Decision No. 319/QD-TTg dated March 15, 2018 of the Prime Minister on approving the Strategy for development of Vietnam’s mechanical engineering sector through 2025, with a vision toward 2035

DECISION

Approving the Strategy for development of Vietnam’s mechanical engineering sector through 2025, with a vision toward 2035^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the November 26, 2014 Investment Law;

Pursuant the Government’s Decree No. 118/2015/ND-CP of November 12, 2015, detailing and guiding the implementation of a number of articles of the Investment Law;

At the proposal of the Minister of Industry and Trade,

DECIDES:

Article 1.To approve the Strategy for development of Vietnam’s mechanical engineering sector through 2025, with a vision toward 2035, with the following principal contents:

I. VIEWPOINTS AND OBJECTIVES

1. Viewpoints

a/ Mechanical engineering is a fundamental industry of strategic significance to the rapid and sustainable national development, which helps raise the national economy’s independence and autonomy, ensure the national economy’s deep and effective integration into the global production and distribution network, and therefore deserves proper attention and adequate investment;

b/ Development of Vietnam’s mechanical engineering sector must center on mechanical engineering serving agriculture, manufacture of automobiles, industrial work equipment, electric equipment and industries supporting mechanical engineering on the basis of efficiently mobilizing resources from all economic sectors, mainly non-state sectors;

c/ Development of Vietnam’s mechanical engineering sector must be based on use of high-quality human resources and advanced technologies and driven by the global competitiveness;

d/ To seize the existing advantages and international opportunities during the integration process; to closely combine mechanical engineering production with services and trade, and develop industries supporting mechanical engineering to proactively and deeply participate in the global value chain and industrial production;

dd/ To attach importance to developing a number of dual-use mechanical engineering sub-sectors and fields to serve national defense and security;

e/ To develop Vietnam’s mechanical engineering sector on the basis of green growth, sustainable development and environmental protection.

2. Objectives

a/ Overall objectives

- By 2035, Vietnam’s mechanical engineering will become a sector  with a majority of sub-sectors using advanced technologies and turning out products up to international standards, participate more deeply in the global value chain, economically and efficiently use energy, be able to equally compete on the global market; the sector will have a professional, disciplined and highly productive workforce who are proactive in researching, designing and manufacturing mechanical engineering products which can basically meet the domestic market’s demand.

- Regarding export: By 2020, 2030 and 2035, the export output will account for 35%, 40% and 45% of the total output of the sector, respectively.

b/ Specific objectives

By 2025, to concentrate on developing such sub-sectors as automobiles, tractors, agricultural machinery, work equipment, industrial equipment and electric equipment, which can basically meet the demands of the economy and be partially exported; the sector’s workforce will be basically qualified to meet modern production requirements:

After 2025:

- To form a number of groups of consultancy and manufacturing contractors capable of designing and manufacturing auxiliary equipment and undertaking EPC bidding packages of industrial works;

- To concentrate on supporting a number of domestic enterprises that have potential to become strong groups in the region in manufacturing automobiles, agricultural machinery and electric equipment;

- To form a system of industrial enterprises to support the mechanical engineering sector which attain the status of direct supplier for enterprises manufacturing finished products and proactively participate in the global value chain, with small- and medium-sized enterprises taking the dominant role.

II. POLICIES AND IMPLEMENTATION MEASURES

1. Policies

a/ To further review and revise policies promoting the mechanical engineering sector, including tax incentives (enterprise income tax and import duty) and investment and business support measures as provided by the Investment Law in the direction of simplifying administrative procedures;

b/ To continue reviewing, revising and improving the system of mechanisms and policies on support for the mechanical engineering sector in compliance with the investment law, Vietnam’s commitments on international economic integration and socialist orientation for the market economy, with a view to driving forward the development of the sector in close combination with the development of dual-use industries;

c/ To strongly step up the development of supporting industries, increase the rate of local production value, build a domestic chain of manufacturing and assembling mechanical engineering products, and proactively participate in the global mechanical engineering production chain.

2. Implementation measures

a/ To concentrate on developing a number of basic materials to serve the mechanical engineering sector, with a view to making the best use of comparative edge in domestic mineral resources, on the basis of advanced, highly competitive and environment-friendly technologies;

b/ To build markets for the selected sub-sectors, thus creating prerequisites for the sector to master technologies and improve its manufacturing capacity. To introduce safeguards to protect domestically made products in compliance with international commitments;

c/ To attract transnational manufacturing corporations with great potential and brand names through offering them attractive incentives in line with the selective and targeted investment support policy, placing special focus on projects to manufacture important mechanical engineering products which are competitive and marketable; at the same time, to attach importance to promoting investment in small- and medium-sized enterprises, particularly those in supporting industries, in the direction of selecting quality and high-added value projects using modern and environment-friendly technologies;

d/ To adopt policies to support enterprises in purchasing designs and technologies, renovating technologies and production equipment, applying advanced production management technologies and models that use more efficiently energy and input natural resources as well as raise the quality and competitiveness of mechanical engineering products; to diversify mechanical engineering products; to support the building and development of product brands or acquisition and merger of globally branded enterprises, including their research and development section, in order to shorten the development process;

dd/ To prioritize investment in upgrading training institutions of the mechanical engineering sector, combining training with practice; to provide financial support for capable officials and workers attending overseas training and practice courses under approved programs and projects; to step by step build up a pool of chief engineers;

e/ To formulate policies on interest rates of credit facilities for investment and on borrowing terms of working capital for manufacturers of highly marketable mechanical engineering equipment (the Government’s Decree No. 32/2017/ND-CP of March 31, 2017, on the State’s investment credit facilities and Decree No. 11/2015/ND-CP of November 3, 2015, on development of supporting industries).

g/ To build an information system of the mechanical engineering sector as a database for common use by state management agencies and enterprises;

h/ To promote and bring into fully play the role of industry associations in connecting mechanical engineering enterprises, putting an end to the situation of division and dispersion in the sector.

Article 2.List of key mechanical engineering products

The list of key mechanical engineering products prioritized for development investment in the 2017-2025 period is provided in the Appendix to this Decision and shall be adjusted to suit the practical socio-economic development of the country in each period.

Article 3.Organization of implementation

1. The Ministry of Industry and Trade shall:

a/ Assume the prime responsibility for, and coordinate with other ministries and sectors in, implementing this Strategy;

b/ Sum up and report to the Prime Minister problems and difficulties, and propose solutions in the course of implementation;

c/ Build and update databases of the mechanical engineering sector at home and overseas and key mechanical engineering sub-sectors on the website of the sector with state budget funds;

d/ Study and draft a decree on preferential policies to support the development of the manufacturing industry, then submit it to the Government for promulgation in the coming time.

2. The Ministry of Finance shall assume the prime responsibility for, and coordinate with related ministries and sectors in, reviewing existing enterprise income tax and import duty incentives for projects manufacturing key mechanical engineering products and proposing new ones.

3. The Ministry of Science and Technology shall assume the prime responsibility for, and coordinate with related ministries and sectors in:

a/ Elaborating, revising and improving the system of national standards and technical regulations on important manufacturing mechanical engineering products in the fields of automobiles, agricultural machinery and electric equipment in conformity with the international standards;

b/ Building technical barriers to increase the quality of imported mechanical engineering products.

4. The Ministry of Natural Resources and Environment shall:

a/ Assume the prime responsibility for studying and proposing to competent authorities amendments to the land law in order to provide preferential land policies for projects manufacturing key mechanical engineering products;

b/ Assume the prime responsibility for, and coordinate with related agencies in, supervising the observance of the law on environmental protection by projects manufacturing key mechanical engineering products.

5. The Ministry of Planning and Investment shall coordinate with the Ministry of Industry and Trade in studying and proposing to the Government for promulgation support policies for small- and medium-sized enterprises manufacturing key mechanical engineering products.

6. The State Bank of Vietnam shall coordinate with the Ministry of Industry and Trade and related ministries and sectors in studying and promulgating support policies for development of the mechanical engineering sector.

7. The ministries, ministerial-level agencies, government-attached agencies and provincial-level People’s Committees shall coordinate with the Ministry of Industry and Trade and related agencies in directing and participating in the implementation of the relevant contents of this Strategy according to their state management functions and tasks prescribed by law.

Article 4.Effect

This Decision takes effect on the date of its signing and replaces the Prime Minister’s Decision No. 186/2002/QD-TTg of December 26, 2002, approving the Strategy for development of Vietnam’s mechanical engineering sector through 2010, with a vision toward 2020.

Article 5.Implementation responsibility

The ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and heads of related agencies shall implement this Decision.

For the Prime Minister
Deputy Prime Minister
TRINH DINH DUNG

Appendix

LIST OF KEY MECHANICAL ENGINEERING PRODUCTS IN THE 2017-2025 PERIOD

(To the Prime Minister’s Decision No. 319/QD-TTg of March 15, 2018)