Engineering needs further state support

by VTV428 April 2016 Last updated at 18:33 PM

VTV.vn - 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.

"Interest rates for local engineering enterprises stand at 10-15% while FDI firms generally are paying just 1-2% interest on their loans. This obviously affects our competitiveness." - Tran Van Quang, General Director, Dong Anh Electrical Equipment Manufacturing Joint Stock Company.

"Foreign firms receive preferential policies. For example, they enjoy land tax exemptions. Meanwhile, local firms mostly have to rely on themselves." - Vu Dinh Dong, Chairman, Thang Long Accurate Mechanical Co., LTD

Foreign market outnumbers domestic markets.

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.

"We’re participating in the exhibition with the intention of introducing our products while finding distributors. Currently, we have 88 distributors in Vietnam." - Jackey Hsiao, Director, Industrial Co., Ltd., Vietnam branch, Taiwan

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." - Nguyen Van Thu, Chairman, 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.


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