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Mechanical industry needs boost   2008-08-25 - Viet Nam News

Vietnam's mechanical industry needs further investment from the State, according to the chairman of Viet Nam Association of Mechanical Industries (VAMI), Nguyen Van Thu.

From now to 2015, the State should focus investment in the core of the mechanical industry, which is manufacturing engineering.

The Investment was needed if the industry was to start producing more complex machinery in stead of focusing on making simple and low-value mechanical components, said Thu.

The mechanical industry now produce more than 500 types of products each year. However, the industry must import more sophisticated equipment as it's not able to produce high-value machinery domestically.

Thu said that during the past six years, the industry had only received small investment sums, resulting in the sector's modest export volume.

The domestic machinery industry largely produced steel structures, manufacturing machinery and tools, and equipment for the agriculture sector.

Many enterprises were investing in localisation of subsidiary products, said Thu.

The Truong Hai Automobile Company is focusing on conquering the truck market and plans to manufacture buses and coaches.

The ship-building industry, closely tied to mechanical production, has a high annual growth rate of 50 per cent. The sector has invested in building factories to produce the mechanical components they require.

The automobile industry is also developing rapidly, focusing on manufacturing small and medium-sized vans, buses and passenger cars.

The automobile industry can now meet domestic demand and is also working on boosting its exports to South America nations.

Thu said that as the mechanical industry had still not received proper investment, it was forced to focus on making simple products. This means that for the ship-building and automobile sectors, the mechanical industry can only make frames and simple parts. Other mechanical parts and complicated equipment must be imported.

The sector still uses out-dated technologies and equipment, he said, and subsidiary industries for mechanical engineering were still weak.

According to mechanical industry experts, there's still a shortage of skilled human resources in order to develop the sector. The quality of training for engineers also didn't meet demands.

The sector also lacks capital for development, as well as good business strategies for its outlet and products. It has poor enterprise management competence, said Thu.

At present, market management was poor and low-quality and cheap mechanical products had flooded the market. Thu said this had resulted in the industry not being very competitive.

The country has setup the Key Mechanical Industry Development Programme to 2010 with a vision towards 2020.

According to the programme the industry should meet about 50 per cent of domestic demand for mechanical products from now to 2010, and export 30 per cent of its output to gain an annual income of US$ 3.5 to 4 billion.

The programme aims to have the industry focus on eight types of machinery, including motive power engines, tractors, agricultural equipment, mechanical tools, construction engineering, ship engineering, automobile engineering and electrical equipment.

In order to overcome the short-comings of the sector as well as to raise its competitiveness, VAMI has worked out the following solutions:

Projects to produce key mechanical products will be given State development investment credit loans with priority interest rates. The State will also set out a specific financial source to invest in key mechanical engineering projects that have been approved.

Thu said the State should make important decisions to invest more in the sector's human resources to develop the mechanical engineering industry.

From now to 2015, the State should focus investment in the core of the mechanical industry, which is manufacturing engineering, Thu said.

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