14:33 | 16/12/2018 Industry
(VEN) - Support industry manufacturers for the engineering industry are experiencing limitations in development in Vietnam, resulting in difficult participation in global supply chains.
Pham Thanh Hai, director of the Hai Duong Department of Industry and Trade, said the motorbike support industry is the most successful sector, with the local rate of domestically produced motorbikes of about 85-90 percent. Vietnam currently has hundreds of businesses producing spare parts and components for motorbikes. The main components are mostly produced in large quantities, meeting the standards of assemblers and creating a good supply system.
In addition, businesses producing spare parts and components for the auto industry have partly met demand. According to the Ministry of Industry and Trade’s Industry Department, the export value of engineering products reached more than US$13 billion in 2016, mainly from household appliances, and auto and motorcycle spare parts. Including iron and steel, the value reached over US$16 billion.
The foundry sector, playing an important role in support industry development, can account for 40-70 percent of the value in the manufacturing of engineering products. The most prominent company in the foundry sector is the Vietnam Engine and Agricultural Machinery Corporation (VEAM), which has major contracts to supply castings to foreign companies such as Toshiba, Ge, Juki and Iseki.
More policies required
Governmental Decree 111/2015/ND-CP on the development of support industries provides management agencies and businesses with a legal basis to implement policies for the development of the engineering industry. As a result, relevant ministries, departments and localities have devised action programs and high-feasibility solutions for engineering support industry development.
However, the former chair of the Vietnam Association of Mechanical Industry (VAMI) Nguyen Van Thu said that to promote the engineering support industry development, manufacturers need access to medium- and long-term loans at reasonable interest rates. The role of the National Technology Innovation Fund ( NATIF) is also important, contributing to meeting the needs of businesses in technology innovation.
Chairman Do Phuoc Tong of the Ho Chi Minh City Association of Mechanical-Electrical Enterprises (HAMEE) said programs are needed to support technology innovation, create favorable conditions for engineering businesses to enter industrial zones and clusters, announce the list of support industry products that FDI companies need, and organize training courses to improve the level of engineers and technicians.