HCMC – Toyota Motor Vietnam Co., Ltd signed a memorandum of understanding with the Ministry of Industry and Trade’s Vietnam Industry Agency on May 17 to support local producers of auto accessories to improve their capability to participate in global supply chains.

Accordingly, the two sides will cooperate to support domestic producers of auto parts to strengthen their linkages with auto assemblers. The cooperation project will be executed this year and the next, the local media reported. They will work to find potential suppliers, connect them with auto manufacturers and assemblers, hold meetings and visits to domestic suppliers and provide training courses. Toyota will provide basic criteria for the Ministry of Industry and Trade to choose appropriate enterprises. The company will also preliminarily assess local suppliers, while the Ministry of Industry and Trade will provide legal support, consultants and potential suppliers and support in training. Pham Tuan Anh, deputy head of the Vietnam Industry Agency, said the lack of connections between Vietnamese and foreign-invested firms had affected the production and economic development. The development of supporting industries, enhancement of the connections between domestic and foreign-invested enterprises and establishment of local supply chains are core factors to ensure the sustainable development of Vietnam’s industry, Anh added. Meanwhile, Toyota Vietnam President Hiroyuki Ueda said the advantage of Vietnam’s supporting industries was the high quality but low cost of local human resources. However, the supply capacity of local firms remains limited, while their production scale is small. Further, they are dependent on high-quality material imports. Their experiences and governance capacity are also limited, so their production costs double and triple those of other countries in the region, Hiroyuki noted. Therefore, Toyota is backing Vietnamese firms in supporting industries to increase the localization rate of their products. Last year, the Ministry of Industry conducted a survey and selected 200 potential suppliers. Toyota later chose six among the 200 firms to involve them in its supply chains.