Domestic engineering supplies one-third of Vietnam’s needs

06:00 | 17/03/2021 Industry

(VEN) - Vietnam’s mechanical market is forecast to reach US$310 billion by 2030, but the country’s mechanical industry currently meets only 32 percent of the domestic demand for mechanical products.

domestic engineering supplies one third of vietnams needs

The vast majority of domestic mechanical enterprises are small-sized

Capacity building for domestic enterprises

According to the Ministry of Industry and Trade’s Industry Agency, there are 25,014 mechanical enterprises operating in Vietnam, accounting for almost 30 percent of all processing and manufacturing businesses in the country. Mechanical enterprises have earned net revenues of VND1.465 quadrillion and created almost 1.124 million jobs.

However, domestic mechanical enterprises in general are small-sized and less competitive, their product quality is poor while prices are high, and most domestic industrial products are incapable of competing with imported ones.

Industry Agency Deputy Director Nguyen Ngoc Thanh attributed the problems to the modest connectivity between domestic mechanical enterprises and their market access and human resource weaknesses.

Hikari Vietnam Production and Trading Company Limited General Director Nguyen Duc Cuong said that in recent years, domestic mechanical enterprises, including Vinfast, Thanh Cong, and Thaco, have made breakthroughs, however, they still consider mechanics just an auxiliary part of their businesses. In the long run, the mechanical industry needs to not only develop cutting but also raw materials, molds, processing and manufacturing, Cuong said.

Market demand forecast needed

According to the Ministry of Industry and Trade, in order to vitalize Vietnam’s mechanical industry, it is necessary to forecast market demand and define market segments in which the industry can survive competition and improve competitiveness. Apart from creating markets, it is important to adopt flexible policies that encourage businesses to invest in and expand production, a ministry representative said.

Industry Agency Deputy Director Nguyen Ngoc Thanh said mechanical enterprises need to develop the domestic market. “From now to 2030, the domestic demand for mechanical products is estimated at about US$310 billion, including US$120 billion worth of automobiles, but domestic manufacturers have satisfied only one third of that demand. There are big opportunities for domestic mechanical enterprises to penetrate foreign markets,” Thanh added.

The Ministry of Industry and Trade has suggested that relevant authorities adopt policies to develop mechanical engineering, including production of key mechanical products and agriculture serving mechanical products.

According to the Industry Agency, Vietnamese mechanical enterprises’ strengths are found in assembly and production of motorcycles and motorcycle parts, household mechanical products and tools, and automobiles and auto parts, which account for nearly 70 percent of the country’s total mechanical production value. Most of these products are exported and or provided to foreign-invested enterprises as supporting industry products.

The Ministry of Industry and Trade has submitted to the government for consideration a resolution on development of Vietnam’s mechanical industry, which encourages the use of domestic mechanical products by major state-funded projects.

The Ministry of Industry and Trade has submitted to the government for consideration a resolution on development of Vietnam’s mechanical industry, which encourages the use of domestic mechanical products by major state-funded projects.

Lan Anh