Synchronizing solutions to expand domestic market for mechanical industry

Open-road policy, creating market for mechanics

Mechanical engineering is a fundamental industry, serving the needs of machinery, equipment, and components for many manufacturing industries. Therefore, in recent years, the Ministry of Industry and Trade and other ministries and branches have proactively implemented many policies to expand the domestic market and expand the capacity for the mechanical engineering industry to develop. A series of strategic documents, resolutions, and important decisions have been issued, setting long-term development goals and closely linked to practical needs.

A typical example is Decision 319/QD-TTg dated March 15, 2018 of the Prime Minister approving the Strategy for the development of Vietnam's mechanical industry to 2025, with a vision to 2035. This document affirms that mechanical engineering is a fundamental industry, while emphasizing the linkage of mechanical production with services and trade, promoting supporting industries so that enterprises can proactively participate deeply in the global value chain. One of the focuses of the strategy is to create a market for domestic mechanical enterprises.

The Government and the Ministry of Industry and Trade have issued many policies to encourage the development of the mechanical engineering industry.

Along with that, Resolution 29-NQ/TW in 2022 on industrialization and modernization identifies priority for developing mechanical engineering for the production of agricultural machinery, automobiles, ships, energy equipment, medical equipment, etc. These are fields with very large domestic market capacity, creating opportunities for mechanical enterprises to "take root" and develop long-term.

In practice, these policies have been effective. Through tax, land and credit incentives from Decree 111/2015/ND-CP on supporting industry development, many enterprises have boldly invested in the production of components, molds, plastics and technical rubber. Thanks to that, the localization rate in motorbike production reaches 85-95%; metal components for automobiles meet 15-40% of demand; for the railway industry, domestic enterprises can manufacture carriages with a localization rate of up to 60% if the order is suitable.

In particular, the resolutions on national railway development (Resolution 172/2024/QH15, Resolution 187/2025/QH15, Resolution 188/2025/QH15) have set out the requirement to prioritize the use of domestic mechanical products. This is a step with clear "market creation" meaning, helping Vietnamese enterprises have the opportunity to directly participate in key national projects worth tens of billions of USD.

At the Workshop on developing supporting industries for the Vietnamese mechanical industry in association with domestic automobile production and assembly, and developing the Vietnamese railway system in Quang Ninh, co-organized by the Ministry of Industry and Trade in March 2025, a representative of the Department of Industry, Ministry of Industry and Trade said that the Department of Industry has been and will make every effort to promote the entire industry in general and the mechanical industry in particular, especially mechanical engineering for automobile production and assembly and railway system development. At the same time, he hopes to continue to receive close cooperation from localities, associations and enterprises to realize the growth target of the processing and manufacturing industry at over 9.7% and GDP at over 8% in 2025.

Trade promotion - the key to market expansion

Along with the policy mechanism, trade promotion activities are also promoted by the Ministry of Industry and Trade, considering this an important tool to expand the market and enhance the competitiveness of mechanical enterprises. Fairs, exhibitions, and seminars at home and abroad are held regularly, creating opportunities to connect Vietnamese enterprises with multinational corporations, as well as expanding the domestic customer network.

In reality, although competitiveness is still limited, many mechanical enterprises have gradually affirmed their position thanks to participating in trade promotion activities. Some products have become supply partners for "big guys" such as Toyota, Thaco, Thanh Cong..., creating a strong spillover effect. The presence of these enterprises in the supply chain not only helps to raise the brand of Vietnamese mechanical engineering, but also contributes to stabilizing the domestic market, reducing dependence on imports.

The domestic market is assessed to have much potential for Vietnamese mechanical products to exploit.

However, there are still many difficulties when the mechanical industry only meets less than 30% of the equipment demand in the fields of thermal power, hydropower, renewable energy, cement, etc. Products of many enterprises still lack precision, high cost, and lack competitiveness. Meanwhile, according to Mr. Nguyen Duc Cuong, Vice President of the Hanoi Supporting Industry Association, the major barriers are long-term investment capital, complicated policy access procedures, and dependence on imported raw materials, making enterprises easily passive.

From the business perspective, Mr. Nguyen Van Khanh, Deputy Director of Toan Phat Mechanical Company Limited, expressed that the domestic market capacity for mechanical products is still small, which makes businesses hesitant even though they really want to invest in technology and expand production. " The mechanical industry is very specific, with large investment capital, slow recovery time, and high requirements for standards and regulations. If the domestic market is not large enough to "support", before being able to participate in the export market, it will be very difficult for businesses, " said Mr. Khanh.

To overcome this, experts all emphasize the need to continue promoting trade in a more practical and synchronous manner. First of all, domestic and international exhibitions must be held annually, at fixed times, with wide promotion for businesses to grasp and participate. In addition, it is necessary to survey specific needs through industry associations, thereby "breaking down" support policies suitable for each group of businesses, instead of applying them generally.

Another important direction is to link trade promotion with large public projects. For example, according to the Power Plan VIII, Vietnam plans to invest an additional 32,000 MW of gas-fired power plants and 23,000 MW of wind power by 2045. This is a mechanical equipment market worth more than 60 billion USD. If 40% of the localization is achieved, domestic mechanical enterprises will have the opportunity to access a market worth 24 billion USD, which is not a small number.

Many experts say that the most important thing for mechanical enterprises today is for the State to create markets, especially large-capacity markets such as urban railways, offshore wind power or energy projects. If appropriate mechanisms are added, Vietnamese mechanical engineering will certainly have many opportunities to change.

It is also important to emphasize that trade promotion does not stop at advertising or connecting, but must also go hand in hand with human resource training, research and development (R&D) support, application of new technology and standardization of production processes. This is the foundation for Vietnamese mechanical products to be competitive enough to meet the strict requirements of domestic and international markets.

Vietnam's mechanical engineering industry has a huge domestic market potential, from automobiles, motorbikes, railways, to energy, construction and materials. With a demand of 310 billion USD by 2030, this is not only an opportunity, but also a "test" of the capacity of domestic mechanical enterprises. The policies of the Party, the State and the Ministry of Industry and Trade in recent times have "paved the way" and created the market. However, to take advantage of the opportunity, enterprises must proactively upgrade technology, diversify products, invest in research and trade promotion.

The domestic market, if exploited effectively, will be a good foundation to promote the development of Vietnam's mechanical industry, helping this industry not only stand firm domestically but also reach far in the international market.

Source: https://moit.gov.vn/tin-tuc/xuc-tien-thuong-mai/dong-bo-giai-phap-mo-rong-thi-truong-trong-nuoc-cho-nganh-co-khi.html

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