Economic Sector

Last updated: Monday, April 22, 2019


Mechanical Development in Industry 4.0

Posted: Wednesday, September 19, 2018

In the context of international integration and the Industrial Revolution 4.0, the emergence of new factors demands more requirements for the development of the mechanical industry. It is time for this sector to change its solutions and policies to ensure its competition and business support.

The cornerstone of the economy
Stressing the importance of the Vietnamese mechanical industry, Deputy Minister Do Thang Hai said that this backbone sector, especially appreciated by the Party and the State, is strategically significant to the rapid and sustainable development and helps improve product competitiveness, draw more foreign direct investment (FDI), speed up acquisition and transfer of technologies, and accelerate the development of local domestic mechanical engineering enterprises. It also ensures the efficient and effective economic participation in global production and distribution networks, thus backing sustainable and long-term economic growth.

According to the Ministry of Industry and Trade, although support and incentive policies for the new key mechanical industry have been applied just a short time, the mechanical industry has obtained considerable achievements. The number of mechanical enterprises increased sharply from 10,000 in 2010 to 21,000 in 2016. The export value of this sector already topped US$16 billion a year.

Data from the Ministry of Industry and Trade showed that many mechanical products which were previously imported have now been locally manufactured as many companies mastered important technologies to gradually raise the localisation rate and contribute to the cause of industrialisation and modernisation. They are highly capable of manufacturing moulds, bicycle and motorcycle components, standard mechanical components, ships, machine tools and agricultural machines. These products partly meet domestic demand and are exported to some countries in the world. Some have joined supply chains run by FDI enterprises and global supply chains operated by multinational corporations.

Mr Pham Tuan Anh, Deputy General Director of the Industry Department under the Ministry of Industry and Trade, said that, according to the general objective to 2035, Vietnam's mechanical industry will be developed into advanced industries featured by modern technologies and world-class high-quality products, and will be deeply engaged with global value chains. Regarding export, the sector’s export value will account for 35 per cent of its total output by 2020, 40 per cent by 2030, and 45 per cent by 2035. Specifically, by 2025, the sector will focus on developing sub-sectors like automobile, tractor, agricultural machinery, construction equipment, industrial equipment and electrical equipment to meet basic requirements of the economy and for export. After 2025, the sector will form some consulting and manufacturing contractor conglomerates capable of designing and manufacturing auxiliary equipment and EPC bidding packages for industrial works and set up some consulting and manufacturing contractors capable of designing and manufacturing auxiliary industrial equipment for industrial works.

Development solutions
In addition to its achievements, it is frankly acknowledged that the domestic mechanic sector is still very limited. Its production capacity is still low and mechanical companies are too small relative to total companies nationwide. The sector runs a huge trade deficit as it still relies on foreign imports, companies lack interactive cooperation, and they weakly absorb technology. Global industrial development and increasing international integration trend offer numerous opportunities as well as challenges for the country's mechanical industry development.

Deputy Minister Do Thang Hai strongly urged authorities and businesses to take action to address challenges and utilise all advantages and opportunities to develop and shape the favourable institutional and policy environment for mechanical enterprises, thus promoting sector development.

The Ministry of Industry and Trade will propose drafting a governmental decree on mechanical industry development, coordinating with the business community and professional associations to adjust the list of key mechanical products and simplify compliance confirmation procedures, forming and promoting roles of the Industrial Support Centre in order to facilitate enterprises to renew appropriate equipment and technologies, encourage and incentivise mechanical enterprises to apply technologies of the Industrial Revolution 4.0 to production.

On supporting mechanical businesses, Deputy Minister Do Thang Hai said that the Ministry of Industry and Trade will work with the business community to propose tax policy adjustments aimed at creating a level playing field for domestic engineering businesses and enhancing the quality of human resources for this sector.

Huong Giang

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