain.
Second, continue to refine the institutional framework and policies for the supporting industry, while allocating sufficient resources for implementation. Furthermore, improve mechanisms for attracting foreign direct investment (FDI) by incentivising technology transfer, R&D, human resource training, and forging links with domestic suppliers.
Third, promote the development of sectors manufacturing and assembling finished products to create a market for the supporting industry. This includes providing targeted support to “anchor” (leading) enterprises in sectors such as automotive, electronics, mechanical engineering, energy, railways, textiles, and high-tech, while linking major investment projects with programmes to develop domestic suppliers. Fourth, foster an innovation ecosystem within the supporting industry, characterised by close coordination among the State, enterprises, scientific and technological research and training institutions, and local authorities.
Experts argue that the supporting industry and FDI share a mutually reinforcing relationship. The development of the supporting industry not only boosts the localisation of production but also creates favourable conditions for attracting FDI.
Conversely, foreign direct investment (FDI) plays a vital role in the development of supporting industries by providing capital, technology, and management expertise. To foster these linkages, Viet Nam must establish mechanisms that encourage the growth of domestic enterprises and enhance their competitiveness, thereby narrowing the capability gap and facilitating closer integration with foreign firms.
According to Pham Van Quan, the private sector serves as the cornerstone for building a supporting industry ecosystem in Viet Nam. Amid the ongoing, robust shift in global supply chains, unlocking private-sector resources is not only a prerequisite for seizing new opportunities but also a key factor in ensuring the sustainability and autonomy of the domestic manufacturing sector.
Consequently, it is essential to roll out interest-rate support mechanisms for small and medium-sized enterprises (SMEs) to alleviate the financial burden of investing in technological innovation. Simultaneously, policies should be enacted to provide corporate income tax exemptions or relief for businesses operating in strategic sectors, such as semiconductors and advanced materials.
Furthermore, to cultivate “anchor” enterprises capable of leading value chains, the State must enable large-scale firms to access resources and sustain market demand through procurement mechanisms. For their part, enterprises must proactively upgrade their technological capabilities and the quality of their human resources to meet the rigorous standards set by international partners.
To cultivate “anchor” enterprises capable of leading value chains, the State must enable large-scale firms to access resources and sustain market demand through procurement mechanisms. For their part, enterprises must proactively upgrade their technological capabilities and the quality of their human resources to meet the rigorous standards set by international partners.
On May 25, Permanent Deputy Prime Minister Pham Gia Tuc signed Decision No. 929/QD-TTg, approving the Supporting Industry Development Programme for the 2026–2035 period. The programme sets a target for the localisation rate in key industrial sectors to reach an average of 40–45% by 2030, while aiming to position Viet Nam among the top three ASEAN nations in industrial competitiveness.
The programme emphasises a business-centric approach, linking production with technological innovation, digital transformation, and the green transition. The State will play an enabling role by refining institutional frameworks, providing resource support, and fostering market development.
In line with the strategic direction of the Ministry of Industry and Trade, efforts are being intensified to promote investment, connect supply chains between foreign-invested enterprises and domestic suppliers, and facilitate technology transfer — all aimed at elevating Viet Nam’s standing within the global value chain. A core focus of this period is to build a robust ecosystem of supporting industries that possess technological mastery and regional competitiveness.
With close support from the Government and the Ministry of Industry and Trade — delivered through timely mechanisms and policies — Viet Nam’s supporting industry stands on the threshold of an era of autonomous, modern, and sustainable development.
