It calls on the government to help develop the engineering sector

HANOI: Measures should be taken to strengthen the development of Vietnam’s mechanical engineering sector, experts say.

According to the Vietnam Mechanical Industry Association, although there are approximately 3,100 mechanical engineering companies and 53,000 manufacturing plants, these companies represent only 7% of the country’s market for engineering goods and services.

The association said numerous obstacles and issues continue to prevent the industry from reaching its full potential as Vietnam imports approximately $40 billion worth of industrial, agricultural, infrastructure, services and defense equipment, machinery, materials annually.

A recent report by the Department of Industry of the Ministry of Industry and Trade (MoIT) shows that the sector is mainly focused on three sectors: motorcycles and motorcycle parts; mechanics and home tools; and cars and car parts, which are a good starting point for further development of the industry.

Vietnamese companies can now produce and assemble almost all types of passenger cars, trucks and buses, as motorcycle production has achieved a localization rate of 85-95% and major market players such as Vinfast, Thanh Cong and Thaco.

The industry has gradually increased its localization rate, driving the development of other industries and the economy while creating jobs for millions of workers.

However, this industry only met about one third of domestic demand.

Industry experts say Vietnam, with a population of 100 million, most of them young, could become a mechanical engineering center in Southeast Asia.

Low product quality and high costs are key problems preventing the establishment of large international mechanical engineering companies in Vietnam.

The association called for stronger government support to help integrate the industry into additional economic sectors, incentives for medium-sized enterprises to increase production, and human resources training and financial assistance. Moreover, attention should be focused on acquiring new technologies while motivating both domestic and foreign companies fairly.

Truong Chi Binh, secretary general of the Vietnam Supporting Industry Association, said there are not enough incentives to encourage industrial development in Vietnam.

He said a typical new mechanical engineering company doesn’t expect to make a profit in the first three to five years.

“There is a lack of investment in the industry,” he said.

He said Vietnam could learn from the successful examples of countries that have developed their mechanical engineering industries by implementing appropriate policies to encourage investment and production.

The department advised the MoIT to continue building industries, including power and precision engineering, to attract investment from large multinational corporations.

Meanwhile, the ministry should focus on creating a market that will help companies increase production and improve supply chain integration.

Le Hoang Linh, head of the Manufacturing Industries Department at MoIT, said steps have been taken to encourage the use of domestic mechanical products in public investment projects, state-owned enterprise investments and government procurement.

“We are focusing on building demand for key sectors such as automotive, agricultural mechanics and railways,” Linh said.

“The market is expected to reach $300 billion by 2030, with cars alone worth $120 billion. This is a good opportunity for Vietnamese engineering to enter the global market and develop,” he said. —Vietnam News/ANN