Vietnam Annually Spends US$4-5Bln on Mechanical Product Imports

Vietnam has thousands of mechanical enterprises in all economic sectors: State-owned and private. These enterprises can meet only between 30 and 35 per cent of the domestic demand. For the remainder of over 60 per cent, Vietnam has to import from Taiwan, Japan, China and Germany, with total annual expenditures of between US$4-5 billion.

In this context, Dao Phan Long, Vice President and General Secretary of Vietnam Association of Mechanical Industry (VaMi), said that he has thought long and hard about how to boost the local mechanical service and reduce the import of foreign-made products.

With proper mechanisms and policies, Vietnam’s mechanical service, in the last five years, has seen a rapid development. However, it is facing difficulties due to a lack of human resources, more concretely, lack of skilled workers and engineers, let alone the shortage of investment capital. The sector needs huge capital amounts while the payback period is often long. As a result, many projects on the modernisation of mechanical factories have been hampered by a lack of investment. Many enterprises have received orders from many foreign partners but they cannot implement these orders because they do not have enough money to buy machines and equipment. Many enterprises have to import old machines and equipment at cheap prices from China. The machines and equipment Vietnamese enterprises have to import most include drilling machines, lathes, polishing machines, cutting machines, stamping presses and other shaping machines.

In his working visit to Vietnam, Helmut van Monschow from the German Working Machine Manufacturers’ Association said that with its underdeveloped mechanical sector, Vietnam could buy machines from foreign countries. However, the purchases should be based on careful selection and calculation.

Stephon Ph. Kuhne, of the Hanover Fair Organisation Company, said he highly appreciated Vietnam's purchasing power. In the long term, Vietnam will become a large market, which needs investment and co-operation from developed countries. In the coming time, mechanical enterprises will come to Vietnam for market exploration. An exhibition and fair of agricultural machines is expected to take place in Ho Chi Minh City in October. The event will see the participation of manufacturers from many foreign countries, who will exhibit high quality and precise machines, capable of operating under harsh conditions.

Long said that it would really be a good opportunity for Vietnamese enterprises to study, select and buy modern machines and equipment, instead of importing old, outdated ones at cheap prices. He said that the Vietnam Mechanical Enterprises’ Association would improve its role, gathering enterprises to exchange information, avoiding unfair competition.

The biggest difficulty for Vietnam’s mechanical service are the owners of mechanical enterprises. Managed by different corporations under different ministries and localities, mechanical enterprises in Vietnam face overlapping investment and they lack co-ordination. In the coming time, the Government will reduce management of ministries and localities, thus helping promote creativity and unity among enterprises. Mechanical services feature indepth professionalism and specialisation. Accordingly, four or five plants may become involved in manufacturing one product. Each of them would manufacture one detail. However, in Vietnam, many factories still manufacture all the details required for a complete product, reducing output and quality. Therefore, a concrete track is needed for Vietnamese mechanical enterprises to specialise in manufacturing a small number of details for a finished product.

In the long term, they should explore the market and study the needs of the whole economy during the modernisation and industrialisation process, in order to develop suitable products. The service is certain to become successful with proper investment policies and suitable markets.

• Kim Phuong