After joining the World Trade Organisation (WTO), Vietnam has to abide by its commitment to this global trade club, including the termination of subsidies for domestic enterprises. The subsidies include preferential credits, export bonuses, and preferential interest rates. The policy is no exception to the national mechanical industry. As a result, the sector should further improve in both investing production and seeking markets for products on their own feet. The country’s mechanical industry in the past time, however, also gained significant achievements, notably the outbound shipments of their products.
According to Nguyen Van Thu, chairman of the Vietnam Association of Mechanical Industry (VAMI), Vietnam’s mechanical industry used to be under a loose control for a long time. As a result, the sector’s total revenue reached only US$300 million. However, the situation has been improved since 2000, particularly the strong development of mechanical engineering and metallurgy filed with eight main groups of products.
Instead of importing a large number of mechanical products as before, Vietnam currently becomes an exporter of fans, bikes, motorbikes, buses, and generic equipment for power plants, especially components to serve the shipbuilding industry.
Some years ago, Vietnam built 3,000-DWT cargo ships, but nowadays it can make ships with loads of 100,000 DWT. The state-run Vietnam Shipbuilding Industry Group (Vinashin) has signed shipbuilding contracts with many foreign partners worth of US$1 billion.
To escape the position of outsourcers for international firms, the mechanical industry has plans for structural improvements. Particularly, in the domestic market, the sector has sought big consumers and contractors which are in charge of large projects. At present, many companies are able to produce equipment for hydropower and thermal power plants, cement production plants and other fields.
The Vietnam National Coal and Mineral Industries Group (Vinacomin) may install and manufacture not only high tonnage trucks for mining activities but also cranes and bulldozers as well. Notably, the Vietnam Machinery Installation Corporation (Lilama) has won EPC contracts of electrical plant project worth up to US$300 million.
The VAMI’s report said that Vietnam’s mechanical products have been exported to many countries, such as buses to Russia, African market and Latin America; equipments for power plants to Turkey, Australia and Taiwan; engines and agricultural machines to the Middle East and the Southeast Asian area. Notably, Vietnam won many shipbuilding contracts for developed shipbuilding countries like the UK, Japan, Germany, Norway and Sweden.
With trade promotion activities, domestic firms can increase their shipments aboard and more importantly drew attention of the world’s leading giants in the mechanical industry to invest into Vietnam, contributing to the country’s socioeconomic development.
With its WTO admission, Vietnam’s mechanical industry will have more opportunities; especially modern technology and science transfer. Under the plan, the sector will meet about 40-45 per cent of the domestic market by 2010 while 30 per cent of its output is destined for export. Key export products for the forthcoming time include cars, motorbikes, ships and machines for agro-forest sectors.
The VAMI also said that the development of the mechanical industry should closely combine with economic development strategies and investment polices. At the state level, it is vital to allow capable enterprises to sign EPC contracts which include designs and purchase and installation of equipment. At the corporate level, enterprises will have more authority to team up to handle the EPC contracts.
Recently, the Ministry of Industry has submitted to the Prime Minister a draft policy for investment and production project of mechanical products. Accordingly, the ministry proposed the Prime Minister to approve the plan for providing funds for researches, technology transfer, patent purchase, employment of foreign experts and manpower training for the mechanical sector. Actually, the support does not violate the country’s WTO commitments, but bring in high effectiveness.
H.Ly
Vietnamese
