MECHANICAL ENGINEERING

The output of the Vietnamese mechanical engineering sector is growing, registering a 33% increase in net turnover from $4.7 billion in 2004 to $6.3 billion in 2005. However, the growth is uneven; output of electric motors, diesel motors, pumps, electric fans and automobiles is increasing, but machine tool output is declining.  

There are over 2,000 mechanical enterprises nationwide. There are 127 foreign invested mechanical engineering corporations in Vietnam, of which 57 companies are 100% foreign financed. There are around 1,000 mechanical collective units and these collectives are typically smaller in size compared to the state-owned and private enterprises. Estimates place the total number of informal machining establishments and workshops at about 29,000.

Planners in Hanoi want mechanical engineering to become the city’s prime industry by 2010, forecasting the sector will account for 37% of the capital’s output. To encourage industrial development, Hanoi plans to build a 300-350 ha industrial zone in the city’s Soc Son district by 2010.  Industrial zones in the city of Hue, Bac Ninh province and Ha Tay province also give preference to mechanical engineering enterprises. 

Vietnam mechanical industry consist of such major specialties as: complete equipment, machinery tool, shipbuilding, dynamic engines, motorbike, construction machinery and equipment, mechanical engineering for forestry, agriculture and industry processing, electrical devices and materials, and machinery for light industry and for consumer goods.  

The domestic mechanical industry represents 13% of industry’s output and most of it is for domestic use. In the agricultural sub-sector, Vietnam produces small tractors, specialized movers, excavators and mowers primarily for the domestic market. Engines below 30 HP are produced entirely in Vietnam. 70% of rail car production in Vietnam is completed with locally made parts, and automobiles produced in Vietnam satisfy 70% of domestic demand. 80% of motorbike parts are also produced domestically. The automotive sub-sector also produces 45 seat buses. Some air conditioners, refrigerators and washing machines are produced in Vietnam.

The domestic industry also produces screws, nuts, bolts, steel pipes for gas conduction, steel tanks, steel girders and other mechanical engineering products.  More than 90% of demand for metalworking products is supplied domestically, but these corporations import most of their machinery. Demand for metalworking equipment rises 30% annually, with the sheet metalworking sub-sector demanding the most. Shearing machines, press brakes and rolling machines are the types of sheet metalworking equipment in highest demand. 

Vietnam imports roughly $7 billion annually worth of mechanical equipment from China, Japan, South Korea and Germany. Lathes, stamping presses, and drilling machines are some of the major machine imports. In 2005, Vietnam imported $8.5 billion of mechanical equipment, in which computer and electronic products accounted for 20%, increasing 26% compared to 2004. Automobile and motorbike import represented 19% (automobile 13%, motorbike 6%), increasing 19% from previous year. The Ministry of Trade estimates Vietnamese machinery imports will reach $14 billion in 2010. 

Engines are exported to other ASEAN countries, though Vietnam only supplies 30% of domestic engine demand. The export value of electronic and computer products in 2005 was $1,442 million, grew 34% from $1,076 million in 2004. In 2005, Canon opened its largest inkjet printer assembly plant in Vietnam. Vietnam exports nuts, bolts and screws to the Netherlands. It also ships some metallurgical additives to the United Kingdom, aluminum bookshelves to Japan and iron decorations to the Europe and the US.

The shipbuilding sector is also an export earner in recent years. Vietnam has built 12,000-tonne ships for export with total value of over US$1 billion and it is now busy building 53,000-tonne ships for export. There are ambitious plans to support shipbuilding and in 2005 the government provided a US$750m soft loan for expansion of Vinashin (see report on Ship Building Industry).