MINISTRY OF EDUCATION AND TRAINING – MINISTRY
OF PLANNING AND INVESTMENT
VIETNAM INSTITUTE FOR DEVELOPMENT STRATEGIES

DO THUY NGA

DEVELOPMENT OF SUPPORTING INDUSTRIES
IN HANOI CITY

Major: Development Economics
Code : 9 31 01 05
SUMMARY OF DOCTORAL DISSERTATION

Hanoi – 2018


This dissertation has been completed at
VIETNAM INSTITUTE FOR DEVELOPMENT STRATEGIES

Supervisors: 1. Assoc Prof., Ph.D. Bui Tat Thang
2. Ph.D. Duong Dinh Giam

Reviewer 1: Prof., Ph.D. Nguyen Dinh Huong
Reviewer 2: Ph.D. Tran Hong Quang
Reviewer 3: Assoc Prof., Ph.D. Nguyen Van Huan

The dissertation will be presented in front of the Doctoral Dissertation
Evaluation Committee at Vietnam Institute for Development Strategies.

Dissertation copy can be found at
National Library;

crankshaft were produced by Japanese FDI firms in Hanoi instead of imported ones.
Electronic components for information technology sector meet not only the demand of
domestic market but also significant amount for export [47].
However, production value of Hanoi SI-companies only accounted for about 10% of
the total industrial production value in the city [8]. Although automobile parts and
motorbike industries are among the most developed supporting industries as large market in
Hanoi, the percentage of revenue accounted for only 26% of the industry. Electronics and
informatics products were lower at only 10%. While electrical industries in Hanoi have
wide range of product categories as well as many different sub-categories, the industries
including electrical appliances and tools, mechanical supplies, mechanical parts, etc. only
accounted for 29.16% of the industries revenue [14]. The SI group for textiles and leather
and footwear is a special group, which accounted for a relatively low proportion of the
industries revenue due to being discouraged to develop in Hanoi after the year 2020.
The development of Hanoi supporting industries was also spontaneous and fragmented,
without the strategic orientations which concentrate on some key sectors and strengths of the
city to develop, overlapping products and uneven quality. Production capacity of the
enterprises was still limited and especially the enterprises have been unable to find solutions

1


for coordinating and linking together to achieve better business performance for individual
enterprises as well as the development of supporting industries in Hanoi city [54; 47]. One of
the biggest challenges for development was lack of qualified human resources, making SI
development more disadvantageous. The level of technology in SI-enterprises is at an average
level, with the number of technologically advanced firms being comparable to those of other
countries in the region (about 20%) [12]. Foreign invested enterprises (FDI firms) have
equipped with more advanced machining technology, but the capacity is sufficient to meet the
internal needs of its parent companies. Competitiveness of Hanoi SI-enterprises is low, lack of
coordination, lack of specialized allocation between production facilities, and weak linkages

The object of this dissertation is all components of supporting industries in Hanoi
city in terms of economic development. It is a process of mobilization and development of
supporting industries that aims to support the city's supporting industries to develop towards
sustainability and green growth.
- Spatial scope: The dissertation analyzes enterprises of supporting industries in Hanoi city.

2


- Time scope: The dissertation studies and evaluates current situation of supporting
industries development in the period of 2010-2017 and proposes measures to promote
development of supporting industries in Hanoi city by the year 2030.
- Constituents scope: The dissertation focuses on theoretical and practical issues of
supporting industries development (scale, quality and efficiency) in Hanoi city.
4. Research methodology
a. Research approach
- System approach
- Institutional approach
b. Method of data collection
- Collect data through documents, published reports.
- Method of investigation, field survey.
c. Methods of synthesizing and processing data
(1) Search and synthesize scientific papers and reports by international organizations
related to SI development in general and SI for specific sector.
(2) Collect research papers by scientists, administrators, research institutes and
universities in Vietnam, which have been published and discussed aspects of SI
development in the provincial or city and nationally level.
(3) Study doctoral dissertations, master theses which have studied issues related to
development of SI in the whole country and in Hanoi city.
d. Data analysis methods

a. Studies related to attracting investment in supporting industries
Prema-Chandra Athukorala and Do Manh Hong emphasized an increasingly
important role of SIs for economic development in developing countries. In order to
promote sustainable development, developing countries need to create conditions to attract
FDI, and attractiveness for FDI and effective use of FDI depend sustainable SI development
as well as how much an economy can absorb FDI that, in turns, brings efficiency and
sustainable development to the economy.
b. Studies related to supporting industry development policy
Porter; Ratana; Asia Productivity Organization; Goodwill Consultant JSC and VDF
have shown an important role of policies by focusing on analyzing the role of attracting
foreign investment in SI development.
c. Studies related to supporting industry development
JBIC; McNamara; Thomas Brandt pointed out that in order to develop SI, it is
important for SI to link with each other, to link up with MNEs, and to join the global value
chain to promote SI.
1.1.2. National studies
a. Studies related to supporting industry development for specific sector
There are many papers focusing on SI development of specific industries such as
automobiles, motorbikes, textiles, electronics, footwear, etc., but without focusing on
overall development of SI.
b. Studies related to supporting industry development policy
The main research focuses on proposing policies to develop SI for each specific
sector and draw lessons learned for SI development in Vietnam.
c. Studies related to supporting industry development
These studies focus mainly on development of industries, SIs, and policies, tools and
development for comprehensive industrial development, SI in Vietnam.
1.2. Overall assessment of previous studies
A number of studies have initially described an overall situation of SI development
for some typical industries such as motorbike, automobile, electricity, household electronics,
textile... These studies have pointed out advantages, achievements, limitations and causes

a. Concepts of development
Under different perspectives, development is understood to be multidimensional.
Development is the process of growing up, advancing all aspects, namely, satisfaction of
increased elements, both qualitative and quantitative changes, better institutions, product
types, organizations, market changes, law and enforcement, social security [98].
Economic development is an increase in economic activity (in terms of size and
quality) of a country (or region, province, district, enterprise, family) for the needs of its
people. Or, in other words, economic development is one or more of a number of actions
[49] to achieve development of economic system.
In economic development, industry plays an extremely important role. Industrial
development is expansion of the economy’s productive capacity through diversifying
commodity production as a part of overall socio-economic development [36, 37].
b. Concept of supporting industry and supporting industry development
SI is understood to be a technical and economic sector, including production of
intermediary products, supply of machinery parts and accessories, processed materials and
services and production support services under certain processes to assemble the final products.
The development of SI is development of scale, including increase in production
value, increase in number of SI enterprises, labor force involved in the SI industries; quality
development, including quality of products, quality of human resources in SI industries;
efficiency improvement of SI development, including growth rate of SI, VA/GO ratio,
applications of science and technology and localization ratio of SI products.
Constituent of SI includes: (1) As a specific economic and technical branch of the
industry, arising from labor division, high level and popular of production specialization.
(2). (2) SI plays a role as entities producing intermediate, attached and dependent products
with major industrial products. (3) High level of connectivity and support for development
of the main industry.
Based on that, the author outlined constituent of SI development in this dissertation as
followings: (1) increase in value of SI production, increase in number of enterprises
producing supporting products for the main industry; creating jobs and moving toward more
reasonable labor market structure; (2) improving quality of intermediate products that support

Evaluating quality of supporting industry products: Benchmarking is inherent quality
of every product. It must strictly adhere to technical specifications, technology and product
operation at general level. Superiority means that the product is always innovated to make a
difference, compared to other competitive products.
Assessing quality of human resources in supporting industries: analyzing
comprehensive and sustainable development of SI, it is necessary to analyze high-skilled
workers in enterprises, index of trained level, ability to manage and use machinery and
technical equipment; ability to use labor skills and technology for producing SI products.
2.1.4.3. Criteria for assessing the effectiveness of the supporting industry
- Growth rate of supporting industries: This is an indicator reflecting an increase in
speed and scale of output of SI for a given period. The growth is compared by the original
time, reflecting growth rate.
- VA/GO ratio: efficiency of SI production is expressed in VA/GO ratio, in which, VA
(Value Added) is an increase in new creative value and GO (Gross Output) is production
value of the sector. If ratio of VA/GO is high, meaning the growth rate of GO is lower than
that of VA. It shows that the SI sector develops in depth, producing raw materials, creating
large amount of added value. In contrast, VA/GO ratio is low, the growth rate of GO is
higher than that of VA. This shows that the SI sector is expanding in width, outsourcing, and
hiring. A rise in GO without an increase in VA, which economists call the phenomenon
"impoverished growth", should be avoided.

6


- Ability to apply science and technology and localization ratio of SI products: With
modern technology system, SI companies meet all quality requirements, delivery time for
customers. It is flexible, ready to meet all requirements of customers when any change
occurs. In particular, in the context of globalization, international economic integration also
helps SIs to improve their competitiveness in exporting products to foreign markets and
exist as a satellite of MNEs.

2010
2011
2012
2013
2014
2015
2016
Average growth rate (%)

Whole industry
Manufacturing
Production
Continuous
Production
Continuous
value (bill VND) growth rate (%) value (bill VND) growth rate (%)
267,659
259,898
293,443
9.63
284,854
9.60
317,028
8.04
307,343
7.89
350,918
10.69
340,058
10.64

production value increased by more than 8% per year.
Decline in number of industrial products was mainly due to reduction in orders from
partners and a fall in purchase of SI products which affected output of the final products.
However, production value of Hanoi's industries was still relatively good, which indicated
that industrial enterprises have invested in developing their products in order to increase
quality of their products for export.
Industrial development has created jobs for many workers in the city as well as
people from other provinces to work. In the period 2010 - 2016, the industry created nearly
01 million jobs in its industrial zones. In 2016, number of employees working in the
industrial sector in Hanoi was over 757 thousand employees, average growth rate in the
period 2010 - 2016 reached 2.1% per year. Of which, manufacturing and processing
industry employed nearly 720 thousand workers, accounted for about 95% of the total labor
force in the whole industry.
Investment in Hanoi industry was still comparatively small but increased remarkably.
In the period 2010 - 2016, investment in new industrial development increased by only over
9% per year, approximately equal to growth rate of industrial production value. Hanoi
industry has been attractive for investors. The Hanoi government implemented many
policies, creating a favorable environment for businesses to invest in the city industrial
sectors.
Table 3.2. Investment in industry of Hanoi city
Indicators
Total investment
- For industry
- For manufacturing
- For other industrial sectors

2010
148.1
38.3
19.8

Source: [11]

Currently, the city has developed 19 industrial zones and high-tech zones with the
total area of 4,100 hectares, of which there are 8 key industrial zones. Hanoi city was
building three hi-tech zones, along with 110 industrial clusters with an area of more than
3,000 hectares. By the end of August 2016, Hanoi industrial zones have attracted 616
projects (323 FDI projects) with registered capital of USD 5.22 billion, disbursed 3.28
billion, the investors mainly from Japan, Korea, China, Singapore ... 293 domestic projects

8


with registered capital of VND 11,891 billion (disbursed 7.168 billion). Among FDI
projects, many projects of leading corporations were to produce high technology products
such as Canon, Panasonic, Hoya, Meiko (Japan).
3.1.2. Policies for supporting industry development
Along with the city industrial development, supporting industry has been formed and
developed to support Hanoi industry. At the beginning of 2011, when the government
started to pay attention to SI development, a number of policies were promulgated to
promote SI development.
SI development became one of the main contents of the Master Plan for Vietnam
Electronics Industry Development up to 2010 with a vision to 2020 (Decision No.
75/2007/QD-TTg dated 28/05/2007). Decision No. 37/2007/QD-BCN approved the plan for
SI development to 2010 with a vision to 2020. Major contents of the plan included SI
sectors that needed to focus on SI development: textile, leather-shoes, electronics informatics, manufacturing and assembly of automobiles, mechanical engineering.
However, there was unavailable definition of supporting industries. Vietnam still lacks a
legal definition of SI that should be understood consistently among government agencies.
Privileged policies on taxation, credit and human resources stipulated in the Decision
was old ones, as stipulated in other legal documents. Currently, policies for SI development
in Vietnam in general and in Hanoi in particular are ample, but less practical to support SI

priority sectors of Hanoi to 2020 are shown in the Table 3.3.
Table 3.3. SI sectors and supplying capabilities for Hanoi's industries
Sectors

Manufacturing (agricultural,
industrial machines,
automobiles, electronics, ...)

Metal components
(including molds)
Plastic - rubber
Spare parts
components
Electromagnetic
components
SI for
Raw materials (fabrics,
textiles and leather, ...)
leather Accessories (buttons,
shoes
machine only, soles, ...)
SI for high tech industries

Textiles
and leather
- shoes

High
tech
industry

this sector played a major role in development of Hanoi supporting industries. The products
of mechanical, electrical and electronic components, plastic and rubber have been widely
supplied to industries manufacturing automobile, motorbike, and electronics in the city.
Also, products of the industries were exported, contributing to improve value, processing
and manufacturing techniques as well as changes in structure of exported products in Hanoi
city. Some sectors such as producing spare parts, components and materials have developed
considerably in Hanoi, especially in domestic production of molds; components, spare parts
for bicycles and motorcycles; standard mechanical components; electric cables, tires and
tubes of all kinds. These products were good quality, meeting the requirements of FDI

10


companies and domestic demand as well as simultaneously exporting to East Asia, ASEAN
and EU countries.
However, SI companies in Hanoi were mainly SMEs. The SI has been transformed
moderately in terms of scale. Currently, large-scale, large enterprises in the city were
unavailable. For that reason, it was difficult for SI enterprises to access to new production
technologies, to improve their competitiveness in terms of capital and products with large
companies because Hanoi SI enterprises were generally weak at capital, finance, human
resources, product quality, science and technology, etc.
Table 3.4. Production scale of supporting industries in Hanoi

Unit: firms
2011
Indicators
Total
1. Production of spare parts
- Mechanical components
- Electronic components

15
6
4
3

432
322
194
79
49
107
42
19
27

Medium
firms
297
246
104
93
49
50
19
12
10

11

2


2012

2013

2014

2015

2016

Total
1. Production of spare parts
- Mechanical components
- Electronic components
- Plastic - rubber components
2. Textile and garment
industry
- Yarn making
- Production of woven fabrics
- Finishing of textile products
- Knitted fabrics and nonwoven fabrics

35895
30895
11053
17103
2739

36857

growth (%)
105.36
105.82
106.30
105.83
103.80

7842

8121

8382

8560

8713

8928

102.63

4983
2036
589

5139
2103
618

5293


106.92

11


3. Leather - shoes industry

17

19

23

29

31

35

115.54
Source: [12]

In the period 2011 - 2016, number of workers working in SIs increased from 36,000
in 2011 to over 46,000 in 2016. The number of employees working in SIs accounted for
over 6 % of total employment in industry. Therefore, SIs sectors had a better quality of labor
than the general level of industrial enterprises. Proportion of SI employees accounted for
over 6% of total number of employees in the industry, but production value accounted for
about 10% of the total industry.
Most of the enterprises employed less than 100 workers. Enterprises with over 200


2013

2014

2015

2016

28.84
26.62
12.39
10.45
3.78
4.35
2.19
1.78
0.24

30.92
28.6
13.56
11.03
4.01
4.71
2.29
1.98
0.27

34.11

42.9
19.5
18.5
4.9
7.25
3.45
2.95
0.56

Average
growth (%)
9.98
10.01
9.49
12.10
5.33
10.76
9.52
10.63
18.47

0.14

0.17

0.19

0.2

0.23

The average production value per worker in the supporting industry increased from
over VND 800 million in 2011 to nearly VND 1 billion in 2016. With this growth, the city's
supporting industries contributed job creation for large numbers of workers in the city and
from other localities, along with increased incomes and a stronger increase in production
value, contributed significantly to economic growth of the city.
3.2.2. Quality of supporting industry development
3.2.2.1. Product quality of supporting industries
Recently, localization ratio of motorcycle parts reached over 80%. Some complicated
parts such as engine gears, motorbike crankshaft were produced by Japanese FDI firms in
Hanoi instead of imported ones. Electronic component parts of information technology
industry meet not only the domestic market but also for export.
Some Hanoi companies have actively invested in technology to produce SI products.
As a result, the level of technology has improved. A number of SI products were able to
compete with imported products (such as the products of the Mechanic Equipment Export
Joint Stock Company, Hanoi Plastic Joint Stock Company, Thang Long Metal Joint Stock
Company, shares in East Anh chain ...). Contemporarily, there are a few companies in Hanoi
to break out of stagnation by investing in equipment, raising the scale. Competitiveness of
SI was low, there was lack of coordination, specialized distribution between production
facilities and almost lack of coordination, distribution of production, linkage between main
producers with subcontractors, between subcontractors, between FDI enterprises and
domestic enterprises. Notably, lack of qualified human resources has made the SI
enterprises more disadvantageous.
Hanoi SI companies were generally at a low-level development, with a large gap
compared to other countries in the region. Therefore, SI companies were unable to
participate actively in value chain, and if so, they can only make simple components for FDI
enterprises. FDI companies in Hanoi were difficult to find suppliers which were domestic SI
enterprises. Although it is desirable, becoming a supplier for FDI enterprises is still a
difficult playground. capacity and technology of majority Hanoi SI companies were still
limited. In Vietnam in general and in Hanoi in particular, it is necessary to develop bodies
that certify standardized products, certify safe and environmentally friendly production.

91
143

13

Unit: number of workers
Average
2015 2016
growth (%)
11230 11431
98.60
15983 18743
107.51
6493 6918
105.07
4680 5392
110.97
3291 3581
113.01
362
538
176.96


Sources: [10], [12]

Majority of the workers had primary education, or elementary vocational training. From
2011 to 2016, the trend of trained workers increased significantly, as shown in the Table 3.7.
3.2.3. Efficiency in supporting industry development
3.2.3.1. Growth rate of supporting industry development

10.69
10.32
10.94
3.82
0.00

2014
6.61
9.21
9.55
6.13
33.33

2015
2016
8.39
7.21
9.99
13.28
9.15
13.07
22.74
13.81
25.00
20.00
Source: [12]

Main Hanoi SI products and strengths of the city were producing spare parts, which
grew substantially. Only production value of manufacturing spare parts industry accounted
for over 92% of total production value of SI in 2011 and remained unchanged until 2016.

46.79
43.62
43.12
37.33

2014
2015
2016
44.24
43.98
41.87
40.94
40.35
38.88
43.03
42.24
37.64
42.50
38.00
35.17
Sources: [59], [10], [12]

3.2.3.3. Science and technology application and product localization
The technology that spare parts companies in Hanoi are using technology and
machineries mainly from Japan, China, Taiwan and some upgraded domestic machineries.
However, localization ratio of products requiring high technology, high accuracy
requirements was relatively low. In automobile industry, due to lack of auxiliary equipment,
automobile industry in Hanoi was unbale to reach its targets. Localization ratio was below
20%, especially producing cars and specialized vehicles. With the low localization ratio,


70 – 80
10
40
30

Plastic - rubber
Components
85 – 95
20
30-35

30

15

15

10

5

5
Source: [59]

3.2.3.4. Linkage of supporting industries
In order to develop Hanoi SI, the City People's Committee assigned Hanoi Department
of Industry and Trade and other relevant departments to regularly organize trade conferences,
trade promotion, exhibitions, and support for the enterprises. The IS exhibitions were to create
favorable conditions for SI enterprises to connect together or cooperate with industrial
enterprises in Hanoi or from overseas, especially Japanese, Korea, Thailand, etc. Hanoi SI

Business support policies are adequate (capital, interest rate, tax...)

4.42
4.55
4.20

15

Standard
deviation
1.80
1.72
1.68


CS4
CS5

Investment policies of the State are useful
4.15
1.59
Combination of economic policy and environmental policy is good
3.95
1.74
Sources: Data analyzed by the author, 2017

3.3.2. Global and regional linkages, influences of multinational corporations
One of the most concerning points for the whole manufacturing industry was lack of
linkage between large producers and supporting enterprises, between foreign invested
enterprises and domestic ones. Many businesses still think "sell what they have, not what


Standard
deviation
1.42
1.59

Variables

Along with stable political condition, cultural factors also affected development of SI
enterprises. Consumers in the country now have preferences of appreciating quality and
design of foreign goods or buying goods associated with famous brand, thus making
domestic enterprises have difficulty in maintaining the domestic markets. On the other hand,
resources of domestic companies were weak and unable to conduct marketing and
advertising activities.
3.3.9. Factors affecting the development of supporting industries in Hanoi

18


After calculating the Cronback Alpha Correlation Coefficient, all variables were
guaranteed to be run in Exploratory Factor Analysis (EFA). After running EFA, 40 variables
were grouped into 8 influencing factors, and the selected variables have factor loading> 0.5.
The TT5 variable has a loading factor of less than 0.5 and was rejected. Continuously
running the EFA with the remaining 39 variables were matched, the KMO coefficient> 0.8
for the Figen values was greater than 1, variance was 71.03%, indicating that 8 groups of
factors with 39 variables were suitable, perfectly consistent and statistically significant.
Verifying the results and grouping of 8 groups of factors are consistent with the
above analysis.
- The coefficient R2 = 0.670, which represents variation of the independent variables
in the model, accounting for 83% of SI development a good indicator showing fitness of the

NNL

0.227

QHLK

Variable
Intercept
Cultural
politics
Human
Resources
Relationships,
linkange
Policy
Finance
Science and
technology
Infrastructure
Market
R2
F
Sig F

Symbol

Standardized
Coefficients
Beta


0.027

CS
TC

0.129
0.278

0.043
0.052

0.020
0.202

0.433
3.432

0.066
0.001

KHCN

0.195

0.037

0.117

2.581


19


linkage (0.172). The lowest is the coefficient of infrastructure variable (0.085). This result,
in our opinion, is also consistent with the results of field surveys in the city.
3.4. Overall assessment of supporting industry development in Hanoi
3.4.1. Achievements in supporting industry development
First, in terms of output performance, Hanoi SI grew faster rate than the average of
industrial sector. Production efficiency was reflected in the following aspects: employment,
profits, and good contributions to the budget.
Second, some SI companies in Hanoi have become a part of the linkage in the product
value chain of multinational corporations. Hanoi has established industrial parks
specializing in SI, associated with FDI enterprises such as Bac Thang Long Industrial Zone,
Noi Bai, Quang Minh. Hanoi IS enterprises supplied to not only domestic markets but
increasingly exported to markets of other countries.
Third, Hanoi industry has been gradually developing. Foreign direct investment inflows
have increased, state-owned enterprises are reformed rapidly ...
Fourth, it can be said that the recent increase in the number of FDI projects was due to the
continuous improvement of the investment environment, especially as increasing awareness of
the SI importance and having paid much attention to development of this new industry.
Fifth, the state has issued a number of legal documents to promote development of SI as
mentioned from previous chapters.
3.4.2. Limitations and reasons
3.4.2.1. Limitations
First, Hanoi IS was at its early stages of development with several weaknesses. The
number of Hanoi-based enterprises was low and low level of development in terms of
quality and quantity.
Second, Hanoi SI was fragmented, underdeveloped, insufficient supporting services to the
enterprises, backward technology and weak competitiveness. Hanoi IS products was poor in
types, designs, monotonous design, and the prices were generally higher than that of imported

Seventh, programs and policies on supporting SI were abundance, but overlapping,
ineffectiveness to SI development. Abstaining the government supporting activities or
policies were inadequate, many cumbersome procedures, making it difficult for enterprises
to invest in SI.
CHAPTER 4. SOLUTIONS FOR DEVELOPING SUPPORTING INDUSTRIES IN
HANOI CITY
4.1. Contexts for supporting industry development
4.1.1. International contexts
The trend of globalization and international economic integration has been
increasingly profound and strongly affecting activities and economic sectors; Technological
development and globalization have substantial impacts on production, especially for
developing countries. Vietnam is approaching ever closer with the Industry 4.0; There is an
increasing trend of FDI projects in supporting industries to developing countries; Following
the AFTA commitment, member countries have to reduce import tax.
4.1.2. Domestic contexts
Restructuring some priority industries in Vietnam takes place on the basis of new
awareness and comprehensive content; Strategic development of cutting-edge industries
goes along with the delopment of related SI systems;
Development strategy of SI has become increasingly urgent as Viet Nam is losing its
cheap labor advantage in labor-intensive industries compared to other Asian countries.
4.1.3. Hanoi city context
After 10 years of SI development policy implementation, Hanoi currently has 59
products of 46 enterprises whose products have been recognized as the key industrial
products of the city. The city government has issued “the certificate of industrial key
products". Hanoi's key industrial sector has achieved a certain number of development
steps. The city's SI industry has not developed adequately with the city’s potentials and its
products are not diversified. The is unavailable products and absence of SI companies
involving in high technology.
4.2. Development orientations and objectives of supporting industries in Hanoi
4.2.1. Development orientations

land rent incentives) for investment in the development of hi-tech supporting industries.
- Attracting investment in industry and supporting industries: (i) The city budget will
invest in infrastructure, which provides facilities for investors and enterprises to operate their
business, build ready-for-lease workshops that are suitable for SMEs to produce SI products
in priority SI sectors; (ii) Continue to improve the investment and business environment in a
more open way, reform administrative procedures for consulting and helping enterprises,
reduce the difficulties for enterprises; (iii) Hanoi should set up a dedicated financial fund for
SIs; (iv) Encouraging the formation of industrial zones and clusters for manufacturing
components, spare parts and auxiliary materials for industries; Building industrial parks and
export processing zones in a concentrated way; (iv) Support and encourage investment for
domestic investors; (v) Encourage incubation activities, SI seed nurseries through supportive
mechanisms to facilitate land acquisition, tax exemption, investment in industrial parks;
- Enhance support for industrial enterprises to support market development: (i)
Periodically organize surveys of SI enterprises and make a list of potential suppliers, develop
SI database; (ii) The city should pay attention to allocating budget and have a better
mechanism to support businesses in terms of information, knowledge market, improve
competitiveness, better linkages between enterprises and other enterprises, business,
professional associations in the country and abroad ....; (iii) Organize fairs and exhibitions on
manufacturing products, organizing "reverse" fairs, serving as a bridge between enterprises
producing final products and producing SI products; (iv) Department of Industry and Trade,
Department of Planning and Investment regularly cooperate with related provinces in
cooperation programs between the city and provinces to form regional linkages, especially the
raw material area planning, sector development planning, IS product development planning.
- Capacity building for supporting industry enterprises: (i) Encourage, support
training by demand of employer, vocational training; (ii) Assessment of capacity, demand
and ability to apply management systems and tools of Hanoi SI enterprises. There is a need
to develop support programs and projects suitable to the needs and capacities of each target
group. It is expected that management systems and tools should be trained and consulted;
(iii) Training, consulting, technical support are to develop and apply some management
systems in SI production. SI enterprises shall be considered, partly supported the costs, the

production support services following certain processes to assemble the final product. There
are several authors who studied SI at macro-level, which have been unable to reveal
implication of SI from an economic perspective or have focused only on SI for a particular
industry (machine, automobile, textile, ...).
To evaluate the development of SI, the authors have used the following criteria: First,
SI development was evaluated in terms of development scale as follows: (i) Evaluate
development of number and scale of enterprises in the SI industry; (ii) Evaluate
development of SI human resources; (iii) Evaluate development of SI finance; (iv) Evaluate
development of SI enterprise production value; (v) Evaluate development of the range of
products in the SI industry.
Second, SI development was evaluated in terms of development quality as follows: (i)
Evaluate quality development of SI products; (ii) Evaluate market development of SI products;
(iii) Evaluate quality of human resources development in SI; (iv) Evaluated the quality of
financial development in SI; (v) Evaluate development of science and technology application in
SI; (vi) Evaluate the localization rate of SI products; (vii) Evaluate the development of
downstream industry responsiveness in SI; (viii) Evaluate linkage for SI development.
2) It was estimated that in 2017 Hanoi had about 729 enterprises involved in SI, of
which 568 SIs manufacturing with 03 supplying groups, 161 textile and garment enterprises
and 04 leather-shoe enterprises. Newly-started SIs enterprises were engaged in
manufacturing to supply products to hi-tech industry. Number of SIs enterprises involved in
manufacturing spare parts accounted for 78%; textile and garment and footwear enterprises
accounted for only 22% of the total number of Hanoi SI enterprises. The SI has been

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