15:08 | 07/12/2015 Industry
Vietnam has a competitive edge in developing mechanical engineering, said Atsusuke Kawada, Chief Representative of the Japan External Trade Organisation (JETRO).
Illustrative photo (Source:VNA)
Vietnam’s joining the Trans-Pacific Partnership (TPP) agreement and a Free Trade Agreement (FTA) with the EU will turn the country into a more attractive destination for investments in the field than its regional peers such as Thailand, Indonesia and the Philippines, Kawada said.
He added that Vietnam would become a gateway for the entry of mechanical products to regional markets.
According to JETRO, more than 66 percent of Japanese firms have plans to invest or expand operations in Vietnam. JETRO will give trade promotion support to more than 1,600 small- and medium-sized enterprises (SMEs) from Japan investing in foreign countries, including Vietnam, he noted.
He expected that more Japanese manufacturing and non-manufacturing projects will land in Vietnam in the near future.
In fact, many multinational corporations have moved their businesses from China and Thailand to Vietnam in recent years. Among these big names are Samsung, LG Electronics, Foxconn, Canon and Microsoft.
This has helped the local engineering industry access the latest technologies and become more involved in global value chains.
However, major challenges are still affecting the development of the sector. These include low labour productivity, a low supply of skilled workers and undeveloped supporting industries, Deputy Minister of Industry and Trade Cao Quoc Hung said.
Furthermore, local content in many domestic products is only about 30 percent – lower than China (64 percent), Thailand (53 percent) and Malaysia (42 percent), Professor Vo Thanh Thu from University of Economics, Ho Chi Minh City added.
According to statistics by the UN Industrial Development Organisation (UNIDO), Vietnam's Manufacturing Value Added (MVA) per capita was 245 USD in 2014, far behind the average MVA per capita of the 10 ASEAN member states, 1,985 USD.
Dao Phan Long, Vice President of the Vietnam Association of Mechanical Enterprises (VAMI), suggested that a comprehensive policy package be formulated to nurture the growth of domestic mechanical engineering. Vietnam should say no to low-tech projects and those that could cause environmental pollution, he stressed.
He also recommended that the country focus on developing a small group of key mechanical engineering industries – for example, ship-building and steel manufacturing – and welcome private investments in those fields./.