Pham Xuan Duong, deputy head of the Party's Central Committee’s Economic Commission, told Thoi Bao Kinh Te Viet Nam (Vietnam Economic Times) why the country spends so much on imports.
Q: A lot has been said about the issue that Vietnam depends too much on imported materials for local production. There is no proper answer to the problem. Can you explain the situation?
A: Studies indicate that sectors including energy and mechanics already have their own development plans and strategies.
For instance the power sector has been able to satisfy the country's demand for local production and consumption, thanks to a resolution made by the Political Bureau and a scheme launched by the government.
However, we don't have a specific development strategy for the materials manufacturing sector, but only a general strategy, mainly for the construction materials sector such as cement and steel. This is why we have to import a lot of materials.
Our recent survey showed that factories have made profits, but all the raw materials and fuel were imported. The value of raw materials comprise between 70 and 80 percent of the product costs, while the remaining are worker, labour and electricity costs. We need to face the facts and look for measures to resolve our shortcomings.
Q: There is a very large gap between the amount of imported raw materials and of locally manufactured raw materials. What is your comment on this issue?
A: According to the General Statistics Office's data, the value of imported raw materials has increased from 35.8 billion USD in 2007 to 70 billion USD in 2013. In the processing and manufacturing industries, the industry and trade sector alone imported 50.4 billion USD worth of raw materials in 2013, compared to 24.1 billion USD in 2007.
Meanwhile, the localisation rate in producing raw materials for the manufacturing industry was very low, at 20 to 25 percent for cast-iron materials in the manufacturing industry, and two to five percent for aluminium and copper materials.
Looking back at the reality of raw materials development, we have had no manufacturing as well as new materials, though we have a lot of natural resources. We've just stopped at making schemes and raw materials exploitation and processing for export. It will be very dangerous for our country if we just depend on natural resource exports. Our resources will be exhausted if this situation continues.
Japan has said that Vietnam cannot produce a screw for a plane's wings as the country does not attach special importance to developing the materials industry. In fact, we can do it if we have raw materials that are locally produced at reasonable costs in the country. We cannot produce screws from the construction steel manufactured by Thai Nguyen Steel and Iron Factory. The costs will be high if we use imported steel.
Q: What should we do to develop the manufacturing materials and new materials industry in Vietnam?
A: To develop the manufacturing materials and new materials industry, a comprehensive strategy, scheme and mechanism should be drawn up, while the State should provide capital and scientific and technological support to the enterprises.
In order to do this, the government must issue the criteria required of an industrial country, regarding key Vietnamese products, and lists of national products or products of localities and groups. Then the products in which Vietnam has an advantage will be added to global value chains.
I think the government should immediately issue a direction or even a resolution on building strategy for the development of the manufacturing materials and new materials industry in Vietnam, in efforts to meet the country's demand for industrialisation and modernisation.
We have to strive to produce some manufacturing materials in the short, medium and long-term plans. From producing a few new manufacturing materials in the next decade, we could produce hundreds in the following decades. Then we may think about providing materials for meeting the production demand of local enterprises.-VNA
Q: A lot has been said about the issue that Vietnam depends too much on imported materials for local production. There is no proper answer to the problem. Can you explain the situation?
A: Studies indicate that sectors including energy and mechanics already have their own development plans and strategies.
For instance the power sector has been able to satisfy the country's demand for local production and consumption, thanks to a resolution made by the Political Bureau and a scheme launched by the government.
However, we don't have a specific development strategy for the materials manufacturing sector, but only a general strategy, mainly for the construction materials sector such as cement and steel. This is why we have to import a lot of materials.
Our recent survey showed that factories have made profits, but all the raw materials and fuel were imported. The value of raw materials comprise between 70 and 80 percent of the product costs, while the remaining are worker, labour and electricity costs. We need to face the facts and look for measures to resolve our shortcomings.
Q: There is a very large gap between the amount of imported raw materials and of locally manufactured raw materials. What is your comment on this issue?
A: According to the General Statistics Office's data, the value of imported raw materials has increased from 35.8 billion USD in 2007 to 70 billion USD in 2013. In the processing and manufacturing industries, the industry and trade sector alone imported 50.4 billion USD worth of raw materials in 2013, compared to 24.1 billion USD in 2007.
Meanwhile, the localisation rate in producing raw materials for the manufacturing industry was very low, at 20 to 25 percent for cast-iron materials in the manufacturing industry, and two to five percent for aluminium and copper materials.
Looking back at the reality of raw materials development, we have had no manufacturing as well as new materials, though we have a lot of natural resources. We've just stopped at making schemes and raw materials exploitation and processing for export. It will be very dangerous for our country if we just depend on natural resource exports. Our resources will be exhausted if this situation continues.
Japan has said that Vietnam cannot produce a screw for a plane's wings as the country does not attach special importance to developing the materials industry. In fact, we can do it if we have raw materials that are locally produced at reasonable costs in the country. We cannot produce screws from the construction steel manufactured by Thai Nguyen Steel and Iron Factory. The costs will be high if we use imported steel.
Q: What should we do to develop the manufacturing materials and new materials industry in Vietnam?
A: To develop the manufacturing materials and new materials industry, a comprehensive strategy, scheme and mechanism should be drawn up, while the State should provide capital and scientific and technological support to the enterprises.
In order to do this, the government must issue the criteria required of an industrial country, regarding key Vietnamese products, and lists of national products or products of localities and groups. Then the products in which Vietnam has an advantage will be added to global value chains.
I think the government should immediately issue a direction or even a resolution on building strategy for the development of the manufacturing materials and new materials industry in Vietnam, in efforts to meet the country's demand for industrialisation and modernisation.
We have to strive to produce some manufacturing materials in the short, medium and long-term plans. From producing a few new manufacturing materials in the next decade, we could produce hundreds in the following decades. Then we may think about providing materials for meeting the production demand of local enterprises.-VNA
