Revise mechanical engineering plan: PM

Workers at the factory run by Ha Noi-based Power Engineering Joint Stock Company. Viet Nam's mechanical engineering industry needs to revise its development plans to produce competitive products, Prime Minister Nguyen Tan Dung has advised.

Sector fails to meet domestic demand

PM Nguyen Tan Dung said it only met about 32 per cent of domestic demand in 2012, 10 years after the development strategy was rolled out.

At a conference to review the strategy plan, reports showed that the sector posted nearly VND228 trillion (US$10.8 billion) in production value in 2012, a six-fold increase from 2000. The figure rose to over VND251 trillion ($11.9 billion) last year.

Export revenue for the mechanical engineering industry hit $12.1 billion in 2012 and more than $13.1 billion in 2013.

Deputy Minister of Industry and Trade Le Duong Quang noted that the sector could now manufacture hydraulic machinery for hydro-electric power plants, including those as large as the 2,400MW Son La Plant.

Quang said the motorbike industry also made great progress, not only meeting domestic demand, but exporting 150,000 units a year. The local content rate in made-in-Viet Nam motorbikes has reached 85-95 per cent.

However, Prime Minister Dung noted that many targets were not met. For example, the goal was to have 45-50 per cent of domestic demand met by 2010, but only 32 per cent was met.

In addition, experts warn of the dominance of foreign-invested enterprises in the sector. They also warn that the sector has to import materials and machines, such as welding rods, driving up the trade deficit to $6.6 billion in 2006 and $16.04 billion in 2012.

The country still lacks competitive products that can serve vital areas, such as farming, fishing, aquatic product processing and transport.

Dung instructed agencies and ministries to make sure that policies to help the sector actually work, such as those relating to land, corporate income and value-added taxes and credit - and facilitate the development of supporting industries.

"Our mechanical engineering sector has contributed very little to the increased application of mechanics in agricultural production," Dung said.

Participants suggested that more enterprises other than State-owned companies be allowed to join the key mechanical engineering development programme.

Nguyen Van Thu, chairman of the Viet Nam Mechanical Engineering Association, said the sector had the potential to generate revenues up to $300 billion by 2055, but so far, it had been plagued by low competitive products and outdated technology.

Thu noted that little investment was put into the development of mechanical manufacturing. The association estimated that between 2002-12, not a single new factory in mechanical manufacturing was opened.

"We don't have a clear-cut strategy, clear plan of investment and supporting policies," he said. "It's already 2014 and we still haven't figured out our priorities within the sector."

Thu said the Government should provide policies that can support domestic companies, such as regulating the ratio of materials and industrial equipments made in Viet Nam used in projects.

The Government should also provide favorable credit policies for farmers in the long term so that they could easily access mechanical made-in-Viet Nam equipment.

Source: VNS