According to the Vietnam Institute of Economics, after 30 years of the Doi Moi renovation policies, the proportion of industry and construction in GDP has risen by 16%. However, Vietnamese industry remains weak as engineering – a key sector in the country’s economic development process increased by only 1.6% over this period.
According to statistics from the Ministry of Industry and Trade, Vietnam currently owns 14,800 domestic engineering firms. Among those, only about 100 businesses have the capital of over 22.5 million US dollars. This is attributed to the difficulties in accessing investment to upgrade manufacturing capacity. In addition, local businesses have to shoulder several disadvantages compared to foreign enterprises.
According to Vietnam Association of Mechanical Industry, about 80% of Vietnam’s engineering market is dominated by foreign firms. At the4th International Precision Engineering, Machine Tools and Metalworking Exhibition which is taking place in Hanoi, 71% of the exhibitors are foreign firms. Meanwhile, the remainder aren’t Vietnamese businesses, they’re mainly Vietnam-based FDI firms.
According to experts, to realise the aim of the domestic engineering sector being able to meet over 50% of demand for precision engineered products by 2025 and 60% by 2035 respectively as expected, the engineering sectors will need further state support.
"We need to extend the preferential mechanism for mechanical products and projects. In addition, Decision 111 on support industries has yet to clarify preferential loans policies for support industries including the engineering sector", said Nguyen Van Thu, Chairman of Vietnam Association of Mechanical Industry.
Thu also suggests that the Vietnam Association of Mechanical Industry has prepared to present such proposals to the prime minister in the upcoming meeting between the PM and the business community, with a bid to better the business environment for the engineering sector. The meeting will take place in HCM City on Friday.
