Hanoi (VNS/VNA) - Vietnamneeds to increase policies to promote the development of the domesticmechanical engineering industry and enable local manufacturers to compete withforeign competitors.

According to the Vietnam Mechanical Association,despite being considered as a spearhead industry, mechanical engineeringenterprises have for many years struggled to find ways to develop and competeeven in the domestic market.

Nguyen Duong Hieu, chairman of Lidovit Trading and Industrial Joint StockCompany, said current policies for the mechanics market remained unclear,adding that there were no mandatory requirements on the local procurement ratesin works or projects which pushed domestic manufacturers into difficulty whencompeting even in the home market.

Hieu said that his company could not be a directcontractor but must go through a Japanese enterprise to supply screws for themetro project in HCM City.

Vu Van Dao, director of the Southern Petroleum ConstructionJoint Stock Company, said although his company produced and exported around 90 percentof mechanical equipment in the petroleum sector to more than 30 countriesworldwide, it failed to access the domestic market.

Dao said his company must go through two foreign enterprises to becomecontractor of some local petroleum projects.
The shortage of policies and capital was a majordifficulty hit for mechanical engineering enterprises, Dao Phan Long, presidentof the Vietnam Mechanical Association, said.

Long said that to develop key mechanical products,enterprises needed support in term of policies, especially domestic marketprotection policies.

It was also necessary to provide support policiesfor project owners who used domestically-produced mechanical products, headded.

Specifically, a stable loan interest rate of five percent could be put intoconsideration.

In order to promote the development of thedomestic mechanical engineering industry, the Ministry of Industry and Tradehad proposed a number of policies. One was to encourage large projects,especially State-funded, to use domestically-produced mechanical products.

The ministry said that it was necessary to haveland incentive policies for projects which produce key mechanicalproducts, which was similar to policies to encourage investment in agricultureand rural development.

The ministry proposed projects which produce keymechanical products be provided with exemptions of land lease fees in the first11 years of operation and reduction by 50 percent for a further five years.

Policies to attract foreign investments andpromote the development of the supporting industries for the mechanicalengineering industry were also needed, the ministry said./.