Thursday, May 30,2024 - 5:5 GMT+7  Việt Nam EngLish 

Mechanical industry exports are on recovery path 

 Tuesday, March 26,2024

AsemconnectVietnam - According to General Statistics Office, since beginning of the year, domestic industrial and mechanical production and export activities have had many bright spots on way to rapid recovery.

Positive recovery after many months of decline
Report of General Statistics Office shows that in January 2024, export value of goods reached 4.02 billion USD, an increase of 39% over the same period last year. Notably, machinery, equipment, tools and other spare parts are also one of groups of goods whose export value tends to increase positively. Faced with these signals, General Statistics Office sees that domestic industrial and mechanical production and export activities have many bright spots to recover quickly and develop this year.
Demand of world economy is recording a recovery trend, import turnover from major economies is increasing, Vietnam's leading trading partners such as the US, Europe... have shown signs of growth.
Previously, General Statistics Office's report also mentioned a bright spot in the export of mechanical goods: the export value has tended to recover in the last months of 2023. Specifically, in the fourth quarter of 2023, average export value of mechanical goods has reached over 4 billion USD/month, up nearly 10% compared to the third quarter and 24% higher than the first 2 quarters of the year.
According to data from General Statistics Office, export value of the mechanical industry group, including machinery, equipment, tools and spare parts, has increased rapidly in recent years, reaching an average rate of 26%/year during a period of 2010- 2022, from more than 3 billion USD in 2012 to nearly 45.8 billion USD in 2022. Accordingly, export value of Vietnam's mechanical industry has recorded a "speedy" growth rate for more than a decade and always in top 3 industries with the highest export value.
Affirming that import-export turnover of mechanical engineering industry in recent years has been very large, but Mr. Nguyen Chi Sang, Vice President and General Secretary of the Vietnam Association of Mechanical Engineering (VAMI) admitted that market share for products mechanical products of domestic enterprises are still very modest, proportion of import-export products of mechanical industry still largely belongs to foreign investment (FDI) sector.
“Domestic mechanical industry does not have traditional products, while businesses are still reluctant to change their production scale. Products compete mainly on labor costs, raw materials and supplies depend on foreign countries. In process of searching for markets, mechanical enterprises do not have sales representatives in blocks, loosely linked in process of finding customers. In addition, limitations on e-commerce and lack of knowledge of international trade laws of mechanical enterprises have left foreign customers unsatisfied" - VAMI leader said.
In fact, in past 2 years, mechanical products market has decreased by about 20% of orders. However, mechanical sector also has many new customers due to investment market shift.
We need more of a connecting role and opening up export markets
To expand market and increase export value for Vietnamese mechanical products, Vietnam Mechanical Association proposes a number of support policies for enterprises in the industry. That is to support strengthening connections and contacts between domestic businesses and large enterprises, corporations and partner associations of markets to exchange and cooperate to develop production and export business. Besides, supporting businesses to promote products and reach partners through e-commerce - an effective information channel and an inevitable development trend in the coming time.
According to Ms. Truong Thi Chi Binh - Vice President and General Secretary of Vietnam Supporting Industry Association, currently new and potential market for Vietnamese mechanical products is UAE. This is an easily accessible market because there are not many complicated standards and good prices. The United States is also a potential market for Vietnam's mechanical product exports. "However, enterprises are having difficulty making payments in the UAE market. Therefore, support is needed so that businesses can seize opportunities to access market and meet requirements from partners", Ms. Binh proposed.
Or with Japanese market, this is traditional export market of Vietnamese mechanical products. Export turnover of mechanical products accounts for 5% of Vietnam's total export turnover to Japan. Although there are many opportunities, some experts also specifically point out weaknesses, specifically because Vietnam's mechanical industry still depends on imported raw materials such as high-tech steel and aluminum. That is why enterprises of domestic mechanical engineering industry needs to invest more in research and product development to proactively source raw materials and increase production capacity to be able to process high-value products and be more equal with businesses. Japan, thereby increasing opportunities to participate more deeply in global supply chain.
Dr. Do Huu Hao - Chairman of Vietnam Mechanical Association also proposed a number of solutions to support mechanical industry to recover quickly, such as reviewing key mechanical product groups, creating markets and protecting domestic market for domestic enterprises through laws and sub-law documents. Proposing the Government to soon revise the bidding law in a direction more beneficial to domestic businesses, with new regulations to make it easier for enterprises to access financial sources.
In addition, Chairman of Vietnam General Mechanical Association also said that enterprises also need to invest in direction of "deep specialization, wide cooperation" to improve competitiveness.
From perspective of management agencies, to reduce difficulties for mechanical enterprises, Ministry of Industry and Trade said it will promote negotiations and sign new agreements, commitments and trade links, thereby diversifying market, product, supply chain. At the same time, the Ministry will also support enterprises to take advantage of commitments in signed FTA agreements to boost exports.
Mr. Ngo Khai Hoan - Deputy Director of Department of Industry (Ministry of Industry and Trade) said that in recent times, Department of Industry has coordinated to deploy many support programs for mechanical industry, especially promoting trade in processing industry. On other hand, the Department has coordinated to deploy activities to improve capacity of enterprises such as organizing consultant training activities, with purpose of spreading knowledge to domestic enterprises. Besides, promoting development of production and export of mechanical industry, supporting mechanical enterprises to participate more deeply in global value chain.

Source: Vitic/


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