| Supporting industries and mechanical engineering seek cooperation opportunities in the European and American markets; Optimizing policies for supporting industries. |
There is a lack of large, leading mechanical engineering companies.
In recent years, some mechanical products have been manufactured to a high quality, comparable to that of some countries in the region. Currently, domestic mechanical component manufacturers have quite good capabilities in several areas such as: various types of molds, mechanical components, electrical cables, plastic components, and technical rubber. Furthermore, the demand from the supporting industries is very high, so many businesses have boldly invested to improve production capacity, focusing on developing high-quality product lines to serve foreign direct investment enterprises and aiming for the export of mechanical products.
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| Mechanical processing and manufacturing at Duc Trung Metal Technology Joint Stock Company. Photo: Hoai Nam |
Therefore, domestically produced metal components have met 85-90% of the demand for motorcycle manufacturing; approximately 15-40% of the demand for components in automobile manufacturing (depending on the vehicle type), about 20% for the production of integrated equipment, 40-60% for the production of agricultural machinery and power machinery, and 40% for construction machinery. The supply of metal components to high-tech industries currently meets about 10% of the demand.
Domestically, there are pioneering enterprises developing supporting industries such as Truong Hai Industrial Group – Thaco Industries in Thaco Chu Lai Industrial Park, Quang Nam . Thaco Industries produces a wide range of mechanical products serving daily life, such as agricultural machinery, water supply and drainage pipes, water tanks, automotive components and spare parts… These products have helped Thaco Industries achieve billions of USD in revenue each year and experience continuous growth in recent years.
Ms. Truong Thi Chi Binh – General Secretary of the Vietnam Association of Supporting Industries (VASI) – also commented: Mechanical and supporting industry businesses are facing great opportunities as Vietnam participates in many free trade agreements. These agreements, once in effect, will give mechanical businesses a greater advantage in exporting, expanding markets, and attracting foreign investment.
However, alongside this, the quality of supporting industrial products for the mechanical engineering sector from some domestic enterprises remains low, and production costs are high, resulting in a lack of competitiveness. Furthermore, there is a shortage of large, internationally-sized mechanical engineering enterprises that could play a leading role.
According to the Vietnam Association of Mechanical Engineering Enterprises (VAMI), despite the strong impacts of the Fourth Industrial Revolution, the level of mechanical engineering, especially precision engineering – the cornerstone of industrial production – remains backward compared to many countries. “ Businesses face numerous challenges in technological innovation, keeping up with trends, improving labor skills, infrastructure quality, etc., in order to participate in global supply chains and cope with intense competition from countries in the region and around the world , ” a VAMI representative acknowledged.
Many suggestions and proposals
As a company specializing in trading mechanical equipment for the plastic molding industry and automation for manufacturing plants, a representative from ASG Vietnam Engineering Company cited the example of a one-way valve for plastic injection molding machines used in the production of automotive and motorcycle components. To manufacture this valve head, the company has to import 100% of the steel materials. “ Technical steel requires very harsh working conditions, operating in high-temperature environments and withstanding chemical corrosion. Most Vietnamese steel manufacturers are in the construction industry; we haven't been able to find suitable steel for the engineering sector, ” the ASG Vietnam Engineering Company representative stated.
Due to a weakness in raw materials, many businesses say they are forced to import complete machinery for sale. If they manufactured in Vietnam but still had to import raw materials from abroad, the production costs would be too high, making them uncompetitive.
According to VAMI, to develop supporting industries for the mechanical engineering sector, it is necessary to have a program to support output by connecting with potential buyers in each industry; incentives for existing medium-sized supporting industry companies to invest in expanding production, training human resources, and providing financial support, etc.
Some experts in the mechanical engineering industry believe that specific policies are needed to support domestic mechanical engineering businesses, such as support for training in production management systems and business management systems. This would help domestic supporting industrial enterprises improve their capabilities, meet international standards, and be able to assume a role as a link in the global production and supply chain.
At the same time, it helps businesses have better access to new technologies. Consideration should be given to equal investment incentives between domestic mechanical engineering businesses and FDI enterprises. In addition, the government should create more orders, including orders for supporting industrial products, for Vietnamese mechanical engineering businesses, especially in public investment projects.
Associate Professor Dr. Nguyen Chi Sang, Chairman of VAMI, also believes that the Government needs to promote the development of complete mechanical products, large-scale mechanical products such as wind power, high-speed railways, urban transport railways, medical equipment, bauxite plant production lines, etc.
Mr. Le Van Tuan, General Director of Vietnam Machinery Installation Corporation (LILAMA), also believes that to solve the difficulties facing the mechanical engineering industry, several issues need to be prioritized, such as: creating long-term loan sources with stable interest rates tailored to the specific production characteristics of mechanical engineering enterprises; issuing bidding regulations that contribute to increasing the rate of using domestically produced materials and goods; creating a market for domestic mechanical engineering enterprises; and developing mechanisms and policies to support production and encourage the consumption of domestic mechanical engineering products in accordance with international commitments.
Mechanical engineering is an industry that the government should include in its supporting industry development program.
According to economic experts, for Vietnam's mechanical engineering industry to be competitive with FDI enterprises, it requires regulatory agencies to have policies and mechanisms that encourage enterprise development and require economic projects to prioritize the use of domestically produced goods.
Ms. Truong Thi Chi Binh argued that for the domestic mechanical engineering industry to develop, it needs a market, but achieving this requires the government to have a specific mechanism for the industry. Specifically, there needs to be a clear policy regarding domestically produced mechanical products, meaning that if equipment can be manufactured domestically, its import should be strictly prohibited.
Some experts suggest that regulations on bidding should be studied and enacted to increase the proportion of domestically produced materials and goods used, in accordance with current regulations and international practices. This would both create a market and help improve the capacity and linkages of domestic mechanical engineering enterprises.
According to VAMI, to develop the mechanical engineering industry in general and the mechanical engineering supporting industry in particular, a program to support output is needed by connecting with potential buyers in each sector; incentives for existing medium-sized supporting industry companies to invest in expanding production, training human resources, and providing financial support, etc. Therefore, mechanical engineering is an industry that the State needs to include in the supporting industry development program and enjoy certain preferential policies because developing the mechanical engineering industry means developing supporting industries for other economic, industrial, and service sectors, not just producing some parts and components of machines and technological lines.
Mr. Pham Tuan Anh, Deputy Director of the Industry Department (Ministry of Industry and Trade), also proposed a solution: the Ministry will continue to strongly develop downstream industries, including sectors such as energy, precision engineering, and manufacturing, to ensure that supporting industries have favorable conditions for development. This will attract multinational corporations to invest in large-scale projects in Vietnam. By promoting the production and assembly of finished products, the market for domestic supporting industries will be maintained and expanded, creating a foundation for domestic mechanical engineering enterprises to become suppliers and participate in the supply chain of enterprises producing and assembling final products.
| The mechanical engineering industry is one of Vietnam's key industries, serving as a foundation for the development of other industries. However, for the mechanical engineering industry to fully realize its potential and compete in the international market, developing supporting industries for the mechanical engineering sector is essential and urgent. |
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