Toyota Motor Vietnam and the Ministry of Industry and Trade have signed a memorandum of understanding (MoU) on cooperation to provide assistance for the automobile supporting industry in the Southeast Asian country.
The cooperation will be implemented in 2021 and 2022.
In accordance with the agreement, both sides will focus on improving the capacity of domestic enterprises operating in the automobile supporting industry and strengthening their linkages with car assemblers.
The two sides will also work to find potential suppliers, connect with businesses operating in Vietnam, share experience in supplier development, build supply chains, improve the capabilities of domestic suppliers, and assist in human resource training.
The lack of connection between Vietnamese enterprises and foreign-invested firms will affect both long- and short-term production development and economic growth, said Pham Tuan Anh, deputy head of the Vietnam Industry Agency under the trade ministry.
"Developing supporting industries, strengthening linkage between domestic and FDI enterprises with long-term development strategies, and establishing domestic supply chains are among the core issues for sustainable growth in Vietnam," Anh continued.
President of Toyota Motor Vietnam Hiroyuki Ueda stated that Vietnam's supporting industry has an advantage in quality human resources and low labor cost.
However, the industry still faces such difficulties as limited supply capacity, small production output, and lack of quality domestic materials.
Vietnamese companies still have limited experience and production management capacity, so the cost of spare part production in Vietnam is two to three times higher than in other countries in the region, Ueda elaborated.
Toyota has implemented policies to assist supporting industry enterprises in Vietnam over the past years, helping increase localization rates.
The company currently has 46 suppliers, including six from Vietnam, with its total number of localized products exceeding 720.
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