Vietnamese steel enterprises need to invest in more modern technology to increase their competitiveness in the domestic market, the Vietnam Steel Association (VSA) said.

The association expressed concern that it smaller members may not be able to capitalize on growing infrastructure programmes in the country, if they didn’t update their technology.

Only modern large scale steel manufacturers would benefit from Government plans to pour 360-440 trillion VND (19.5-23.8 million USD) into developing national seaports and many infrastructure development programmes on transport, urban and housing this year, the association said.

Nguyen Tien Nghi, the VSA’s deputy chairman, said the increase in the current steel import tax for steel billet and steel products to 8 percent and 15 percent respectively, which acts to limit steel imports by big producers, was only on temporary benefit to domestic steelmakers.

The enterprises would need to focus on upgrading technology and the quality of their products, Nghi said.

Nguyen Van Sua from the Ministry of Industry and Trade said within the past four years, Vietnamese steel market has seen huge participation of joint-venture steel companies such as Posco, Vinbakyoei, Vietnam-Korea Steel Joint Venture (VPS), Hoa Phat, Pomina and Phu My.

The modern mills, equipped with advanced machines and production chains from Italy and Japan , each have capacity of 250,000-l400,000 tonnes per year.

There are medium-scale factories such as Thai Nguyen Steel Co, Southern Steel Co, Da Nang Steel Co., Vinausteel, Natsteelvina, Hai Phong Steel Co using equipment from mainland China and Taiwan . Each factory has the capacity of 120,000-200,000 tonnes each year.

The local small-scale plants have capacity of 5,000-20,000 tonnes per year. They use locally made equipment, making low quality products, cause environmental pollution and consume large amounts of energy.

Nghiem Gia from Vietnam Steel Corp said that big steel production projects would make it hard for domestic enterprises to compete if they didn’t modernize.

The Ministry of Industry and Trade has issued regulations, which prohibit small scale and outdated steel manufacturing technology, from the fourth quarter of last year./.