Engineering better support to reduce import dependence

Low added value

According to the Vietnam Association of Mechanical Industry (VAMI), the country has about 3,100 engineering companies with 53,000 production facilities. However, domestic production has not met the demand as Vietnam annually spends several tens of billions of US dollar to import machinery and equipment.

Support industries in the automobile sector have developed modestly, with local content of trucks, vans and cars much lower compared with the targets of 40 percent set for 2005 and 60 percent for 2010.

Nguyen Thi Xuan Thuy from the Ministry of Industry and Trade’s Industrial Policy and Strategy Institute, said most support enterprises in Vietnam are small to medium in size, only capable of making simple parts with low technology content, such as mirrors, glass, chairs, electric wires, batteries, and plastic products, in addition to some other simple components for exports.

“Only two of the 18 auto part providers in Vietnam are foreign direct investment (FDI) companies, with the remainder being domestic companies,” Thuy said.

Promoting links

VAMI Chairman Nguyen Van Thu said cooperation among domestic engineering companies must be boosted. For example, the Hanoi Mechanical Company has promoted links with many engineering units to jointly produce automobile parts, machinery and hydraulic equipment.

Support industry enterprises should also actively restructure production and participate in the global value chain to expand their export market and acquire knowledge and new technologies. In addition, the state should devise a strategy for the engineering sector in order to develop products, machinery and equipment serving major industries.