To develop, the mechanical industry must renovate its management

VCN- Talking to the reporter of the Customs News, Mr. Dao Phan Long, Chairman of the Vietnam Association of Mechanical Industry (VAMI) said that, in order to help the mechanical industry develop, the Government should both renovate the management nationwide and make great efforts to protect the domestic market and build a synchronized policy system...
to develop the mechanical industry must renovate its management

What do you think about the level of mechanical technology and equipment of Vietnam?

Now, the level of mechanical technology, equipment for production of Vietnam is too backward compared to the rest of the world. Basically, the domestic mechanical enterprises of many economic sectors are still organizing production at the level of industry 2.0, which is the technology and production management that industrialized countries in the world have ignored, because it is divided and not connected to each other. There are only a few Vietnamese mechanical companies that have reached the level of industry 3.0. This caused the Vietnamese mechanical industry to lose at “home” when competing with competitors with modern mechanical industrial technology. This is a very sad reality.

In your opinion, what is the reason for the backward technology in the mechanical industry in Vietnam?

The reason that makes the Vietnamese mechanical industry lag after nearly 20 years of development, from 2000-2018, is partly due to the responsibility of both state management and the domestic enterprises.

Specifically, the system of policies and state management for domestic mechanical production is not effective, does not match the reality, does not protect the domestic market, losing many orders to foreign countries and allowing FDI enterprises to expand right in the Vietnamese market as well as in the region. Meanwhile, Vietnamese mechanical companies spontaneously invested; a weak market research and technology management leads to mechanical products of Vietnam finding it difficult to compete with other countries. Mechanical products are mainly processed steel construction, few products with high added value.

Mechanical production is the same as the production in other technical fields, the market is the most important factor. Over the past years, though Vietnam has a large capacity, these weaknesses make the domestic mechanical enterprises unable to compete and exploit. For example, manufacturing and assembling automobiles, shipbuilding, river-coast ships, offshore fishing vessels, agricultural mechanization machines, oil and gas industry, energy system development, transportation, construction... of Vietnam is very large but the market is almost manipulated and dominated by foreign companies.

In order to change the situation, grow up in the coming years, what is the feasible solution for the mechanical industry of Vietnam, sir?

In the coming time, the strategy for the Vietnamese mechanical industry’s development should be based on the study of calculations and selection of a number of mechanical products on the domestic market, which can compete with the foreign products to add to the key products list. It is buses and trucks production and assembly; manufacture of non-standard equipment and steel structures for new industrial construction works; manufacture of anti-salvage equipment, environmental protection treatment, green energy production and some products of the defense industry.

Moreover, in order to protect the domestic mechanical market, Vietnam needs to learn the lessons from other industrialized countries for protecting their domestic markets. That is, the Government should build a comprehensive policy system, minimize the import of technology, machinery and equipment from other countries which are outdated and backward, causing energy consumption and environmental pollution in Vietnam. Not doing this well, the domestic mechanical industry will never be able to grow in the coming years.

In addition to the above solutions, in the current situation of international economic integration, aiming to quickly create momentum for the mechanical industry, what does the VAMI propose to the Government?

In order to build and protect the domestic mechanical market as well as protect the domestic market in the context of Vietnam's expanding international economic integration, the VAMI recommends that the Government should soon issue some policies. Specifically, the Government needs to renovate the management of the mechanical industry nationwide, to establish a body to help the Government unify management and allocation of resources for investment in mechanical development in Vietnam; to study countries with technical barriers and policies to encourage production without violating free trade agreements.

In addition, the Government should issue a policy to minimize the import of technology and equipment which is backward in mechanical production as other countries have been doing during the period of free trade; renovate science and technology policies, investment plans, finance, banking, training of human resources for the mechanical industry; quickly legislate on activities of associations and branches so that the associations have the legal basis to consult and review and propose the Government to promulgate appropriate policies in each period.

Thank you, Sir!

Mr. Nguyen Chi Sang, Vice Chairman cum General Secretary of Vietnam Association of Mechanical Industry (VAMI): Having a proper market protection policy, the mechanical industry can meet 70% of the demand

The Vietnamese mechanical industry is fully capable to meet up to 70% of the market demand by 2030 if there is a good barrier for market protection. Market protection can be considered as a prerequisite. This has been proven in many countries around the world, especially in the last few years where protectionism can be considered as vital even in developed countries. For example, without protection, the European steel industry went bankrupt; meanwhile, due to lack a proper protection policy, car assembly plants in Australia must shut down...

In general, to meet the domestic market demand of nearly 350 billion USD, from now to 2030, the mechanical industry should have mechanisms to protect the market within conditions and limited time. Corporations in the industry need to develop a localization strategy for their equipment and propose mechanisms for their own development.

Mr. Nguyen Van Thao, Vice Chairman of the Central Theoretical Council: In order to develop the mechanical industry, the responsibility of the State is enormous

The mechanical industry has many natural barriers such as demand for capital, large initial investment, long turnaround time, slow turnover; it requires a high level of science and technology, requiring experts, engineers, laborers with knowledge, skills and labor discipline to design, manufacture and use the products. The products of the industry are not easy to distribute and sell like those of many other industries.

For the development of the mechanical industry, the role and responsibility of the State are enormous. The State needs to have strategies and policies to develop the mechanical industry, especially the key mechanical products, to facilitate the development of the mechanical industry without contrary to the international commitments that Vietnam has signed; to adopt strategies and policies on scientific and technological development and human resource training; closely link in research, training with the needs of enterprises, society...

Besides the State, mechanical enterprises must restructure production, renovate management and technology; have a long-term development strategy, actively link with research and technology transfer institutions, domestic and foreign enterprises, participate in global value chains of large industrial products...

Mr. Le Viet Su, Deputy Director of VINACOMIN Machinery JSC (VMC): Request the State to create favorable conditions for enterprises to borrow capital at preferential interest rates

At present, VCM in particular and many mechanical companies in general are facing many difficulties. The investment in renovation of equipment and technology is very necessary, which is a long-term investment while accessing to low interest rate loans is very limited. In addition, the size of mechanical enterprises are generally small, the collaboration of enterprises is weak, the competitiveness is low, especially when competing with similar import products.

In order to create favorable conditions for mechanical enterprises to approach the 4.0 Industrial Revolution soon, VMC requested the State to consider and create favorable conditions for mechanical enterprises to borrow capital at preferential interest rates, be involved in manufacturing equipments for large industrial projects; have preferential policies in mechanical training; limit relocation of mechanical plants to get land for real estate projects.

By Uyen Nhu

By Thanh Nguyen/ Kieu Oanh

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