Vietnam needs to re-prioritise its machinery production, Deputy Prime Minister Hoang Trung Hai has said.

Meeting with the Steering Committee of Key Mechanical Product early this week, he acknowledged Government support was needed for making mechanical products that are currently in high demand to increase the sector's profits.

"We need to be thinking about whether we should prioritise products such as oil tanks, container ships, 50-tonne cranes and 200kV electric transformers.

"We should focus instead on agricultural equipment or oil rigs."

Relevant offices and engineering firms said at the meeting that the support programme for mechanical production approved by the Government in 2009 was facing certain obstacles that slowed its implementation.

Under the programme, 11 out of 24 projects have been approved for loan assistance with a total value of 10 trillion VND (roughly 476 million USD).

However, only three of those projects have completed their loan contracts, and just 374 billion VND (17.8 million USD) had been dispersed.

Delegates at the meeting agreed that, on paper, the policies were sufficient, but the financial sources and disbursement mechanisms were weak.

Investment in large machinery production projects is currently low, and co-operation among production businesses is said to be lacking. Delegates blamed these factors for the products' high-prices and therefore low-competitiveness.

Heavy machinery producers also said that credit interest was still prohibitively high.

Bids for contracts to supply equipment to large-scale projects need huge initial capital, but many domestic producers cannot afford the loans so the projects usually go to foreign bidders who already have the start-up capital.

To remedy the situation, the deputy PM has asked relevant offices to review loan assistance procedures.

"Along with assistance on loan interest rates, market creation should be a high priority."

The Ministry of Industry and Trade (MoIT) and investors have also been asked to review projects which have received approval but have been delayed or proven ineffective, and bar them from the programme's priority list.

The MoIT has been tasked with considering military enterprises capable of manufacturing equipment for thermo-electricity plants to help get electricity projects back on schedule.

In a related move, Deputy PM Hai has asked the Ministry of Science and Technology to cooperate with the MIC to accelerate research and development activities in an effort to redefine the nation's key mechanical products.-VNA