Hanoi hopes to become auto industry centre

Hanoi authorities are nurturing the great ambition of having the city become the centre of supporting industries serving the country’s automobile industry.

According to Pham Duc Tien, Deputy Director of the Hanoi Department of Industry and Trade, Hanoi is building up a programme on developing supporting industries that serve the country’s automobile industry.

The city strives to have strong automobile supporting industries in the near future in order to satisfy the demand for economic development. In the time to come, cooperation among domestic enterprises will be strengthened, while local authorities will pay appropriate attention to the supporting programmes (trade promotion campaigns, calls for investment). In the immediate time, 40 enterprises in Hanoi will be associated under the programme.

According to the Hanoi Department of Industry and Trade, there are 16 automobile assembly workshops in Hanoi which mostly assemble trucks and passenger vehicles. Most of the workshops have the same level of technology with low localisation ratio, while the added value mostly comes from welding, painting and assembling. 70-90% of car parts and accessories are imported from China and South Korea.

There are very few enterprises that produce car parts and accessories in Hanoi, and they can only make simple products like mirrors, glass, electric wires, tyres and batteries. In fact, Vietnam-made accessories cannot compete with imported ones due to high production costs, low-quality and undiversified designs.

Under the strategy on developing automobile supporting industries, Hanoi will develop into a big centre. By 2010, Vietnam will be able to make trucks and passenger vehicles with 65% of locally-made content. The figures will be raised to 75% for passenger cars by 2020, and 85% for trucks.

Bui Ngoc Huyen, General Director of Vinaxuki, which specialises in making trucks and commercial vehicles, said that supporting industries can develop only when many enterprises join forces in highly professional cooperation.

Vinaxuki alone will not be able to make automobile engines. In Japan, 60 enterprises join forces to make car engines.

Huyen said that now Vinaxuki can make cabins for 5-6 types of truck models, which it can provide to other manufacturers. Meanwhile, other manufacturers should focus on making other products which they can provide to other manufacturers, including Vinaxuki.

Meanwhile, Huyen said that the state’s preferential policies are not attractive enough to encourage enterprises to produce car parts and accessories.

In other countries, the automobile industry is listed among the high-tech industries; therefore, it can receive many preferences to develop. In Viet Nam, the automobile industry is not considered a high-tech industry so it does not enjoy many incentives. While other countries consider shipbuilding a medium-tech industry, Viet Nam lists it as a high-tech branch.

“With such a viewpoint and policy, we will not have a real automobile industry,” Huyen said.

Experts say that Viet Nam should not hope it can export cars, but exporting car parts proves to be within reach. The foreign-invested Denso, which can get tens of millions of dollars from exporting car parts, is a good example for Vietnamese enterprises to follow. However, in order to have more Densos, the government needs to have good policies. (VNN)