Vietnam's mechanical engeneering industry development strategy until 2010 & vision to 2020

1. Development viewpoints

· Mechanical engineering is one of the base industries, playing an important role in the economic development and consolidation of security and national defense.

· To focus on the efficient and sustainable development of the mechanical engineering industry by making best use of all domestic resources combined with external resources. To encourage all economic sectors to get involved in the development of the mechanical engineering industry in an organized manner with sound assignment and coordination, and meanwhile to continuously renew, restructure, fortify and develop state mechanical engineering enterprises into the mainstay of the mechanical engineering industry.

·  To concentrate on developing a number of key mechanical specialties and products to cash in on natural and human resources in order to meet basic requirements of the country’s development cause.

·  To enhance the capacity for self-research and manufacturing, promoting absorption and application of state-of-art sciences and technologies, so as to attain Asia’s medium-advanced technological level, and launching a wide range of highly competitive mechanical products.

· To step up specialization and cooperation, enhance capacity of the mechanical engineering industry, thereby creating a prerequisite for developing other industries.

2. Objectives

a) Overall objectives:

Priority shall be given to the development of the following key mechanical specialties and products to meet basic requirements of the national economy:

- Complete equipment;

- Prime movers;

- Mechanical engineering for serving agriculture, forestry, fishery and processing industry;

- Machine tools;

- Construction engineering;

- Shipbuilding engineering;

- Electrical and electronic technical equipment;

- Automobile, communication and transport engineering.

b) Specific objectives:

By 2010, the mechanical engineering industry is expected to meet 45% - 50% of the country’s demand for mechanical products, of which exportable products are seen to account for 30% of its total production value.

3. Strategic Orientation for Development of a Number of Key Mechanical Specialties and Products

a) Complete equipment

· To enhance the capacity to manufacture complete equipment by means of advanced technologies. To manufacture sophisticated equipment as a substitute for imported products and step by step to proceed to export them. To raise the capacity for designing complete equipment, efficiently combined with technologies intended for specific industries.

· To invest equipment and technologies in fundamental processes, such as molding, forging and casting, in order to synchronize equipment with technologies, serving the  manufacture of large and sophisticated details and assemblies.

· To utilize the availability of equipment of mechanical engineering enterprises across the country, and accelerate coordination in the assignment and cooperation in manufacturing complete equipment.

· To meet 40% of domestic demand for complete equipment by 2010. In the foreseen future, to concentrate on the fields, including manufacture of paper and pulp, cement, construction materials, oil and gas, electricity generation, supply of clean water, and processing industry, etc.

b) Prime movers

· To develop the manufacture of prime movers into an efficient industrial branch of Vietnam through in-depth investment programs and projects, modernize equipment and technologies, enhance the manufacturing capacity, and improve products’ competitiveness.

· By 2010, to meet 60 to 70 % of domestic demand for medium and small-sized prime movers, and manufacture hydraulic engines of 400 HP or more, with the rate of using local spare parts ranging between 35% and 40%. 

c) Tractors and agricultural machines

· Tractors:

- To invest in the manufacture of two-wheeled tractors with a capacity of 6, 8 or 12 HP to cover domestic demand.

- To manufacture four-wheeled tractors of a capacity of 18, 20 or 25 HP, and gradually to proceed with the manufacture of four-wheeled tractors of up to 30 HP.

- By 2010, to manufacture medium-sized four-wheeled tractors with a capacity of 50 to 80 HP.

· Agricultural machines

- To concentrate investment on developing the efficient manufacture of agricultural machines, including farming and processing machines and equipment for preserving farm produce, with a view to meeting domestic demand and gradually proceeding to export them.

- To encourage local medium and small-sized mechanical manufacturers to take part in the manufacture of equipment and machinery for the purpose of serving agriculture and the processing industry in an organized manner, soundly assign and collaborate with mechanical engineering enterprises in and outside the province or city.

· Machine tools

- Priority shall be given to the development of the machine tool manufacturing industry in a bid to meet the demands of industries.

- To conduct research, design and manufacture of modern machine prototypes (application of PLC and CNC technologies) and special processing devices.

- To speed up modernization of the existing machine systems at industrial establishments via Computerized Numerical Control (CNC) Programs.

e) Construction engineering

- To make in-depth and investments in the manufacturers of construction machines with state-of-art equipment and technologies in order to serve the of production of construction materials, building of large works, urban and rural construction.

- To bring into play advantages of the manufacture of metal structures for construction and industrial projects, and concentrate on the manufacture of advanced highly- sophisticated construction equipment and machines, which are in great demand at home and abroad.

f) Ship engineering

· To develop Vietnam’s shipbuilding industry into an integrated economic and technical branch from training, research, designing, manufacture to sales of products, meeting the requirements of restructuring fleets operating at home and abroad. By 2010, Vietnam is expected to have a medium-advanced shipbuilding industry in the region, meeting the requirements of the country’s socio-economic development, helping consolidate security and national defense, and step-by-step proceeding to export ships.

· By 2010, the shipbuilding industry shall be fully capable of building almost all inland waterway transport means, project ships, fishing ships and vessels of under 15,000 DWT, satisfying 70% -75% of the demand for building multi-purpose ships of 15,000 – 50,000 DWT and oil tankers of 100,000 DWT. To repair all national ships of up to 400,000 DWT.

· To soon develop auxiliary industries, such as manufacture of steel sheets for shipbuilding, assembling of hydraulic engines of up to 6,000 HP and manufacture, and manufacture and assembling of inboard equipment, electrical and electronic appliances, and marine facilities, with a view to raising the rate of local parts used for building new ships to 60% by 2010 and to 70% by 2020.

g) Electrical equipment

· To make the electrical equipment manufacturing industry attain the advanced level in the region in terms of electrical equipment and materials by 2020.

· To make new investment and intensive investment in the manufacture of electrical equipment with advanced technologies in a bid to quickly enhance the capacity for manufacturing electrical equipment and improve products’ competitiveness for the purpose of meeting most of domestic demand, replacing imported equipment and boosting exports of electrical equipment to regional and word markets.

· In the short-term, to make in-depth investment and expand operations of the existing manufacturers to help launch large-sized transformers of up to 125 MVA and voltage of 220 kV, distribution and transmission facilities for the electricity industry, pressure equipment and other electrical devices for industrial and civil use.

h) Automobile engineering and communication and transport engineering

· On automobile engineering

- To develop Vietnam’s automobile industry on the basis of absorbing and applying the world’s advanced technologies, combined with the exploitation and gradual upgrading of current technologies and equipment, in order to meet most of domestic automobile demand, aiming at exports of Vietnam’s automobiles and spare parts.

- Common vehicles: To meet 40% - 50% of the domestic demand in terms of quantity by 2005 and above 80% by 2010, with the rate of domestically-produced vehicles being up to 40%  and 60%.  The rates of using local engines and gearboxes alone are projected at 50% and 90%, respectively.

- Specific purpose vehicles: To satisfy 30% of the domestic demand in volume with the localization rate of 40% by 2005, and proceed to meet 60% of domestic demand in quantity and to attain the localization rate of 60% by 2010.

- High-class tourist cars: The rate of local parts used for manufacturing high-class tourist cars at join-ventures is projected at 20%-25% in 2005 and 40% - 45% in 2010. To meet 80% of domestic demand for high-class trucks and buses, with the localization rate being 20% by 2005 and 35% - 40% by 2010.

· On transport engineering

- To make in-depth and additional investment in technologies and assembly facilities for manufacturing project vehicles and machines, such as thermal bituminous concrete mixers, bituminous concrete spreaders, road rollers of all types, stone-grinding and screening stations with a capacity of 100-300 tons an hour.

- To make intensive investment and update technologies used for manufacturing high-class train cars, with the localization rate being up to over 70% by 2005 and to 90% by 2010.

4. Policies and Measures to Support the Development of the Mechanical Engineering Industry

a) Market policy:

· The State will provide technical standards of key mechanical products as the basis for inspecting quality of domestic and imported products.

· The State will offer conditional protection on a term basis for a number of homemade mechanical products and introduce policies to promote sales of homemade mechanical products.

b) Policy to raise capital for the mechanical engineering industry

· The State will adopt a mechanism to support the borrowing of working capital by manufacturers of mechanical equipment and projects on the manufacture of complete equipment, which require a substantial capital for a long-term production cycle.

· Projects on the manufacture of key mechanical products shall be entitled to borrow credit loans with an interest rate of 3% a year, a loan period of 12 years and a two-year grace period according to Resolution No. 11/NQ-CP dated July 31, 2000 by the Government. Also, the borrowers shall begin repaying loans only from the fifth year of operation or be able to get a refund for the difference in interest rates in case of commercial loans.

· To speed up equitization of mechanical engineering enterprises, including sales of stakes to foreigners, in order to raise new investment capital and to diversify funding sources.

· The State will issue policies to encourage all economic sectors to invest in the manufacture of spare parts and components in a bid to enhance the capacity for specialization and cooperation within the mechanical engineering industry.

c) Tax policies

· To exempt or reduce tariffs on imported raw materials, components, and parts of key mechanical products in service of domestic production.

· To exempt or reduce taxes on mechanical products, which are manufactured in Vietnam for the first time, on a term basis .

d) Research and Development Investment Policy

· For key mechanical products, the State will consider granting financing support for technical services, such as hiring of experts, procurement of designs and technologies, and technology transfer, which are beyond the enterprise’s capability.

· Mechanical engineering enterprises will be eligible to set aside a maximum of 2% of their sale turnovers for research and development activities.

e) Personnel Training Policy

The State shall give priority to the investment in upgrading mechanics training institutions and partly finance programs and projects on overseas training and practice for excellent staffs and workers .

Wednesday, July 13, 2005

The Ministry of Transport of Vietnam