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Developing the engineering sector

Developing the engineering sector - 

At a conference to review 10-year implementation of the engineering industry development strategy in Vietnam, Prime Minister Nguyen Tan Dung directed that in the coming time, Vietnam’s engineering industry needs to work out more suitable schemes to improve both its capability and competitive capability to target stable and sustainable development.

Prime Minister Nguyen Tan Dung gives instructions at the conference

Localization rates increase

Despite difficulties, over the past 10 years, Vietnam’s engineering industry has achieved recognizable results with growing localization and export rates. A report from the conference to review 10-year implementation of the engineering industry development strategy of the Ministry of Industry and Trade (MOIT) showed that regarding export, in 2012 the industry’s export value reached US$12.1 billion, accounting for 34.71 percent of the industry’s total value. In 2013, the industry’s export value was expected at US$13.18 billion. This result proved that the engineering industry is becoming one of Vietnam’s most important sectors for export.

Previously, as for hydropower projects, Vietnam had to import mechanical equipment but now this step is charged by domestic mechanical companies, even at big hydropower plants like Son La Hydropower Plant with capacity of 2,400 MW. The domestic mechanical joint-ventures have also manufactured and provided mechanical equipment to other hydropower plants with total weigh of up to dozens of thousands of tonnes.

Motorcycle manufacturing has also obtained significant progresses which meet domestic and export demand, at a capacity of about 150,000 units a year. The localization rate of domestically-made motorcycles has reached about 85-95 percent.

Chairman of the Vietnam Engineering Association Nguyen Van Thu gave evidences that in the cement sector, the domestic manufacturing industry designed and manufactured the whole comprehensive production lines for some cement production plants at a capacity of up to 800,000 tonnes a year. Vietnam Machinery Erection Corporation (Lilama) manufactured equipment for Song Thao Cement Plant with localization rates at 70 percent in terms of volumes and 40 percent in terms of value. Another example was Construction Machinery Corporation that successfully manufactured conveyor belt system for Song Gianh Cement Plant and manufactured, installed equipment for Dong Banh Cement Plant.

Especially, a 500 kV transformer researched and manufactured by Dong Anh Electrical Equipment Corporation Joint Stock Company had localization rates at 95 percent in terms of volumes and 45 percent in terms of value. According to expert’s evaluations, Vietnam is the only country in the Southeast Asia that has successfully manufactured this kind of transformer at a 25-30 percent lower price compared with the imports.

Giving priorities to developing manufacturing industry and improving competitive capability

According to Nguyen Van Thu, from now to 2015, the investment demand in industries like cement, hydropower, thermal power, chemical and aluminum is very large with estimated investment capital of US$107billion. Therefore, the manufacturing industry has to focus on manufacturing equipment for 600 MW thermal power plants according to the localization program. In addition, it also needs to investment in manufacturing equipment for the prioritized industries like chemical and mineral sifting.

The manufacturing industry has an important position in the country’s industrialization and modernization process. However, in 2012 it only met 32.58 percent of the domestic demand, lower than the targets of 40 to 50 percent set in 2010. Therefore, the PM assigned MOIT to work out more suitable schemes based on what have been achieved and associated with the manufacturing industry planning in the coming period. The new schemes have to give attention to the conditions of the market economy, integration and competitiveness.

The PM also directed ministries and sectors to continue reviewing, amending and supplementing mechanisms, policies that match with the real development of the industry, especially those related to land, income tax and Value Added Tax on engineering enterprises and also protection tax on domestic products in accordance with international commitments, associated with appropriate credit policies to promote the development of the support industry.

Minister of Industry and Trade Vu Huy Hoang:

MOIT will coordinate with relevant ministries and sectors to build a draft engineering industry development strategy until 2025, with a vision to 2035 and submit to the PM for approval at the earliest time.

Source: VEN

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