Mechanical enterprises lack overall mechanism

Though not lacking in money and capacity, mechanical enterprises are considering new markets for fear of lacking mechanisms and policies. Photo: H.Dieu

Full of opportunities but without mechanism

Mechanical engineering is one of the backbone industries of socio-economic development, especially in the current period of growth recovery. According to the Vietnam Association of Mechanical Enterprises (VAMI), the market of the mechanical industry in the coming years will still be very large, when many national key projects, wharfs, railways, energy projects, ships and agriculture continuing to be deployed, along with the promotion in public investment.

In April 2022, the processing and manufacturing industry increased by 11.3% over the same period last year, higher than the growth rate of 5.8% and 9.6% of the same period in 2018 and 2019 (years without the Covid-19 epidemic). According to the General Statistics Office, businesses have been more proactive in terms of labor and production and business plans, overcoming difficulties to recover and expand production.

However, according to businesses, an overall strategy for specific implementation will enable them to more actively accept large projects. Mr. Nguyen Quang Hieu, General Director of Petroleum Rig Manufacturing Joint Stock Company (PV Shipyard) said that in wind power alone, mechanical enterprises can participate in the production of blades, wind columns, power systems, base system for both domestic and offshore projects. With one project, the volume of mechanical products can be up to several hundred thousand tons. Given the base system, an offshore wind power project needs at least 35-40 columns and each column is 120,000 tons. So this could be a market for 500,000 tons of equipment within the next five years.

However, Mr. Hieu said that the immediate opportunities are open but Vietnamese mechanical enterprises are small, lack both a master plan and a mechanism to cooperate and develop with large enterprises, so mainly is a spontaneous and fragmented business.

Given the lack of mechanism for the mechanical industry, Mr. Le Van An, Chairman of the Board of Directors of Agrimeco Engineering and Construction Corporation, said that in 2008, the Government signed and promulgated the Strategy on the development of the mechanical industry to 2035 and was adjusted in 2018. However, the following mechanisms and policies as well as specific strategies so far are not available. This leads to the fact that businesses see opportunities, but are afraid to spend effort and money to research new technologies due to a lack of policies and documents from regulatory agencies to support. Therefore, businesses have repeatedly proposed mechanisms and policies to retain the mechanical market for Vietnamese enterprises.

Sharing the same opinion, Mr. Dao Phan Long, Chairman of VAMI, said that many factories of large enterprises in Vietnam can completely build their own light wagons for urban railways (metro) if required. Therefore, businesses are looking forward to supporting policies and mechanisms to be able to actively participate in this market, not being able to fall into the hands of foreign businesses.

Need to "legalize" policies

One of the issues proposed by businesses and experts in the field of mechanical engineering to promote development and protect the Vietnamese mechanical market is the need for a Law on Mechanical Engineering. According to Mr. Dao Phan Long, Vietnam's mechanical industry is "swimming" in the incomplete market mechanism and has not received support from state policies to have as many orders from public investment as other countries. This causes mechanical enterprises to lack orders and lose money right on their "home market".

Meanwhile, many upcoming projects will be soon implemented which asks domestic enterprises to catch up. Mr. Le Van Tuan, General Director of Vietnam Machinery Erection Corporation (Lilama), said that with enterprises will benefit much from good policies, mechanical enterprises which encourage them to produce better quality products and good services more than enough to compete with other countries in the region.

Therefore, VAMI said it will submit to the Government for comments on the development of the Law on Mechanical Engineering. Representatives of mechanical enterprises said that only when all are "legalized", the Government's support policies for the mechanical industry can be implemented. In addition, the Government also needs to have an overall strategy on the organization of mechanical production, to increase industry linkages as well as to have a domestic bidding mechanism for mechanical enterprises.