Vietnam - Firms urged to cut back on imported materials

The Ministry of Trade and Industry (MoIT) is calling on local firms to reduce their dependence of imports of machinery parts, vehicles and raw materials such as sugar, salt, steel and conrete, which account for nearly 83 per cent of Vietnam's total imports in terms of value.

The ministry said that 150 of the products or raw materials that are imported can now be sourced domestically – as opposed to 95 as of May 2010.

The ministry issued decree number QD2840/QD-BCT a few years ago that named products and raw materials that could be bought locally. Most of those products include machinery used in the power industry, equipment used in production lines for rubber and fertiliser, lorries under 10 tonnes, coaches with fewer than 50 seats, fertiliser, combine harvesters, motorbikes; and raw materials such as sugar, salt, steel and cement.

However, Le Duong Quang, MOIT Deputy Minister, said the government should introduce protectionist measures to make local producers of machines and machinery parts more competitive domestically. He also said local producers are only capable of making simple machines, or assemble more complex items made abroad.

Nguyen Van Thu, the president of the Vietnam Association of Machinery Industry, said EPC bidding (a contracting arrangement within the construction industry under which the contractor will design the installation, procure the necessary materials and construct it, either through own labour or by subcontracting part of the work) does not favour local firms. As a result, he said domestic manufacturers of power plants could only meet 35 per cent to 40 per cent of domestic projects in terms of value.

Tran Anh Thai, deputy director of Applied Technical System Ltd, said local enterprises were usually less competitive than foreign firms.

He also said regulations should be implemented to favour local companies.

Quang said the MoIT will submit to the government a proposal to encourage local firms to bid for state-funded projects. He also said the ministries would be looking into bidding regulations.

VIR/VNA

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