Thúc đẩy liên kết để phát triển ngành công nghiệp điện tử trong bối cảnh các hiệp định thương mại tự do thế hệ mới

Nội dung text: Thúc đẩy liên kết để phát triển ngành công nghiệp điện tử trong bối cảnh các hiệp định thương mại tự do thế hệ mới

1. PROMOTING LINKAGES AND DEVELOPING ELECTRONICS INDUSTRY IN THE CONTEXT OF NEW-GENERATION FREE TRADE AGREEMENTS THÚC ĐẨY LIÊN KẾT ĐỂ PHÁT TRIỂN NGÀNH CÔNG NGHIỆP ĐIỆN TỬ TRONG BỐI CẢNH CÁC HIỆP ĐỊNH THƯƠNG MẠI TỰ DO THẾ HỆ MỚI Tran Viet Thao, PhD Vu Thi Thanh Huyen, PhD Nguyen Thi Phuong Ly, MA Thuongmai University Abstract In recent years, Vietnam has been proactively integrating widely in the regions and with other countries in the world. Participating in New-generation Free Trade Agreements (FTA), especially the Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), FTA with the EU, with many partners, with large scale, high level of commitment, is an important breakthrough for our country's comprehensive international integration, bringing a great impact on economic sectors, especially the electronics industry which has been making great contributions to Vietnam's export growth and FDI attraction. Aiming take advantage of the opportunities and overcoming the challenges from the process of integration, promoting linkages in production and trading the electronics industry is considered an important and fundamental solution. This article focuses on analyzing the current situation of the linkage in developing Vietnam's electronics industry recently, then assesses the opportunities and challenges of the industry in the process of joining the new-generation free trade agreements. Keywords: electronics industry (EI), linkages, new-generation free trade agreements. Tóm tắt Trong những năm gần đây, Việt Nam đang ngày càng chủ động hội nhập ngày càng sâu rộng với các khu vực và quốc gia trên thế giới. Việc tham gia các hiệp định thương mại tự do (FTA) thế hệ mới, nhất là Hiệp định Đối tác xuyên Thái Bình Dương toàn diện và tiến bộ (CPTPP), Hiệp định đối tác kinh tế toàn diện khu vực (RCEP), Hiệp định FTA với EU, với nhiều bên, quy mô rộng, mức độ cam kết cao, là những đột phá quan trọng của hội nhập quốc tế toàn diện của nước ta, đem đến nhiều tác động lớn cho các ngành kinh tế, đặc biệt là ngành công nghiệp điện tử - vốn là ngành đang có đóng góp lớn cho tăng trưởng kim ngạch xuất khẩu và thu hút FDI của Việt Nam những năm vừa qua. Để tận dụng các cơ hội, cũng như đẩy lùi cách thách thức từ quá trình hội nhập, thúc đẩy liên kết trong sản xuất, thương mại ngành CNĐT được coi là giải pháp cơ bản, quan trọng. Nội dung bài viết tập trung vào phân tích thực trạng liên kết trong phát triển CNĐT Việt Nam thời gian vừa qua, từ đó, đưa ra những đánh giá về cơ hội và thách thức của ngành CNĐT trong quá trình tham gia các hiệp định thương mại tự do thế hệ mới. Từ khóa: công nghiệp điện tử (CNĐT), liên kết, hiệp định thương mại tự do thế hệ mới. 484
2. 1. Introduction Linkages in production are considered one of the important factors to reduce production costs and improve added values for the industry/ products. Particularly, for the electronics industry, the linkages in production play an important role in technological innovation, reforming the organization of production activities, thereby promoting the increase in productivity and efficiency for both the manufacturing industry and for the economy. Although it is assessed that the industry has a high growth rate of export turnover, accounting for the largest proportion of the total export turnover and FDI attraction, ,low added values and limited actual participation of domestic enterprises are existing situation in Vietnam’s electronics industry. These have raised the issue of serious consideration on the current situation of the linkages in the manufacturing of the electronics industry in Vietnam in the past time, thus, to give necessary solutions to promote the development of Vietnam's electronics industry in the next years. 2. Theoretical basis and research methodology 2.1. Linkage and the roles of linkage in industrial production The concept of linkages in industrial production In a narrow sense, a limited definition may be given thatit linkssupplies, raw materials, semi-finished goods and components or finished products; between commercial concerns. In other words, industrial linking may occur when one manufacturing firm purchases inputs to produce goods or services or sells to another manufacturing firm. In a broad sense, industrial linkage encompasses all cooperative activities, including flows of materials and information, between separate elements and functions of the manufacturing system. Manufacturing linkage is a combination of products that flow from factories, to retailers, wholesalers, the public, as well as other manufacturers.(Dobson, 1984) Thus, the concept of industrial linkage has different interpretations, but at least, can be seen in the following way:  First, processlink. This is considered as to describe the movement of goods between different companies as stages in the manufacturing process.  Second, a service link; and this refers to the supply of machinery and auxiliary parts as well as repair and maintenance requirements when supplied by separate companies.  Third, marketing link involves relationships with other companies that assist the selling and distribution of goods;  Fourth, financial and commercial links describe the relationships with financial and advisory services such as banks, insurance companies and stockbrokers Within this article, the authors will approach linkage in the narrow sense, which is the links that take place in the manufacturing process, describing the movement of goods among different companies in stages of the manufacturing process. 485
3. The role of linkage in manufacturing and industrial development Due to the significance of linkages in the production activities of industries in the economy, there have been a number of studies related to this issue in the world and in Vietnam. According to a research of Khalid Nadvi and Stephanie Barrientos (Nadvi & Barrientos, 2004), industrial clusters, or the geographic concentration of businesses and supporting units involved in the same field, may create advantages for small businesses. The cluster model emphasizes internal connectivity, whereby the benefits of the cluster are enhanced by the cooperation of local companies, local organizations and local social capital. The growing evidence of small business clusters in developing countries competing in local and global markets has spurred much of the policy enthusiasm in promoting clusters. Similarly, according to research by Ana Colovic and Olivier Lamotte (Colovic & Lamotte, 2014), the clusters may facilitate the internationalization of new international joint ventures by providing resources,networking opportunities and legitimacy to help them reach global markets and by speeding up internationalization; According Joynal Abdin (Abdin, 2016), cluster development is considered as an effective tool to promote economic growth. Industrial clusters are considered as one of the most effective mechanisms to generate income and increase employment, especially for small, medium and small enterprises. Developed or developing countries have their own policies for developing industrial clusters. According to Nguyen Dinh Tai (Tài, 2013), the role of linkages in industrial production and the theory of industrial clusters are developed from Michael Porter's theory of national competitive advantage (1990). This theory shows that each industrial linkage cluster is like the value chain in the production of goods and services, in which, industries are linked by goods and services flows. The industrial linkage clustersare formed from the high concentration of businesses in a number of sectors and fields that are quite closely related, in which the role of supporting businesses is closely involved. The growth of an industrial linkage cluster is often associated with the increase and sustainable development of enterprises in the supporting industry. An industrial linkage cluster, once formed, will create the foundation elements to improve competitiveness through a number of components such as: giving businesses the opportunity to increase productivity; promoting creativity and innovation; remarkaly affecting the formation of new businesses in the industry or in related industries. Similarly, according to Le Minh Ngoc and Le Huyen Trang (Ngọc & Trang, 2011), industrial linkage clusteraffects competitiveness and creates competitive advantage in three ways: Increasing the productivity of enterprises in the linkage cluster through improving access to suppliers, skills and expertise; adjusting the direction and speed of creativity to future productivity growth; and promoting the formation of new businesses. On the other hand, research by Nguyen Ngoc Son (Sơn, 2015) on industrial clusters shows that the geographic concentration of related companies and organizations which are linked in one specific sector contributes to strengthening the local economy and 486
4. urbanization, facilitating industrial restructuring as well as encouraging linkages among businesses, allowing public resources to be more concentrated. Nevertheless,this also creates opportunities for gatheringinformation and knowledge; which is the premise for improvement, innovation in production and reducing transaction costs. Similarly, according toVo Tri Thanh et al(Thành), the development of industrial linkage clusters facilitates increasing competitiveness (through reducing production costs, sharing information and other resources), innovation (technology, management, ), development and transformation of local economic structures. Therefore, there are more than 2,500 initiatives for developing industrial linkage clustersin 75 countries of all development levels in the world so far. The linkagemay be expressed in the relationship among enterprises of all economic sectors in industries and internationally; betweenforeign-invested enterprises and domestic enterprises; between large enterprises and SMEs in industrial zones and industrial clusters; between enterprises and state management agencies, policy-making agencies; between manufacturing enterprises and training establishments, research institutions, industry associations; 2.2. New-generation Free Trade Agreements Concept: Free Trade Agreement (FTA) is a commercialdeal between two or more countries. Accordingly, countries will follow the roadmap of reducing and eliminating tariff barriers as well as non-tariff barriers towards the establishment of a free trade area. Free trade agreements can be made between two individual countries or can be reached between a trade bloc and a country such as the EU-Chile Free Trade Agreement, or theASEAN-China Free Trade Agreement. The term "new generation" is completely relative, used to talk about the FTAs with a comprehensive scope, beyond the framework of liberalization of trade in goods, such as EU-Vietnam Free Trade Agreement (EVFTA). ); Trans-Pacific Partnership Agreement (TPP); Transatlantic Trade and Investment Partnership (TTIP); EU Treaties; North American Free Trade Agreement (NAFTA); Southern Common Market (MERCOSUR); ASEAN+1 FTAs; Australia-United StatesFree Trade Agreement (AUSFTA). Compared with the WTO agreements, the "new generation" FTAs are the "WTOplus" agreements, with contents that had previously been rejected but now is necessary to be accepted because the international trade scene has changed. Therefore, the term "New-generation Free Trade Agreement (FTA)" is used to refer to FTAs with broad and comprehensive commitments, including the commitments on free trade in goods and services as the "traditional FTAs"; the deepest level of commitment (tax reduction almost to 0%, with possibility of a roadmap); strict enforcement mechanisms and moreover, it covers the areas that are considered "non-traditional" such as: Labor, environment, state-owned enterprises, government procurement, transparency, mechanisms on resolving investment disputes Opportunities and challenges of the New-generation Free Trade Agreement (Cương, 2019) include: 487
5. Opportunities: Firstly, promoting export: Trade liberalization in general and the new-generation FTAs in particular have the effect of promoting export. The provisions of these FTAs force member economies to restructure, open new markets and create commodity attraction. Secondly, for domestic production: Participation in new-generation FTAs will lower prices of input materials for domestic production so the production costs of businesses will be reduced,thus, commodity prices will be more competitive than imported goods, boosting domestic production for export. Thirdly, for business environment: Participation in new-generation FTAs such as EVFTA, CPTPP regarding the institutional issues, legal policies behind the borderline will create favorable conditions and opportunities for changing, improving policies and laws in a way that is more transparent, convenient and in line with international practice. Fourthly, for attracting foreign direct investment (FDI): In the new-generation FTAs, there are commitments to treat fairly between domestic and foreign investors regarding establishment, acquiring, expansion, management, deploying, operation and trade. They will create opportunities for foreign investors to access the market faster. New- generation FTAs also have regulations on sustainable development, which help reduce backward technologies and promote the development of technologies using renewable and environmentally friendly energy sources. Challenges: Firstly, challenge on institutional improvement, creating a healthy competitive environment. Economies will need to actively innovate to meet the requirements committed in the free trade agreements; At the same time, domestic enterprises will need to constantly update new policies and regulations. Secondly, the challenge on competitiveness of theeconomies. The reduction of import tax according to the committed schedule leads to domestically produced goods being subject to strong competitivenessfrom imported goods, and the domestic manufacturing industries are directly affected by the above fluctuations of international commodity market. Thirdly, the challenge on leading and directing FDI inflows towards improving domestic industrial capacity and promoting linkage with domestic enterprises. Fourthly, the risks of increasing macroeconomic instability in the context of volatile world and region. The greater the openness, the more negative impacts on the economies from the outside. 2.3. Research methodology and data sources Research methodology: In order to study the current linkage status of electronics industry in the context of new-generation free trade agreements, the authors use qualitative methods including descriptive statistics, comparison, confrontation to analyze the current situation of manufacturing and business of Vietnam's electronics industry; generalize the linkage between supporting industrial enterprises and major electronics enterprises; since 488
6. then, assess both the opportunities and challenges of the electronicsindustry in the context of new-generation free trade agreements. Data sources used in this article include the data obtained mainly from the General Statistics Office. 3. Results and discussion 3.1. Overview of process for Vietnam to participate in new-generation of free trade agreements Vietnam has signed a number of new-generation FTAs, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), specifically: CPTPP: Countries are committed to eliminate import duties on 65-95% of tariff lines and completely eliminate 97-100% of tariff lines as soon as the Agreement comes into effect, the remaining items will be scheduledfor tariff elimination within 5-10 years. In the CPTPP, Vietnam is committed to abolish the tariff lines at high rates, whereby: 65.8% of tariff lines have a tax rate of 0% right after the Agreement comes into effect; 86.5% of tariff lines will have a tax rate of 0% in the 4th year when the Agreement comes into force; 97.8% of tariff lines will have a tax rate of 0% in the 11th year when the Agreement comes into effect. For export taxes, Vietnam is committedto abolish the majority of goods that are currently subject to export tax according to a5-15 yearschedule after the Agreement comes into effect. For information technology products, CPTPP countries are committed to become members and implement WTO Information Technology Agreement (ITA). Vietnam is already a member of ITA and is currently negotiating with other CPTPP countries under the WTO to expand ITA. According to ITA, countries will have to eliminate tariffs and other taxes that apply to most information technology products, including computers, telecommunications equipment, semiconductors, and scientific devices used for manufacturing and testing semiconductors and most parts of these products. EVFTA: The main contents of the Agreement includes: Trade in goods, trade in services, rules of origin, customs and trade facilitation; measures for food hygiene and safety, animal and plant quarantine, technical barriers in trade, investment, trade defense, competitiveness, intellectual property and sustainable development; legal issues, cooperation and capacity building. In EVFTA, Vietnam and the EU are committed to eliminate import duties on 99% of tariff lines over a period of 7 years for the EU and 10 years for Vietnam. Accordingly, Vietnam is committed to eliminate tariffs for 48.5% of tariff lines right after the Agreement comes into force, 58.7% after 3 years, 79.6% after 5 years,91.8% after 7 years and 98.3% after 10 years. For export taxes, Vietnam is committed to eliminate most of the export taxes on the goods to the EU with the roadmap up to 15 years. For electronic goods, under the EU's commitment to open the market of goods, 74% of tariff lines will be eliminated import tax right after the Agreement comes into effect, the remaining products will be eliminated import tax according to the schedule of 3 to 5 years. 489
7. Under Vietnam's commitments to open door for a number of EU‘simportant commodity groups, import duties will be eliminated on 61% of tariff lines on machinery and equipment as soon as the Agreement comes into effect. Import tax on remaining goods will be reduced to 0% after the maximum of 10 years. 3.2. Overview of the development situation and the status of linkages in the manufacturing and processing industry 2.2.1. Overview of the development of Vietnam’s electronics industry Electronics industryof Vietnam has developed very fast since 2010. According to the 2018 Statistical Yearbook of the General Statistics Office(Tổng cục Thống kê, 2019), the number of enterprises manufacturing electronics, computers, and optical products is 1755, 25.4% increased compared to that in the previous year, attracting 735,978 employees, an increase of 20.2%. In particular, the number of enterprises with a labor scale below 300 is 1441, accounting for 82.11%; the number of enterprises with capital scale of less than VND 50 billion is 1178, accounting for 67.1%. This shows that the majority of electronics manufacturing enterprises are small and medium-sized enterprises, causing difficulties for the process of innovation and technological improvement. Industrial production index (IPI): The IPI of electronics, computers and optical products has fluctuated relatively complicatedlysince 2012. After a sharp decline in 2013, the IPI increased rapidly in 2014 and 2015; in 2016, the index dropped to only 12.5% in comparison to the previous year; In 2017, the IPI increased again at 35.2%; However, by 2018 it only obtained 10.7%. This shows the unstable and unsustainable growth rate of Vietnam's electronics industry. Import and export: in general Vietnam’s export of electronic products has a relatively strong growth. In particular, the overall export turnover of Vietnam's electronics industry accounts for a relatively large proportion of the country's total export turnover. Table 3.1. Export share of Vietnam's electronic products 2012 2013 2014 2015 2016 2017 2018 Total export 114529.2 132032.9 150217.1 162016.7 176580.8 213215.3 243697.3 value (million USD) Electronics, 20595.4 31889.3 35007.1 45847.2 53450.6 71891.8 78781.5 computers, phones of all kinds and components (million USD) 490
8. Structure 17.98 24.15 23.30 28.30 30.27 33.27 32.33 (%) Source: General Statistics Office, 2019 In recent years, the exportshare of electronic products, computers, phones and components has increased rapidly, from 17.98% of total exports in 2012 to 32.33% in 2018. This shows positive roles of the electronics industry in general on Vietnam's export growth and its contribution to economic growth. However, despite high export turnover, Vietnam's electronics industry depends heavily on imported inputs and raw materials. Thus, the added value that Vietnam earns from exportingelectronic goods is relatively low and has not had significant contribution to Vietnam's GDP growth in recent years. Attraction of foreign direct investment (FDI), by the end of 2016, the total number of FDI projects in the electronics sector was 1011, accounting for 8.63% of the total number of FDI projects in manufacturing and processing industry; equivalent to the registered capital of USD 28,306.15 billion, accounting for 16.39% of the total registered capital of the manufacturing and processing industry. In addition, the average growth rate in the period of 2011-2016 of 83.04% is a high growth rate, showing the important role of Vietnam's electronics industry in attracting FDI. Table 3.2. Foreign direct investment (FDI) in electronics industry in Vietnam Million USD Year 2011 2012 2013 2014 2015 2016 100% foreign capital 419,18 1.363,63 5.511,48 6.349,86 5.081,47 2.131,23 Business cooperation - - - - 1,00 - contract Joint venture - 4,22 6,30 49,48 14,63 28,45 Total 419,18 1.367,85 5.517,78 6.399,34 5.097,09 2.159,68 Source: Foreign Investment Agency, Ministry of Planning and Investment, 2017 Considering the form of investment, it can be seen that most of the investment in the electronics industry is concentrated in the form of 100% foreign capital, while the form of joint venture, especially the form of business cooperation contract accounts for a very low proportion. This also shows alimited linkage between FDI enterprises and domestic enterprises in electronic manufacturing cooperation, little opportunity to take advantage of FDI to promote the transfer of modern technology, absorbing advanced organization, management ability to increase the added value of the electronics industry in Vietnam. 3.2.2. Overview of the linkage status in the development of Vietnam's electronics industry Regarding the linkage between enterprises in the electronics supply chain, 491
9. The linkage between FDI enterprises and domestic enterprises is still loosing. In each supply chain of FDI enterprises, Vietnamese enterprises only participate in the stages of low value creation. The proportion of domestic supply to assemblers is low, usually by FDI enterprises. Supporting industrial products are mainly produced or imported by FDI enterprises. The products,which are manufactured by domestic enterprises, are at low quality, high prices (outdated technology, slow to innovate due to limited resources, poor production processes, etc.), so they can only be sold within domestic enterprises. Table 3.3. Supply capacity of the field of manufacturing components and spare parts for Vietnam's electronics industry Domestic supply capacity (%) Electrical and Plastic - Downstream field Mechanical electronic rubber components components components Electronic Appliances 50% 30 - 35% 40% Electronic information and 30% 15% 15% telecommunications High-tech industry 10% 5% 5% Source: Center of Supporting Industrial Enterprises Development - Institute for Industrial Policy and Strategy, 2015 Basically, after more than 30 years of development, Vietnam's electronics industry is still in the state of assembly for foreign brands. Domestic electronics enterprises still only exploit old products with low profit and about 5-10%/ year increase in the added value. Meanwhile, FDI enterprises in the electronics and machinery industry are facing pressure of reducing the component and accessory cost sand enhancing the added value of domestically manufactured products. Difficulties in promoting linkages between domestic enterprises and FDI enterprises are partly due to the number of supporting enterprises, especially those that meet quality requirements and are capable of providing for FDI enterprises and satellite chain suppliers are still very few. The production technology, management system and types of products are limited and do not meet the high requirements of customers. Lack of programs to support capacity building, promote linkages from the Government and business support agencies. The linkage and information exchange between Vietnamese supporting industry enterprises and FDI enterprises and satellite enterprises are still limited. Regarding the linkages in industrial clusters and industrial linkage clusters, In recent years, a number of industrial linkage clusters, electronics industrial clusters have also existed naturally. For example: Thang Long Industrial Park (Noi Bai, Hanoi) with the concentration of many enterprises from Japan.This Industrial Park links the large mechanical and electronic assembly enterprises such as Canon, Panasonic with 492
10. suppliers of components and spare parts also from Japan such as Nissei, Santomas, Yasufuku, ; In the north, the electronics industrial clusters include Hanoi, BacNinh, Thai Nguyen, Hai Phong, VinhPhuc, Hai Duong, Hung Yen and Bac Giang with a concentration of multinational corporations such as Canon, Samsung, Nokia, LG, Panasonic, and many satellite businesses, mainly FDI enterprises; in particular, multinational corporations play a key role in forming and developing electronics industrial clusters. In the south, there has also been starting to establish hi-tech industry clusters, especially electronic circuits and information technology in Ho Chi Minh City; electronics industrial cluster in Binh Duong; However, industrial clusters and industrial parks mostly show only the geographical concentration of enterprises, not yet motivate to promote and attract businesses in the same field to participate in the production chains, the participation of domestic supporting enterprises is still very limited. According to Vo Tri Thanh et al. (Thành), based on the evaluation of Mekong Economics (2011), the limitations of Vietnam’s Electronic industrial linkage clusters are expressed in the following aspects: (1) Demand conditions: low domestic demand (to achieve economic efficiency thanks to scale), Vietnam has not really participated deeply to meet the demand of the region and the world; (2) Competitiveness and industrial strategy: lack of domestic enterprises with high competitiveness, low productivity growth, tax rates are insufficiently encouraged and unreasonable; (3) Conditions of production factors (lack of skilled labor supply, low quality of high-tech education, poor quality of infrastructure outside industrial zones, lack of effective management skills and technological innovation ); (4) Supporting industry and related industries: lack of qualified and cheap domestic supply, information shortage between suppliers and assemblers. Regarding the linkage between enterprises and the system ofassociation, business supporting centers: according to evaluation of CIEM et al.( (Mitsubishi Research Institute & Central Institute for Economic Management, 2016), local authorities are operatingbusiness supporting centers and industrial encouraging centers in each province and city, however, the awareness of enterprises about the existence of these facilities may be very low. Therefore, the frequency of using these facilities is also very low. This shows the weak linkage between enterprises and agencies and organizations supporting enterprises. 3.3. Oppotunities and challenges Thus, it can be seen that, in recent years, the electronics industry has made rapid development, greatly contributed to the total export turnover and attracted FDI inflows. However, the current status of the development process of the industry also shows a number of existinglimitations, especially the weak linkage in the manufacturing process, making it difficult for the electronics industry to raise added value and contribute more substantially into the process of economic growth. The achievements and limitations of the industry have brought both opportunities and challenges in the context of Vietnam participating in new-generation free trade agreements, in particular: Oppotunities: Firstly, market expansion and export promotion. In recent years, Vietnam's 493
11. electronics industry has continuously been the industry with the largest proportion and rate of export turnover, therefore, in the context of joining new-generation free trade agreements, with tax reduction to 0%on most commodities, the deeper and more comprehensive level of opening, theelectronics industry continues to be the industry that has great opportunities of expanding and penetrating markets. By promoting the linkage of manufacturing and trade with partners signing the agreement, the electronics industry has many remarkable opportunities to participate in production chains and value chains with member countries in the region and in the world. In particular, the commitment to open markets in EVFTA will help further expand export markets, especially the products that both have advantages such as agricultural and aquatic products, wooden products, textiles, footwear of Vietnam, machinery, equipment, cars, motorcycles, and alcoholic beverages of EU. Secondly, promotion of domestic production. When the tax rate decreases, especially for input materials for production of exports such as: Textile raw and ancillary materials, plastics, corn, rubber, , creating conditions for lowering prices, reducing production cost of exported industrial goods. On the other hand, the reduction of tariff will make more goods imported from other countries, especially EU countries into Vietnam, due to cheap prices and rich and diversedesigns, positively impacting domestic production. In order for the domestic manufacturing industry to compete with imported goods, the issue of manufacturing linkage and cooperation will have an important meaning. Thirdly, regarding attraction of foreign direct investment (FDI): With the provisions of the new-generation FTAs, investors will invest deeply into the Vietnamese market, therefore, the quality of foreign direct investment will be improved, creating motivation for economic development, strengthening the linkage between FDI enterprises and domestic enterprises. For example: EVFTA will motivate EU‘shigh quality investors and other partners into Vietnam. So far, EU investors have been present in most important economic sectors, focusing on industry, construction and some service industries. Challenges: In addition to the positive effects, Vietnam's manufacturing and processing industry has to deal with a number of challenges in the implementation of new-generation FTAs, namely: Firstly, the competitiveness of Vietnam's electronics industry is still low. The reduction of import taxes according to the committed schedule leads to domestically produced goods being subject to strong competitiveness from imported goods, and the domestic electronics industry is directly affected by fluctuations in the international commodity market. On the other hand, most of Vietnam's exported products are assembly and processing withmainly imported input materials; The rate of enterprises investing in producing raw materials is low, while the localization rate of products is slowly improved, the link between domestic enterprises and FDI enterprises is still weak, making it more difficut to take advantage of the opportunities from the New-generation free trade agreements. Secondly, for imports, despite the signing of FTAs with many partners, in the short term, Vietnam's imports still depend heavily on traditional markets (such as China), due to 494
12. the deep tax commitment levels as well as favorable geographical position, thus, the problem of trade deficit from China is unable to be fully solved. Besides, the tax cuts also put a lot of pressure on the operations of domestic electronics industrial enterprises. Thirdly, there are a number of issues for FDI inflows to the electronics industry in particular and Vietnam's manufacturing and processing industry in general, such as: (i) The limited contribution of FDI to improving industrial capacity; (ii) The weak linkage between FDI enterprises and domestic enterprises; (iii) FDI enterprises mainly operate in the field of assembly and processing, are labor-intensive and less likely to create disseminating effects technologically; (iv) Although the legal framework and policies on FDI opening and international economic integration have been improved, there are still many limitations in management, leading to issues such as environmental pollution, transfer pricing, tax evasion ; (v) More connected capital flows with the world also make the risks of macroeconomic instability increase in the context of fluctuating world and regional economy, which also poses challenges in building and implementation of macroeconomic policies. 4. Conclusion Therefore, it can be seen that in the context of integration and participation in new- generation free trade agreements, the issue of linkageshas an important meaning in promoting the development of the electronics industry in Vietnam. In the following years, the electronics industry is still considered a major driving force for Vietnam's economic growth. In order to make good use of the opportunities and limit the challenges in implementing the commitments of the new-generation FTAs, solutions are needed to promote linkages in the electronics industry. Domestic electronicsindustrial enterprises should make more efforts in improving production capacity to meet the requirements of FDI enterprises, multinational corporations, participating in global supply chains and value chains, thus, improving the added value for the whole electronicsindustry. The Government should have policies to orient FDI inflows in the direction of strengthening the links with domestic enterprises. Nevertheless, it is necessary to strengthen the coordination and linkage between enterprises and State management agencies, enterprises supportingorganizations, centers and associations in order to timely exchange, provide information and regulations related to the implementation of the Agreements, market information, REFERENCES 1. Abdin, J. (2016). Government’s role in industrial cluster development. Retrieved from joynal-abdin. 2. Colovic, A., & Lamotte, O. (2014). The role of formal industry clusters in the internationalization of new ventures. European Business Review, 26(5), 449-470. 3. Center of Supporting Industrial Enterprises Development - Institute for Industrial Policy and Strategy. (2015). Niên giám về Công nghiệp hỗ trợ các ngành chế tạo Việt Nam. In (pp. 174-179). Hà Nội: Nhà xuất bản Lao Động. 495
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