Hanoi (VNS/VNA) - Domestic mechanical engineering enterprises shouldstrengthen cooperation to improve competitiveness and gain more market share,industry experts have suggested.

Nguyen Quang Hieu, general director of PetroVietnam Marine Shipyard JSC (PVShipyard), told Nhan Dan (The People) newspaper that there were enormousopportunities for mechanical engineering firms to tap into the lucrative localmarket with a scale of up to billions of US dollars.

Hieu cited offshore wind power projects as a good example. He said Vietnameseenterprises could produce offshore wind turbine foundations. Even a small-scalewind power project comprises about 30-40 turbines, and its turbine foundationsystem would need an estimated 300,000 tonnes of equipment.

With each tonne equivalent to 4,000 USD, including the cost of materials, onaverage, there would be about 1.2 billion USD worth of market share for localmechanical engineering enterprises, Hieu said.

Dao Phan Long, chairman of Vietnam Association of Mechanical Industry (VAMI),agreed. He said the domestic mechanical engineering enterprises enjoyedrelatively abundant development potential.

In the past 5-10 years, Vietnam has spent about 40 billion USD each year importingequipment and machinery from abroad to serve the entire economic sector,including industrial production, agriculture, infrastructure construction,services and national security. This is a large demand that not many countrieshave, according to Long.

The country will also implement many essential and large-scale projects, suchas the National Power Development Plan for 2021-30, Long Thanh InternationalAirport and inner-city railways, traffic works and irrigation, which means thelocal mechanical market remains lucrative, according to industry experts.

However, domestic mechanical engineering, mostly small and medium-sized, hasfailed to gain a larger share of the domestic mechanical market due to theirlimited financial capacities, lack of equipment, poor linkages betweencompanies and insufficient supportive policies from the Government.

General Director of LILAMA Corporation Le Van Tuan said mechanical engineeringwas a key industrial sector and the backbone of national development. However,enterprises still had to find their way to develop due to the lack of aGovernment resolution for the industry.

Increasing connectivity a must

To gain a larger market share, Hieu from PV Shipyard said businesses shoulddraw up an effective investment plan focusing on high connectivity.

For example, to manufacture large structural equipment such as offshore windturbine foundations, it is necessary for a mechanical engineering firm to builda large factory which also comprises a deep-water port and has modern machinesinstalled. Each factory must have capital ranging from 30-50 million USD.

Meanwhile, the capital shortage was a major weakness of most local mechanicalengineering businesses. So they needed to enhance their cooperation to createstrength, Hieu said.

To deal with the issue, Hieu said, his company would team up with otherbusinesses with sufficient financial capacities, working in similar areas whileusing projects as mortgages to get bank loans.

Besides closer links among enterprises, an overall development strategy for theindustry was also vital, Deputy Chairman and General Secretary of VAMI NguyenChỉ Sang said.

Preferential and protective policies of the State had not met the expectationsof the industry, Sang said, adding that VAMI would submit the Government foropinions on the issuance of the Law on Mechanical Engineering.

"When everything was legalised, the Government's support policies for theindustry would be implemented," Sang said.

Earlier, VAMI forecast the total demand of the domestic mechanical market toreach an estimated 300 billion USD by 2030. The need for machinery andequipment for industrial projects such as thermal power, hydroelectricity,chemical, mining and mineral processing is about 120 billion USD.

Vietnam has signed many trade agreements, and multinational companies areexpanding to find joint venture partners and set up production factories in Vietnam.The trend of moving supply chains is a great opportunity for many businesses,including the mechanical engineering industry.

Vietnam is home to about 25,000 operational mechanical engineering enterprises,accounting for nearly 30% of enterprises in the country's processing andmanufacturing industry, according to the Ministry of Industry and Trade'sDepartment of Industry./.