Vietnam has yet to fully develop its capacity for independently creating certain products that can compete internationally, currently being primarily involved in processing activities.
The influx of investments from various multinational corporations into Vietnam's mechanical engineering sector presents both challenges and opportunities. According to Deputy Minister of Industry and Trade Cao Quoc Hung, Vietnam has significant advantages compared to other ASEAN countries, such as abundant natural resources and ongoing steel projects like Fomusa (7.5 million tons/year) and Nghi Son (7 million tons/year).
Moreover, Vietnam's favorable geographical location, stable political security, and a relatively large proportion of industrial exports contribute to its competitive edge. Atsusuke Kawada, the Chief Representative of the Japan External Trade Organization (JETRO) in Hanoi, also views Vietnam as having the potential to develop its mechanical engineering sector and become a new manufacturing hub.
To fully capitalize on this opportunity, Professor Vo Thanh Thu from the University of Economics in Ho Chi Minh City suggests that Vietnam actively attracts selective investments, improves the business environment, and reforms educational training, particularly in high-tech skills for the industry.
With its entry into the Trans-Pacific Partnership (TPP), Vietnam is set to become a gateway for products to access regional markets. Over 66% of Japanese businesses express their interest in investing in Vietnam, with plans for business expansion. This trend is not only visible in manufacturing but also extends to non-manufacturing sectors.
In recent years, many multinational companies have shifted their production bases from China and Thailand to Vietnam. Notable examples include Samsung, LG Electronics, Foxconn, Canon, and Microsoft, investing billions of dollars. This shift positions Vietnam to enhance its technology and integrate further into global value chains.
However, Vietnam faces challenges in the development of its mechanical engineering industry. There is a lack of breakthrough policies to revolutionize the sector. Labor productivity and skill levels are low, with the localization rate standing at just over 30%, trailing behind regional counterparts.
Despite having a large labor force, Vietnam relies on raw and semi-processed products, assembly, and lacks involvement in global value chains. The value-added per industrial employee in Vietnam is significantly lower than the ASEAN and ASEAN6 averages.
To overcome these challenges, Deputy Minister Cao Quoc Hung emphasizes the need for strategic policies, focusing on high-tech investments and rejecting projects with low technology and value. Additionally, strict criteria for selecting and encouraging investments in key products are vital.
In conclusion, while Vietnam has opportunities to develop its mechanical engineering industry, unlocking this potential requires strategic policies, skill development, and selective investment attraction. Vietnam should prioritize key products, leverage its comparative advantages, and align policies with international market needs to propel its mechanical engineering sector to new heights.