PTITJ: Could you please tell PTITJ about some your evaluation on Vietnam status of IT and Communications development in general and electronic industry in particular?
Terry Takahashi: Quite frankly, rather than I try to evaluate, I would like to hear from Vietnamese side on this subject. Unfortunately, information on industries currently available in Vietnam seems to be limited. To provide database would be very important from now on so that the Government may map out the path toward industrialization and also so that MNCs can make mid-long term strategic plan.
As far as I understand, Electronic Industry in Vietnam is in the very beginning stage and its presence is fractional in manufacturing sector. On the contrary, in Malaysia, Electrical & Electronics sector is playing a substantial role with current output of nearly US$30 billion, which represents 40% of manufacturing sector. Moreover, approx. half a million people are employed. MNCs are playing significant role in Malaysia.
PTITJ: According to you which field of following fields Vietnam has potentiality and opportunity to develop at most (in interrelations with other countries in the region): software industry, computer hardware industry, electronic industry, digital contents
Terry Takahashi: Vietnam would have potentiality in any fields. The key would be the guidance and support by the government at the beginning. If the government is convinced of where the nation should go by being aware of the characteristics by industry, the government may rather easily clarify how to utilize resources outside and how to develop resources inside.
For example, if the government sets creation of employment as one of the top-priority, the shortest way to realize is to invite export-oriented MNCs. When it comes to electronics and computer hardware industry, they may create quite a number of employment because of their big world demand, thus big scale of production. The government should concentrate on this target till at least half a million of employment, which would be realistic is created.
I believe this is the first step for Vietnam to aim at. Because to raise standard of living thus expand domestic demand would be the first crucial turning point for Vietnam to show its presence in the world. Long time has passed since reputation of Vietnamese big potentiality spread out in the world after “Doi Moi” policy announcement. However it has not appeared yet. Outstanding domestic demand with 80 million-population is big enough to attract world attention in the market economy. More importantly this would create bargaining power which would work out to the benefit for Vietnam in the future. Even just for this reason, it would be worth inviting MNCs.
However just inviting MNCs for this purpose by providing relatively cheap labor cost would not mean 100% utilization of resources outside. In the process of MNCs operation, domestic resources including human resources should be developed so that Vietnam could develop indigenous enterprises in the future. This is the area where the government can not entirely leave it to market economy.
Key words for this purpose are encouragement of “technology & management know-how” transfer and re-investment by MNCs with appropriate guidance and support by the government.
On the other hand, when it comes to software industry and digital contents industry, needless to say, these industries are in the limelight as it is said that the 21st century is the era of new economy, i.e. post-industrialization and great amount of value added is expected without any doubt.
However, we should be aware, as Mr. Eamonn Fingleton wrote in “In praise of hard industries”, that the nation can not be supported entirely with these post-industrialization as follows;
1) It is likely to generate imbalanced situation in employment since these industries accept only top-ranking in IQ.
2) Since these industries enrich limited number of people, these would not necessarily raise income per capita.
3) Software tends to be developed based on language and culture by country, it does not necessarily foster export.
Therefore we can say that industrialization and post-industrialization are inseparable and great help to each other for the nation.
We hope that the government would map out the path taking the balance between industrialization and post-industrialization into account toward the year 2020.
PTITJ: Could you please tell us your opinion about Vietnam potentiality in electronic development in comparison with other countries in the regions?
Terry Takahashi: Vietnam would have a big potentiality in developing supporting industries where high precision engineering is required as well as absorbing technology and skill through operation and maintenance of high-tech machinery from invited MNCs. Though Malaysia and Thailand are well known as production center of Electrical and Electronics industry, they could not succeed in developing indigenous supporting industries as much as expected with over 20-year-history. They still rely high-tech field on foreign enterprises. Judging from the good reputation of Vietnamese skill and good quality of human resources, there would be great opportunity for them to challenge in this area. More specifically, to challenge the forging, casting, and molding industries which would satisfy MNCs requirements in quality, delivery and cost. These industries could support not only electronics industry but also other industries where precision skill/technology is required as fundamental core industry. Autonomous management depends totally on second to none technology/technique in manufacturing sector. Fortunately, export-oriented MNCs can provide a state-of-the-art technology for Vietnamese to absorb.
Though MNCs are sometimes blamed for lack of technology/skill transfer, the major reason why high quality engineers and highly skilled technicians have not been developed do not seem to lie on it. This reason can not explain the success in Taiwan, Korea and partly in China. It seems that it depends on firstly the policy and educational system by the government to motivate people, secondly the facilities and vocational institute to give opportunity to train people and most crucially entrepreneurial mind and also self-motivation and interest by the people.
It would be the same as developing good players in any sports. Even if we can find world top-ranking coach, there is no guarantee that professional players are developed since it depends on 99% of efforts and 1% of talent by the players. Thus the government can not enforce MNCs to develop them.
Therefore once the government sets objectives, the government should focus attention on how to utilize know-how outside and how to support and motivate Vietnamese people along the line with the objectives. For this purpose, one of the way is to assign some officers to take charge of, for example, A, B and C companies. Their responsibility is to fully understand the management and operation of those companies and to make proposal for further improvement for the nation, as it is happening in Singapore.
If this could be achieved, Vietnam with comparative advantage could have variety of opportunities in collaboration with ASEAN countries.
The key is to challenge toward precise skill of micron and nanometer, since it would open the path toward great chance of success in electronics industry and create big possibility to develop second to none indigenous supporting industries.
PTITJ: In order to develop Vietnam electronic industry in coming time, could you please tell us Vietnam will has what advantage and difficulty, in particularly when Vietnam officially join AFTA and WTO?
Terry Takahashi: By joining ASEAN and implementing AFTA, Vietnam would face to challenging and exciting world as pioneer, where other ASEAN countries have never experienced. In other words, other ASEAN countries had been protecting themselves by putting barrier i.e. tariff for more than 20 years till they could establish firm manufacturing base inside the country. In case of Vietnam, before establishing firm base Vietnam has to step into free trade within the region due to AFTA. Therefore any companies who have already set up their manufacturing base within the region are able to compete against the companies in Vietnam under equal conditions, or rather more favorable conditions to the extent they have secured export competitiveness.
I believe this is the right path for Vietnam to join AFTA since Vietnam announced strong will to be a member of industrialized countries. In the current stream of globalization, fair trade and/or wide opportunity of trade can be expected only among the members, otherwise obliged to accept unfavorable trade conditions.
PTITJ: You have any recommendation for Vietnam electronic industry policy and for Vietnam businesses producing electronic items?
Answer to this is almost covered in Question 2. Once again I would like to emphasize is to try to invite MNCs of electronics industry as many as possible with the stance of “what can I do for you?” Anyway, under AFTA, it is quite obvious that Vietnam should have a large variety of value added products which enable export within the region so that Vietnam can equally enjoy “give & take” bargain. And in parallel with this, the government should carefully monitor the progress of human resource development and also, should try to find the solution if required by coping with government and enterprises outside till Vietnam can secure the comparative advantage whereby Vietnam can expect indigenous enterprises.
With these strengths, Vietnam can consider variety of alternative policies such as bilateral agreement with China and/or collaboration scheme with other ASEAN countries.
The former case i.e. bilateral agreement with China is worth examining for Vietnam as far as it works out to the benefits for both since the utilization of cheap components from China create more competitiveness in the trade within the region. The latter case i.e. collaboration with other ASEAN countries would provide optimal division of labor as far as Vietnam has items to export such as high value added products and/or components which require high skill/technique.
Key words in policy making would be creation of employment and human resource development.
PTITJ: According to you, how could Japan help Vietnam in developing electronic industry?
Terry Takahashi: As seen in Vietnam-Japan Joint Initiative, the stance of Japan to assist and collaborate with Vietnam would continue. As far as electronics industry is concerned, frontal subject would be to examine how to overcome current structure with mutual cooperation. More specifically, under AFTA, current structure would come to foster import of electronics products from the region more and more as domestic demand expands, since domestic-market-oriented manufacturing companies have not secured export competitiveness yet due to the limited size of production volume as well as import duty.
PTITJ: Thank you very much.