Tuesday, October 25 2016


Market growth key for engineering

Update: November, 25/2015 - 08:33

Truong Thanh Hoai, head of the Heavy Industry Department under the Ministry of Industry and Trade spoke to the Hai Quan (Customs) newspaper about the development of the mechanical sector.

The mechanical engi-neering industry has not achieved its development target as planned. What is your opinion on this issue?

I think the most important issue here is the market. The mechanical sector needs a big investment capital, but the margin is low and it takes a long time to recover capital. Meanwhile, the interest rate of bank loans is still high.

Before joining the WTO, the market for engineering products was very small. The market has increased after joining the WTO in 2007 but it is still limited. I think this is the key and the most important thing that the sector has not had the opportunity to develop. Hopefully, a number of bilateral and multilateral free trade agreements which have been signed recently will provide an opportunity to expand the market for mechanical products, then engineering businesses will have a chance to develop more.

What has the ministry done to help businesses develop?

We had submitted to the Government and the Government has also approved a number of mechanisms for developing the mechanical engineering industry such as localisation of thermal power plants. Under the plan, the enterprises have designed and manufactured some devices for thermal power plants in the period of 2012 to 2025.

In fact, the current need of energy is sharply increasing. In the near future, we will have dozens of power plants with total investment of US$2 billion. The capacity of each plant would reach about 1,000-1,200MW. So the demand of mechanical devices is very large.

The Prime Minister approved pilot projects and is assigning domestic businesses to manufacture some devices for thermal power such as Quynh Lap No 1 and Quang Trach No 1. We think that the skills and capacity of enterprises will be raised after gaining success in pilot projects. Based on that, businesses can engage in local projects.

We are talking a lot about how Viet Nam will have the opportunity to become the new centre for manufacturing of the world after 2015, in which mechanics is identified as the key industry. So what should we do to reduce imported products and increase the local-made products?

The Party and the Government have confirmed mechanical engineering is one of the base industries and plays an important role in the economic development and consolidation of security and national defence of the country. We know that we just have only conditions and competitive advantages, but to become the new centre of the world we have much work to do.

Looking back at Decision No 186, the Government has proposed eight key mechanical groups to speed up economy development. As the state management agency, do you think it is too many and should we review it?

In the context of the current international economic integration, particularly, market demand is the most important factor. Priority and incentive policies will be given to the key mechanical specialties and products which basically meet the national economy's demands.

About Decision No 186, we find priority to eight mechanical specialties is too much because with current technology, we can not manufacture high-tech products as many countries do. So we must determine which product we can produce and still meet the demand of the market.

I think we should concentrate on developing a number of key mechanical specialties in the fields of agriculture, automobile engineering, electric technical equipment and industrial support for engineering. These sectors have large markets, and opportunities for these products would be greater in the future. — VNS

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