After suffering a significant fall in revenue last year, the mechanical engineering industry has high hopes for recovery in 2021, given Vietnam’s good COVID-19 control and participation in free trade agreements.
The mechanical engineering industry has high hopes for recovery in 2021 due to the country's good control of pandemic and participation in FTAs.
According to a report from the Vietnam Association of Supporting Industries (VASI), in 2020, due to the impact of the COVID-19 pandemic, nearly half of member businesses experienced a sharp decline in revenue, especially in the first half of the year.
However, Truong Thi Chi Binh, VASI Vice Chairman, said that thanks to their great efforts, businesses have basically found sources of supply, reconnected with export partners, and gradually recovered.
Nguyen Duc Cuong, General Director of the Hikari Vietnam Production & Trading Company, said the supply chain breakdown last year forced his company to cooperate with domestic enterprises over materials and export opportunities. This was a positive change the pandemic indirectly brought about for the local business community, he added.
Cuong said that 2021 will remain a challenge but promising signs can be seen, like good economic growth and sound pandemic control helping attract foreign investment and creating opportunities for domestic producers and businesses.
If local supporting industries can seize the opportunities, they could quickly join global supply chains as demand for strong Vietnamese products like apparel and household items is expected to rise post-pandemic. Companies with long-term plans, a network of partnerships, and good management mechanisms will survive and grow.
Insiders said it is likely that multinational corporations will shift production to and purchase from a third country instead of China, which presents a good opportunity to Vietnam, they noted.
Dao Phan Long, Chairman of the Vietnam Association of Mechanical Industry, said that producers will benefit more this year from opportunities but should prepare themselves to meet standards relating to products, production materials, and prices.
This requires stronger connectivity between them, particularly in sharing information, technologies, and orders, Long noted.
FTAs help domestic mechanical and supporting industry firms gain better export advantages.
Truong Thi Chi Binh said the free trade agreements Vietnam has joined will help domestic mechanical and supporting industry firms gain better export advantages and see the country attract more foreign investment.
Given the pandemic, Government measures to support the domestic market and plans to form joint ventures in the supporting industry are needed, she added.
According to the Ministry of Industry and Trade, in order to assist mechanical and supporting industry enterprises in 2021 and subsequent years, it will continue to improve the efficiency of its two technical centres for industrial development support in the northern and southern regions.
The centres have cooperated with trans-national corporations in Vietnam such as Toyota, Mitsubishi and Canon to find suitable suppliers participating in these companies' value chains./.VNA
Companies in the supporting industry will get an interest rate subsidy from next year in an effort to promote the development of the part-supply industry.