Mechanical enterprises face many challenges

Through many stages of development, Dak Lak mechanical industry has achieved an average growth rate of more than 10%/year, contributing to the socio-economic development of the province.

The province currently has more than 2,000 enterprises and mechanical establishments, including some units recognized as science and technology enterprises. However, the production scale is mainly small and medium, with 90% being small establishments and households.

The province's mechanical products focus on serving agriculture and forestry, many products have domestic and foreign brands such as: coffee processing equipment, water pumps.

In 2024, the output of the mechanical industry will be significant, specifically: the whole province has produced 18,000 agricultural processing equipment, 68,000 water pumps, 390,000 tons of steel and 820,000 ^m2 of corrugated iron. Although the products are diverse and supplied to many fields, the Dak Lak mechanical industry is facing many major challenges, affecting its development.

A mechanical enterprise in Hoa Phu Industrial Park (Buon Ma Thuot City). Photo: Minh Chi

Mr. Le Cong Da, Director of Gold Viet Production and Trading Company Limited, shared that as one of the units producing clamps and irrigation nozzles for agriculture, his company as well as other mechanical enterprises in the province are facing fierce competition from imported goods from China, Thailand, and Japan with cheap prices and stable quality. Enterprises also lack skilled mechanical labor, especially in areas such as precision machining and automation.

Furthermore, mechanical production activities require high investment capital for machinery, factories, and technology, but the unit's ability to access capital is limited.

Another challenge is that Vietnam currently does not have a complete ecosystem for manufacturing components and raw materials, so businesses still have to import a lot from abroad, which will increase costs. Not to mention that to export goods, businesses must meet strict standards of the international market, while the domestic inspection system is still limited.

According to the Dak Lak Province Mechanical Association, currently, legal regulations and business support policies are overlapping, and complicated administrative procedures cause difficulties for mechanical enterprises in particular and the business community in the province in general.

In addition, the province's geographical location is far from major industrial centers, lacking seaports and railways, increasing transportation costs and reducing competitiveness; the resources of mechanical enterprises in the area are limited, lacking capital and modern technology; cooperation and supporting industry of the province's mechanical industry are weak, products mainly serve the local market.

Meanwhile, the province's human resource training has not met the demand, there is a lack of connection between schools and businesses... Those factors have combined to create big challenges for businesses operating in the mechanical field.

Currently, the demand for mechanical market is increasing, along with Vietnam's participation in many international trade agreements, mechanical and supporting industry enterprises are facing great opportunities, having more advantages when exporting to markets, and at the same time attracting foreign investment to the province.

However, to “catch” this opportunity, experts say that mechanical engineering enterprises must standardize their products, from raw materials to production stages and competitive prices. To do this, enterprises must link up more strongly. In particular, there needs to be a “revolution” in reforming human resources; machinery systems; learning from experience and innovating, applying modern technology to the mechanical engineering industry.

Dang Phong Import Export Production Trading Service Company Limited is one of the first mechanical enterprises in the province.

“The Department of Industry and Trade has proposed and recommended to the province, ministries and central branches to issue legal documents on the development of the mechanical industry, develop key industrial products in a synchronous and practical manner; reform administrative procedures to streamline and implement policies to support enterprises in investing, innovating technology and production equipment; have preferential policies for the mechanical industry…”.  

Director of Department of Industry and Trade Luu Van Khoi

Mr. Nguyen Dang Phong, Vice Chairman of Dak Lak Province Mechanical Association, Director of Dang Phong Import-Export Production, Trade and Service Company Limited, affirmed that the mechanical engineering industry is the backbone of the country, creating conditions for the development of many other economic sectors. In fact, the mechanical engineering industry always has "demand", as long as enterprises accompany the people and produce products that meet the actual needs of the people. More importantly, enterprises must see the opportunities, must have passion and determination.

To develop the mechanical industry, Director of the Department of Industry and Trade Luu Van Khoi said that the first thing the province needs to do is to improve policies, invest in infrastructure, improve business capacity and the quality of human resources. Accordingly, it is necessary to upgrade transport infrastructure to facilitate trade, connect regions and reduce the geographical distance of the province from seaports and major industrial centers. The State also needs to have a mechanism on credit interest rates for investment and working capital loan terms for mechanical equipment manufacturers. At the same time, attract large domestic and foreign manufacturing companies and corporations with potential and brands with attractive incentives to implement a focused and key investment support policy.

On the business side, in addition to support in terms of mechanisms, policies, administrative procedures and tax support from state agencies, most units hope that in the coming time, the province will have more trade promotion programs, connecting businesses and consumers; developing industrial park infrastructure systems to serve the mechanical industry and creating conditions for businesses to expand production.

Source: https://baodaklak.vn/kinh-te/202504/doanh-nghiep-co-khi-doi-mat-nhieu-thach-thuc-3921aaf/