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IFC program to improve suppliers' capacity

Released at: 09:24, 25/05/2018

IFC program to improve suppliers' capacity

Photo from IFC

"Vietnam Supplier Development Program" launched on May 24 in Hanoi to promote Vietnamese suppliers' links with MNCs and expand high-value production.

by Huong Do

The International Finance Corporation (IFC), a member of the World Bank Group, in partnership with the Vietnam Industry Agency at the Ministry of Industry and Tradem launched a new “Vietnam Supplier Development Program” on May 24 in Hanoi.

The program aims to help local Vietnamese companies become suppliers for multinational corporations (MNCs) while enabling existing suppliers to expand their business and share of added value.

MNCs have invested heavily in Vietnam and there is an opportunity to substantially increase their local sourcing. Impediments have included the lack of local suppliers who meet the necessary global standards. Given this scenario, the two-year Vietnam Supplier Development Program aims to help domestic suppliers - throughout the value chain in targeted sectors - meet the requirements of MNCs, including quality, price, and delivery, among others. Subsequently, they can be linked to MNCs for future supply opportunities.

“The ability to gain new business locally with MNEs is a first step to increasing the competitiveness of participating local companies,” said Mr. Do Thang Hai, Deputy Minister of Industry and Trade. “The intention, over time, is to move companies up the value chain so that they can develop more sophisticated products and become globally competitive.”

Over the next two years, the program will work with eight leading MNCs in the automotive, electronics, and energy and household appliance sectors: Bosch, Canon, Datalogic, Denso, Ford, General Electric, Panasonic and Toyota. They have been identified based on their interest in sourcing locally and assisting local companies in finding business opportunities. Forty-five local companies, who are wholly or largely Vietnamese-owned, have been selected to join the program based on recommendations by participating multinationals and various business organizations.

“We are happy to work with local companies that could compete with suppliers from other countries,” said Mr. Masahiro Yamamoto, Corporate Planning Director at Panasonic Vietnam. “We expect this program can help us start business with some potential long-term partners and promote our local sourcing.”

Designed in close consultation with MNCs, the program will provide free in-depth business reviews for suppliers. It will also look at the totality of a business to identify areas for improvement and ascertain specific actions to build supply capabilities and improve long-term competitiveness. Further, efforts will be made to link companies more effectively with potential buyers.

“Large foreign direct investments into Vietnam by leading global firms have brought opportunities to promote Vietnam’s support industries and facilitate local producers’ increased participation in the global value chain,” said Mr. Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos. “This program aims to help participating Vietnamese companies find new businesses from these MNCs and, subsequently, maximize wider international markets, expand high-value production, and create more jobs.”

Based on its success, subsequent programs in the future will potentially cover other sectors and MNCs, presenting more companies with the chance to participate. The program is being implemented in partnership with the Vietnam Industry Agency with support from Switzerland’s State Secretariat for Economic Affairs (SECO).

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