Increased demand for imported machinery

Many enterprises have to spend tens of billions of dong to import machinery and equipment to meet requirements from partners. Photo: H.Diu

According to data from the General Department of Customs, from the beginning of the year to the middle of March 2023, Vietnam imported about US$ 7.34 billion of machinery, equipment, tools and other spare parts. In 2022, the total import value of this group of goods reached US$ 45.1 billion. These are the second largest value imports after computers, electronic products and components.

Many enterprises said that most machinery and equipment products, especially those used to produce high-tech and high-precision products, must be imported from abroad because the quality of domestic products and machinery does not meet the demand. Some even said that almost 100% of products from screws to machinery must be imported with equipment up to millions of dollars, but enterprises still had to invest with the expectation that the product could meet and join the production chain of foreign-invested enterprises and the global supply chain.

According to Ms. Bui Thi Hong Hanh, CEO of NC Network, Vietnamese enterprises faced a lack of equipment and machinery to meet certification standards related to supply chains, and raw materials.

Up to now, Vietnam did not have a complete machinery and equipment manufacturer, so, enterprises had to use old machines imported from abroad such as Japan.

Talking about the current situation of the enterprise, a representative of Lap Phuc Mechanical Joint Stock Company said that when importing products of the company, foreign partners always required them to have factories with machinery and equipment meeting standards and competitive prices. Therefore, the company must make efforts to invest and import machinery from Japan, the US, as well as train personnel to use machines, in spite of many difficulties and challenges in terms of finance and resources.

According to experts, it is expected that the import spending on machinery and equipment in 2023 will increase by 3-6% compared to 2022. Therefore, facilitating the import of goods in general and machinery and equipment, in particular, is continuously focused on from management agencies to goods supply enterprises. In particular, according to enterprises, taking advantage of opportunities in Free Trade Agreements (FTAs) to import machinery and equipment should also be focused.

For example, thanks to the Free Trade Agreement between Vietnam and the European Union (EVFTA), enterprises can import a variety of equipment and machinery with low tax rates. Mr. Dinh Van Hien, Chairman of the Board of Directors and General Director of DKNEC Group Joint Stock Company, said that the company had 23 partners in Germany, France, Sweden, and Denmark.

If in the period before EVFTA, the importing tax rate of components and assembly equipment (IKD) was very high, thanks to the tax reduction from EVFTA, the price of IKD components and equipment was low, reducing import tax from 1-10%, helping them have a competitive advantage, manufacture many products and export to a number of countries.

In addition, at the end of 2022, Deputy Prime Minister Le Minh Khai signed a decision stipulating documents and procedures for importing used technology lines by simplifying import procedures for hi-tech enterprises or projects operating in high technology applications or projects belonging to special investment incentives as prescribed. It is expected by many enterprises to help reduce administrative procedures and customs clearance time. Because for many enterprises, due to limited financial resources, importing used machinery, equipment and lines from advanced countries is the optimal solution.

Although ministries and branches, including the Customs sector, are highly appreciated by enterprises for facilitating the import of machinery and equipment, being proactive in the source of domestic machinery and equipment needs to get more attention.

The project on restructuring the industry and trade sector for the period to 2030 has set requirements, focusing on localizing the supply chains of industries to reduce dependence on imported machinery, equipment, and raw materials, increase autonomy, improve domestic added value, the competitiveness of products and the position of Vietnamese enterprises in the global value chain.

Moreover, according to many comments, the import of cheap machinery and equipment with outdated technology can make Vietnamese products more difficult to compete and pose a risk of making our country a “technology dump”, adversely affecting the environment and society.