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Development of Vietnam’s mechanical industry: Recommendations to soon have a Mechanical Law

06/05/2022

Only when it is “Lawized”, the mechanical engineering industry – one of the backbone industries for the country’s socio-economic development will be able to develop.

That is one of the recommendations and received the high consensus of the members of the Vietnam Association of Mechanical Enterprises (VAMI) recently at the 1st General Meeting of the Association in 2022.

There is no Government Resolution for the mechanical industry alone

Mr. Le Van Tuan – General Director of Vietnam Machinery Erection Corporation (Lilama) Vice Chairman of VAMI emphasized: The mechanical industry is a key industry, the backbone for the development of the country. But so far, we have not had a Government Resolution for the mechanical industry only. Therefore, mechanical enterprises (DN) do not have a policy to develop, still “swirling” to find their own way.

More specifically, Mr. Tuan gave 3 groups of problems that he can propose to the Government to intervene to solve. The first is that the land tax for mechanical enterprises must be lower than in other fields. Because of the characteristics of the mechanical industry, often processing, manufacturing and installing products of large size, oversized … so the workshop must have a large enough area for the production capacity. Therefore, the high land tax will make it difficult for mechanical enterprises to survive in the long run.

Phát triển ngành cơ khí Việt Nam: Kiến nghị cần sớm có Luật Cơ khí
Installation and manufacturing of equipment at Lilama 18 Joint Stock Company – one of Lilama’s prestigious equipment exporters

The second is incentives for corporate income tax. According to Mr. Tuan, corporate income tax for the mechanical industry must be reduced if the enterprise has export goods, the revenue for export goods is tax reduced. Thus, the State has directly supported enterprises to restore and develop production and increase exports.

Third, the State needs to limit the import of domestic products that have already been made. All mechanical enterprises must list the list of mechanics, what can be done in the country cannot be imported. Failure to do this is very difficult to create markets and jobs for the domestic mechanical industry. The list of mechanical industrial equipment and equipment that must be domestically produced will be proposed by the associations to be submitted to the competent authority for supervision by the General Department of Customs. This is a very specific law in developed countries. Foreign private enterprises are allowed to import and export freely but must comply with the regulations and management of the State.

Proposal to soon develop the Law on Mechanics

Mr. Dao Phan Long, Chairman of VAMI further analyzed: Insufficient data shows that on average, over the past 5, 10 years, Vietnam often imports about 40 billion USD/year of equipment, machinery and materials from abroad from abroad. production capital for the entire economic sector, including industrial production, agriculture, infrastructure construction, services and security and defense. It is a fairly large market that many countries want to have but cannot.

However, Vietnam’s domestic mechanical engineering industry does not have much market share, has to “swim” in the incomplete market mechanism with many shortcomings and has not received effective support from the government’s policy system. country to have as many orders from public investment as other countries. As a result, our country’s domestic mechanics lacked orders and lost at home. The cause of this situation is due to both the policies and mechanisms of the State and the poor management of domestic mechanical enterprises in Vietnam.

In the future, we will implement many important national projects with a large total investment such as: Power planning VIII in the period from 2021 to 2030 about 133 billion USD, high-speed railway 50-60 billion USD, Long Thanh international airport, inner city railway lines, traffic works, irrigation, oil and gas, marine economy, shipbuilding, automobiles, motorbikes… Actual numbers show that the mechanical market Our domestic gas in the coming years will still be very large.

In order for our domestic mechanical industry to get orders right at home, the State should have strict regulations on the reasonable ratio in the volume and value of the project to ensure that domestic mechanical enterprises can participate. as international practice, restricting imports, encouraging technology transfer so that domestic enterprises can produce on their own. Thus, mechanical enterprises can participate.

Mr. Long added, when surveying at Truong Hai Automobile Joint Stock Company, Gia Lam Railway Joint Stock Company of Vietnam Railways Corporation, these enterprises said that, in addition to passenger cars and freight cars, For national railway, the factory can completely self-build light wagons for urban railway (metro) if required. And recently, the global supply bottleneck lacks “public” for transport ships, domestic mechanical enterprises can completely handle. The State can also give tax incentives to shipbuilders and support policies to build new ships for transport enterprises to participate in the export logistics market when the market is large enough and growing. fast. Do not let this market share almost be given to foreign countries without being able to take the initiative.

Agreeing with these opinions, Mr. Nguyen Chi Sang, Vice President and General Secretary of VAMI, said: The market for the mechanical industry in particular has to be very competitive, especially with goods from China. Due to the non-market support policy of the Chinese Government, their goods not only meet all kinds of quality but also the price is very competitive. Usually for developing countries, the market for the mechanical industry is protected by the State, especially for public investment projects or projects with large market size. However, in Vietnam in the past decade, the mechanisms and policies to protect the market are very weak, not enough to support investors.

In addition, what is most lacking in the domestic mechanical manufacturing industry today is an overall development strategy for the industry. Here, in order to create conditions for the mechanical industry to develop, the Vietnam Association of Mechanical Enterprises will submit to the Government for opinions on the development of the Law on Mechanical Engineering. Only when all are “legalized”, the Government’s support policies for the mechanical industry will soon be implemented.

By Congthuong

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