| | AUGUST 20248IN FOCUSVIETNAM ADVANCES INDUSTRIAL LOCALISATION IN MECHANICAL ENGINEERING AND BEYONDVietnam is making significant strides in mechanical engineering, particularly within the agricultural sector, and is now focused on increasing the localisation rate in industrial production. The Ministry of Industry and Trade (MoIT) reports that domestic companies have successfully developed a wide range of planting and harvesting machinery, significantly advancing agricultural mechanisation.Over 90 percent of rice milling and polishing machines, as well as dryers, are now domestically produced with advanced technology. These products are not only meeting local demand but are also being exported to ASEAN countries, the Americas, and Africa. Additionally, Vietnamese companies have developed several types of coffee and cashew processing equipment.In the production of bicycle and motorcycle parts, standard mechanical components, and plastic-rubber parts, Vietnamese firms have largely met domestic demand and are exporting these products to international markets. The electronics sector has seen a notable increase in local participation, with the number of Vietnamese firms in Samsung's supply chain rising from 25 in 2014 to 306 by the end of 2023.Despite these achievements, the MoIT acknowledges ongoing challenges in industries requiring high technical standards, such as the automotive sector. The electronics industry also faces a low localisation rate, with most products either imported as complete units or assembled domestically from imported components.Nguyen Van Toan, Vice President of the Vietnam Association of Foreign Invested Enterprises, emphasized the importance of supporting domestic businesses to provide supplementary products to foreign direct investment (FDI) firms at competitive prices. This strategy aims to retain major FDI investors, develop local businesses, and gradually increase the localisation rate.To address these challenges, the MoIT is leading efforts to connect domestic suppliers with multinational corporations, both within Vietnam and abroad. Initiatives include establishing technical centres, modeled after successful examples in South Korea, Japan, and Thailand, to enhance the technical and managerial capabilities of local industrial enterprises.Key focus areas for support include the textile and garment, leather and footwear, electronics, automotive assembly and manufacturing, high-tech industries, materials and metalwork, mechanical engineering, electronics, and food and biotechnology industries. These efforts are expected to bolster Vietnam's industrial capabilities and increase the localisation rate across various sectors.
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