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Accelerating Mechanical Engineering Development

(News Portal – Dong Nai) - The country has approximately 3,100 mechanical engineering enterprises, presenting a broad opportunity for the sector. However, in reality, mechanical products have yet to establish a strong market presence. 

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Production at a Mechanical Engineering Enterprise in Bien Hoa 

Currently, Viet Nam's mechanical sector holds about 7% of the market share, whereas it is projected that by 2030, the industry's value could reach 300 billion USD. This creates a significant challenge for Vietnamese enterprises to rise up and capture market opportunities.

Modest in Both Scale and Quality

According to the Department of Industry (Ministry of Industry and Trade), Vietnamese enterprises are now better able to handle product areas such as molds, mechanical components, and technical plastics and rubber. Some companies have successfully collaborated with foreign investors in Viet Nam for contract manufacturing and exports. While there have been many advancements in the production of mechanical products and supporting industries, and many products have reached international markets, the overall quality and precision of products from most domestic enterprises remain low. Additionally, production costs are high, resulting in a lack of competitiveness. In Dong Nai, local mechanical enterprises are increasingly confident in their technical skills and ability to grasp new technologies; however, they face significant financial challenges in investing in modern machinery and equipment for high-tech supporting industries. Consequently, product diversity and large production capacities remain uncertain.

Mr. Nguyen Tan Loc, Chairman of the Board of Directors of GSB Steel Structure Joint Stock Company (in Thanh Phu Industrial Park, Vinh Cuu District), assesses that the number of well-known Vietnamese enterprises is still very limited. Many still depend on foreign construction companies, especially for projects by foreign direct investment enterprises. Foreign business associations often have interconnected factories to provide services for their members, making access very difficult for most small enterprises. Furthermore, domestic companies are also competing against each other, resulting in an even smaller market share.

In the long term, according to Mr. Pham Tuan Anh, Deputy Director of the Department of Industry, the mechanical engineering sector still has many driving forces for development. The Ministry of Industry and Trade will continue to strongly develop the downstream industry, including sectors such as energy, precision engineering, and various manufacturing areas to ensure the supporting industry has the conditions to grow. Attracting multinational corporations into the manufacturing sector will generate significant demand for supporting industries, providing Vietnamese enterprises opportunities to participate in certain stages and become suppliers in the supply chains of final product manufacturers and assemblers.

Need for Supportive Policies  
According to Associate Professor Dr. Dang Xuan Cuong, Deputy Director of the Center of Innovation and Entrepreneurship at Ho Chi Minh City University of Industry and Trade, the strategy for developing Viet Nam's mechanical industry by 2025, with a vision to 2035, has identified the goal of achieving advanced technology, with product quality meeting international standards and deeper participation in global value chains. Mr. Cuong emphasized that to increase the sector's value, it is crucial to enhance the transfer and application of advances in science and technology related to precision engineering, while encouraging and supporting enterprises to invest in modern technology to gradually participate in product supply chains.

In Dong Nai's planning, the supporting industry in general, and mechanical engineering in particular, has been identified as a key area for development. Dong Nai aims to develop high-tech industries, serving as a primary growth driver for the economy in the coming years. The province has identified five main industrial groups to focus on: machinery manufacturing and precision engineering; electrical and electronics; transport equipment production; chemicals; and food processing and manufacturing.

Specific goals for certain industries include striving for the machinery and precision engineering sectors to contribute significantly to national growth. There will be an emphasis on enhancing the value of production and assembly stages and establishing specialized research and development centers. The province is focusing on attracting enterprises in the fields of automotive, truck, new generation vehicle (electric vehicles), and aircraft components production.​

The development of mechanical engineering must also acknowledge the role of leading enterprises and large manufacturing groups in Viet Nam. For example, Truong Hai Group, originating from Dong Nai, is one of the leaders in automobile manufacturing. In addition to the Chu Lai automotive industrial park in Quang Nam Province, this group is establishing a supporting industrial park in Binh Duong. This also provides opportunities for small and medium-sized enterprises in the Southeast region to develop their capabilities and participate in Truong Hai Group's supply chain. ​

Author: Bao Nguyen

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