Workers in a factory at the An Ha Industrial Park in HCM City. (Photo: VNA) The industries have been struggling in recent years with a shortage of orders,increased costs and decreased demand, with many businesses forced to operate atminimal capacity, according to Dao Phan Long, Chairman of the VietnamMechanical Enterprises Association (VMEA).
Long said domestic industries have now developed decent technical capabilitiesin moulding, mechanical components, electrical cables, plastic and rubber. Manybusinesses have been making significant investments to improve productioncapacity and product quality to meet the high standards set by FDI enterprises,their main customers.
"To establish a strong foundation for Vietnam's mechanical industries,businesses must be able to rely on public investment projects and the State's supportprogrammes," Long said.
He added that a series of shortcomings and limitations in the country's policyhad hindered the development of the industries.
The VMEA called for additional infrastructure development and support policiesto encourage businesses to invest in the production of raw materials formanufacturing industries, which have been mostly dependent on foreign imports.
Long said there should be preferential policies for businesses and investorswho source from domestic firms and longer payback periods for investments inthe industries.
Do Phuoc Tong, Chairman of the Ho Chi Minh City Electrical and MechanicalEnterprises Association, a preferential tax scheme for domestic manufacturingenterprises has been long overdue. He said it doesn't do much to enticebusinesses to source locally for parts if they can import a whole machine at a0 per cent tax rate.
Other inconsistencies in tax policies have contributed to Vietnamesemanufacturing being unable to compete with regional peers.
For example, domestic firms have long voiced concerns over perceived"unfair treatment" compared to FDI firms searching for land andfactory investment and accessing support funds.
In addition, domestic firms often find it difficult to join the supply chaindue to FDI firms often prefer imported products.
"There should be policies that require a certain percentage of domesticproducts to promote cooperation between FDI enterprises and domesticenterprises," he said. "This will also allow supporting industries inVietnam to access new technologies."
National Assembly deputy Hoang Van Cuong from the National Economics Universitysaid it's critical for domestic industries to maintain a strong presence onhome turf or risk missing out on a 100-million consumers market in the future./.
VNA
