Supporting Industries: Vietnam's Strategic Pivot to Drive ASEAN Industrial Integration

From Assembly to Autonomy: Vietnam’s New Positioning for Supporting Industries

In early July 2026, a forum focusing on supporting industries was held in Ho Chi Minh City, signaling a key shift in Vietnam’s industrial policy. As global supply chains accelerate their restructuring under the influence of geopolitics, green transition, and digital transformation, Vietnam is no longer content with the role of an "assembly workshop." Instead, it seeks to achieve self-sufficiency in parts, materials, and technologies through the development of domestic supporting industries. This shift not only concerns Vietnam’s own competitiveness but will also profoundly impact the industrial division of labor and supply chain resilience within the ASEAN region.

Opportunities and Urgency Behind the Data

According to data from Vietnam’s Ministry of Planning and Investment, in the first five months of 2026, registered foreign direct investment (FDI) reached $24.81 billion, a year-on-year increase of 34.9%. Among this, the manufacturing and processing industry attracted $8.06 billion, accounting for the largest share. During the same period, Vietnam’s total import-export volume approached $496.7 billion, with exports of electronics, computers, and components leading at $63.5 billion. However, behind these impressive figures lies a different reality: Vietnam still imports large quantities of intermediate goods, machinery, and components—solely the import of computers, electronic products, and components reached $6.62 billion.

This "large-scale import and export" model exposes the weakness of a low localization rate. Taking the Saigon Hi-Tech Park in Ho Chi Minh City as an example, although it has attracted 26 supporting industry projects with a total investment of over $512 million, the localization rate has only increased from about 10% in 2010 to over 20%. The government has set a target: by 2030, raise the average localization rate in key industries to 40-45%, making Vietnam one of the top three most competitive industrial economies in ASEAN; by 2035, most supporting industry sectors should possess advanced technological capabilities and be more deeply embedded in the global value chain.

Vietnam’s Role Under the China+1 Strategy

The "China+1" supply chain strategy, specifically mentioned at the forum, has opened a window for Vietnamese supporting enterprises to become second- or third-tier suppliers to multinational corporations. Compared to neighboring ASEAN countries such as Thailand and Indonesia, Vietnam’s advantages lie in political stability, labor cost competitiveness, and continuously improving infrastructure. However, the real challenge is how to transition from simple processing and assembly to domestic production of technology-intensive components.

Nguyen Ngoc Dang Khoa, Deputy General Director of SMC Phu My Precision Machinery Company, pointed out that meeting international standards is the entry threshold for participating in the global supply chain. Besides general certifications such as ISO 9001 and ISO 14001, specialized certifications like IATF 16949 for the automotive industry, AS9100 for the aviation industry, and ISO 13485 for medical devices are becoming increasingly important. These standards are not only customer requirements but also frameworks for establishing standardized production systems and ensuring consistent product quality across factories.

Impact on ASEAN Regional Integration

From the perspective of the ASEAN Economic Community (AEC), the upgrading of Vietnam’s supporting industries will create multiple ripple effects.First, reducing dependence on imports from outside the region. Currently, Vietnam imports a large quantity of intermediate goods from China, South Korea, etc. If the localization rate increases, it will enhance intra-ASEAN trade in intermediate goods and improve the autonomy of the regional supply chain.

Second, intensifying intra-regional industrial competition. Thailand has a strong foundation in auto parts, and Indonesia in resource processing. Vietnam's catch-up may prompt countries to reposition their comparative advantages, driving a new division of labor within ASEAN's industrial chain. For example, the rise of Vietnam's electronics supporting industry may attract component manufacturers originally based in Malaysia to relocate.

Third, creating cross-border cooperation opportunities for SMEs. Ho Chi Minh City's Supporting Industry Association (HASI) has signed agreements with the Belgian-Dutch-Luxembourg Vietnamese Business Association to help local enterprises expand into European markets, while also collaborating with MISA Group to promote digital management. If such cross-border cooperation models are replicated within ASEAN, they will accelerate the integration of SMEs into the regional value chain.