Lack of leading enterprises

Some Vietnamese mechanical products are of equivalent quality to products of other countries in the region. Domestic enterprises manufacturing mechanical components have relatively good capabilities in fields, such as molding, electric cables, plastic components, and technical rubber. Aware of high market demand, many enterprises have invested in enhancing production capabilities to create quality products to serve foreign invested companies and export.

As a result, domestically produced metal components have met 85-90 percent of the demand for motorcycle production, 15-40 percent for automobile component production, about 20 percent for complete equipment production, 40-60 percent for agricultural machinery and engines, and 40 percent for construction machinery. Currently, the supply of metal components for high-tech industries meets about 10 percent of the demand. There are pioneering supporting industry enterprises, such as Thaco Industries in Quang Nam Province’s Thaco Chu Lai Industrial Park.

Currently, the supply of metal components for high-tech industries meets about 10 percent of the demand

Truong Thi Chi Binh, Secretary General of the Vietnam Association of Supporting Industries (VASI), believes that mechanical and supporting industry enterprises are facing a significant opportunity as Vietnam participates in many free trade agreements. These agreements will give mechanical enterprises an advantage in exports, helping them attract foreign investment.

According to the Vietnam Association of Mechanical Industries (VAMI), despite the strong impact of the Fourth Industrial Revolution, Vietnam’s level of manufacturing, especially precision mechanics - the pillar of industrial production, remains outdated compared to many other countries.

Long-term solutions

Specializing in supplying mechanical and automation equipment for plastic casting factories, the ASG Technology Vietnam Company Limited has to import 100 percent of steel materials to manufacture the one-way valve set for plastic injection machines used to produce automobile and motorcycle components.

Assoc. Prof., Dr. Nguyen Chi Sang, President of VAMI, said that the Government needs to promote the development of complete mechanical products, such as high-speed railways, urban railways, medical equipment, and bauxite plant chains.

According to Le Van Tuan, General Director of the Vietnam Machinery Installation Corporation (LILAMA), to resolve problems facing the mechanical engineering sector, it is necessary to create long-term loan sources with stable interest rates for mechanical enterprises, put in place tender regulations to help increase the use of domestically produced materials and goods, and create a market for domestic mechanical enterprises.

According to economists, for Vietnamese mechanical engineering businesses to compete effectively with foreign-invested enterprises, management agencies need to adopt mechanisms and policies that encourage business development and prioritize the use of domestic products in key economic projects. It is necessary to study and issue bidding regulations aimed at increasing the use of domestically made materials and goods in accordance with current laws and international practices. This will help expand the market, enhance the capacity of and connection among domestic mechanical engineering enterprises.

To develop the mechanical engineering industry in general and supporting mechanical industries in particular, according to the Vietnam Association of Mechanical Industries (VAMI), it is necessary to strengthen market access through connecting producers with potential buyers, and provide incentives and financial assistance for medium-sized supporting industry companies to expand production and train workforces.

A representative from the Ministry of Industry and Trade’s Industry Agency said the Ministry will continue to strongly promote downstream industries, including energy, precision engineering and manufacturing industries, to create favorable conditions for the development of supporting industries. This will help attract multinational corporations to invest in large-scale projects in Vietnam. By fostering the production and assembly of finished products, the domestic market for supporting industries will be maintained and expanded, laying the groundwork for domestic mechanical enterprises to become suppliers and integrate into the supply chains of manufacturers and assemblers of final products./.