Project implementation basis
On December 17, 2022, Truong Hai Industrial Group Corporation announced the establishment and inauguration of Vietnam's leading mechanical center in Chu Lai.
The birth of THACO Industries demonstrates the strategy of developing mechanical engineering and supporting industries to become THACO's main production and business sector, going beyond the framework of internal development.
From a mechanical manufacturing workshop, THACO has developed the mechanical manufacturing and supporting industry sectors into an industrial corporation.
Industries has received orders from external partners and customers, including automobile and motorbike product groups for domestic automobile assembly enterprises such as Toyota, Isuzu, Hyundai, Piaggio and mechanical processing product groups for partners in the Central provinces such as Makitech, Doosan, General Electric and the Southern provinces such as TTi, Schindler.
Products exported to 15 countries around the world increased in quantity and value (large and high-end markets such as the US (semi-trailers), Japan (airport luggage carts), Korea (specialized vehicle mechanical components, auto parts), Australia (mechanical components for mining), Sweden (agricultural accessories), Finland (conveyor belts, silos)...
In August 2023, Industries signed a memorandum of understanding (MOU) to cooperate with the Port of Oakland in providing equipment for port infrastructure and using the port to import goods into the United States and connecting, cooperating in production, and supplying products and equipment in the fields of environment, recycling... with California Waste Solutions Company, expanding the path to the US market.
Industries' revenue in 2023 is nearly VND 8,700 billion (exports of more than USD 105 million). In 2024, existing factories will be upgraded, and new factories in Chu Lai will be put into operation (high-end passenger car glass, auto frame & body components, passenger car interior complex).
Expected revenue is over 13,000 billion VND (export 250 million USD). In the second quarter of 2024, it is expected to establish and operate a company in the US (sales in the North American market such as the US, Canada, Mexico), establish 2 representative offices in Europe and Australia (support existing customers and develop the market).
Mr. Do Minh Tam - General Director of THACO Industries said that the group is strongly shifting outward, providing industrial solutions along the value chain from product research & development - processing & manufacturing - installation - transfer of operation & maintenance, through the following forms: self-production and cooperation/joint venture with domestic and foreign partners, ready to associate and cooperate with other enterprises to establish a new model in mechanical production and business and supporting industry.
THACO has identified mechanics and supporting industries as the group’s main production and business sectors in its development strategy. This “leading crane” has enough potential to lead and connect small and medium enterprises, forming an ecosystem of mechanical manufacturing and supporting industries, not only Quang Nam but also the whole Central region has stood up to “take responsibility”.
In October 2021, Quang Nam authorities and THACO jointly launched a call for businesses to participate in building a new model of mechanics and supporting industries in THACO's investment strategy.
When will the pilot be implemented?
According to many surveys, Quang Nam has over 2,000 establishments producing, processing, repairing mechanical, agricultural and construction machinery..., but up to 97% of them are small and micro enterprises.
These facilities mostly lack capital, technology, weak connections, lack key products, and do not have the capacity to participate in the global value chain.
Quang Nam authorities have issued many mechanisms and policies calling on businesses to prioritize investment in mechanics and supporting industries to become key economic sectors, but they still cannot attract businesses.
"Pilot mechanism to encourage production cooperation in clusters, mechanical and supporting industries (CNCK&CNHT) in Chu Lai" - one of 11 mechanisms and projects submitted by Quang Nam has been approved by the Prime Minister.
Central ministries and branches confirmed that the lack of synchronous policies and leading enterprises to implement ideas has prevented the supporting industry from developing despite being proposed for many years.
In Chu Lai Open Economic Zone, a business cluster of THACO Industries has appeared with more than 20 subsidiaries producing and supplying supporting products for the automobile industry and other manufacturing industries.
This cluster of enterprises provides a variety of supporting industrial products for manufacturing industrial supply chains. The CNCK&CNHT cluster with THACO Industries as the leading company in this chain can become a pilot model for the Government to replicate nationwide.
This is the premise for Quang Nam to build a strategy and development goals for local CNCK&CNHT in the future, which has been shaped in the recently announced planning.
In just a short time, Quang Nam has completed the outline and submitted it to the Prime Minister for approval (November 2022). Many meetings between central and local ministries and branches were held, but Quang Nam's dossier is still being transferred between the Ministry of Industry and Trade and the Ministry of Planning and Investment, neither ministry is responsible for approving the project outline... because it lacks sufficient authority.
These meetings have shown that the support and incentive mechanisms for the development of supporting industries have been issued quite fully. However, the implementation and benefit of these policies by businesses are still very limited.
Ministries and branches will evaluate and propose amendments and supplements. From the above comments, it is difficult to propose a pilot mechanism for a locality or a sector in an economic zone.
Industrial clusters, including automobile manufacturing and general mechanical engineering, currently only outline policies and directions for each region, without specific criteria or industry planning or scope.
Therefore, the central ministries and branches are still hesitant in the pilot development of mechanisms and policies to form the project "Piloting mechanisms to encourage cooperation and production linkage in CNCK & CNHT industry clusters in Chu Lai Open Economic Zone", not knowing how to support and handle it.
Mr. Ho Quang Buu - Vice Chairman of the Provincial People's Committee said that the establishment of CNCK & CNHT linkage clusters with specific mechanisms and policies to promote formation and promote efficiency at the national level, achieving the set goals is very new content, involving many ministries and branches and is unprecedented, and must be piloted.
This is an initiative of Quang Nam, but the Provincial People's Committee has encountered many difficulties in developing the project, and the problem has been prolonged. Currently, two ministries (Industry and Trade and Planning and Investment) are consulting the Government. However, the Government has not yet included the implementation of this project in the 2024 work program, so the locality has to wait.
“Quang Nam has proposed that the Prime Minister direct the Ministry of Industry and Trade to preside over the development of this project, in accordance with the functions and tasks of the ministry, in accordance with the content of the draft Law on Industrial Development (the Ministry of Industry and Trade is presiding over). The People's Committee of Quang Nam province and THACO will coordinate to implement it,” said Mr. Buu.
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