VDF Workshop

Two Studies on Supporting Industries: Definition and Database

August 22, 2006

Two researchers from GRIPS/VDF Tokyo presented their research results on supporting industries (SI).

Ms. Nguyen Thi Xuan Thuy, a GRIPS/VDF Tokyo researcher and an officer of the Ministry of Industry, presented her study on the definition and related concepts of SI. After reviewing the origin, historical background and related concepts, she proposed a new policy-oriented definition of SI. The core scope of SI consists of parts and components as well as production process supporters including molds and dies, pressing, forging, casting, etc. Broader definitions may include raw material supplies or production-related services such as logistics, warehousing, insurance, finance etc. While the definition of SI can include firms of any size or nationality, policy measures are often directed to local SMEs. Ms. Thuy reviewed SI promotion policies in East Asia and drew lessons for Vietnam such as the importance of inter-agency coordination and linkage between FDI and local firms.

Mr. Junichi Mori reported the survey findings of SI databases in Japan and other countries.  He distinguished SI databases from yellow-page-type business directories, because SI databases should contain specific information needed to minimize supplier search cost and listing of company profiles and main products is not enough.  Surveying several SI databases in Japan, he raised various issues that were crucial in building and maintaining successful databases: for example, how to overcome difficulty in gathering and updating firm data, whether database should be national or local, what design is suitable for practical databases, and so forth.

In free discussion, one JICA expert asked the way to establish a nationwide SI database in Vietnam.  He pointed out that it was inefficient for each cities and provinces to create its own database and that the database format should be standardized.

Prof. Ohno said that the central government may provide guidelines of minimum data requirement and even implement a pilot project to show a good example.  However, he argued that local governments should be the main operators of databases, because the central government was usually slow and less business-oriented than some local governments, and also because the size of database would become unmanageable if it was nationwide. It is desirable and necessary to provide incentives for localities to compete and do better.

Another JICA Expert agreed that each province should create an SI database, taking regional features into consideration.  In addition, he stressed that face-to-face contact between government officials and general directors of local firms was essential for establishing a database with reliable information.

One VDF researcher questioned the credibility of information such as the stock of machines, because firms might provide false information.  Mori explained a practice in Japan where several experts hired by a local government visited member firms one by one and filled up database registration sheets together with general directors. The database may use IT but its maintenance is a very labor-intensive process.

A participant from AOTS proposed receiving information on reliable local suppliers from FDI assemblers. However, some participants reported that FDI assemblers usually kept supplier information confidential.  Others stated that local suppliers, which already had business with FDI assemblers, would provide useful information for the database.

Officers from MPI-TAC explained their on-going pilot project to establish an SI database, which contained data of 41,000 local suppliers in 30 provinces.  They described the difficulty in collecting information from local SMEs, which was similar to what Japanese local governments faced.  One officer pointed out that some merits or incentives were necessary to urge more SMEs to register. For example, when visiting officers provided information on how to get cooperation of Japanese government agencies, SMEs became more eager to participate in the database.

[Nguyen Thi Xuan Thuy & Junichi Mori]