THE PRIME MINISTER

DECIDES:

Article 1.- To approve the strategy on development of Vietnam�s mechanical engineering industry till 2010, with vision to 2020, with the following principal contents:

1. Viewpoints on the development of Vietnam�s mechanical engineering industry:

- Mechanical engineering is one of the base industries and plays an important role in the economic development and consolidation of security and national defense of the country.

- To concentrate on the efficient and sustainable development of the mechanical engineering industry on the basis of bringing into play all domestic resources in combination with external resources. To encourage all economic sectors to take part in developing the mechanical engineering indsutry in an organized manner, with rational task division and cooperation, and at the same time to continue with the renewal, reorganization, development and consolidation of the State mechanical engineering enterprises to make them strong enough to play the role as core and mainstay force of the industry.

- To concentrate on the development of a number of key mechanical specialties and products in order to best tap and bring into the fullest play potentials (natural and human resources) to satisfy essential requirements of the national development cause.

- To enhance the self-research and manufacture capability, and at the same time to step up the absorption and application of advanced sciences and technologies in order to attain the average advanced technological level of the Asian countries, and create many mechanical products with high competitiveness.

- To raise the specialization and cooperation, enhance the mechanical engineering industry�s capability, thus creating a prerequisite for the development of other industries of the country.

a/ General objectives:

Priority shall be given to the development of the following key mechanical specialties and products, so as to basically meet the national economy�s demands:

- Complete equipment,

- Prime movers,

- Mechanical engineering in service of agriculture, forestry, fishery and processing industry,

- Machine tools,

- Construction engineering,

- Ship-building engineering,

- Electric-electronic technical equipment,

- Automobile engineering - communications and transport engineering.

b/ Specific objectives:

By 2010, to strive to meet 45 - 50% of the whole country�s demand for mechanical products, of which the export proporation shall represent 30% of the total output value.

3. Strategic orientation for development of a number of important mechanical specialties and product groups

a/ Complete equipment:

- To raise the capability to manufacture complete equipment with advanced technologies. To strive to manufacture equipment with high sophistication as substitutes for imported products and step by step proceed to export them. To raise the capability to design complete equipment, and efficiently combine them with technology of each industry.

- To concentrate investment in equipment and technologies in fundamental processes, such as molding, forging and creation of large casts, in order to synchronize equipment and technologies and meet the demand for manufacture of large and sophisticated workpieces and assemblies.

- To make the fullest use of equipment capacity of mechanical engineering enterprises throughout the country, to enhance the coordination in the division and cooperation in manufacturing complete equipment.

- To strive to meet 40% of the domestic demand for complete equipment by 2010. For the immediate future, to concentrate on the following fields: production of paper and paper pulp, production of cement and construction materials, generation of electricity, production of oil and gas, supply of clean water, processing industry, etc.

b/ Prime movers:

- To develop the prime mover manufacture into a strong industry of Vietnam, through programs and projects on intensive investment, modernization of equipment and technologies, raising of the capability to manufacture prime movers, and raising of products� competitiveness.

- By 2010, to meet 60-70% of the domestic demand for medium-sized and small-sized prime movers, to strive to manufacture hydraulic engines of 400 HP or over with a localization rate of 35-40%.

c/ Tractors and agricultural machines:

- Tractors:

+ To invest in the manufacture of two-wheeled tractors of a capacity of 6, 8 or 12 HP to fully meet the domestic demand.

+ To manufacture four-wheeled tractors of a capacity of 18, 20 or 25 HP, and gradually proceed to manufacture four-wheeled tractors of up to 30 HP.

+ By 2010, to manufacture medium-sized four-wheeled tractors of a capacity of between 50 and 80 HP.

- Agricultural machines:

+ To concentrate investment in building the adequately strong specialized industry for manufacturing agricultural machines, including farming and processing machines and equipment for preserving farm produce, with a view to meeting the domestic demand and step by step proceeding to export them.

+ To encourage medium-sized and small-sized manufacturing establishments and local mechanical engineering units to take part in manufacturing equipment and machinery in service of agriculture and the processing industry in an organized manner, with a rational task division and cooperation with mechanical engineering enterprises at home and abroad.

d/ Machine tools:

- To give priority to the development of the machine tool manufacturing industry, with a view to meeting the industries� demands therefor.

- To research, design and manufacture modern machine prototypes (application of PLC and CNC technologies) and special working devices.

- To step up the modernization program along the direction of computerized numerical control (CNC) of the existing machine tools in industrial establishments.

e/ Construction engineering:

- To make intensive investment and new investment in the establishments manufacturing construction machines with modern equipment and technologies, in order to basically meet the demands for production of construction materials, construction and installation of big projects, urban and rural construction.

- To bring into play the advantages of the branch of manufacturing metal structures for construction and industrial projects, to concentrate efforts on manufacturing highly sophisticated and modern construction equipment and machines, which are demanded on the domestic and foreign markets.

f/ Ship engineering:

- To develop Vietnam�s shipbuilding industry into a specialized economic-technical branch synchronized from the stages of training, research, designing to the manufacture and sale of products, thus meeting the demand for restructuring of ship fleets operating at home and abroad. To strive for the objective that by 2010 Vietnam shall have a ship-building industry developed at the average advanced level in the region and capable of meeting the demand for national socio-economic development and contributing to the security and defense consolidation, and step by step proceeding to export ships.

- By 2010, the ship-building industry shall be fully capable of building almost all inland waterway transport means, project ships, fishing ships and sea-going ships of a tonnage of under 15,000 DWT; meeting 70-75% of the demand for building multi-purpose ships of 15,000 - 50,000 DWT and oil tankers of 100,000 DWT. To completely repair all national-level ships of a tonnage of up to 400,000 DWT.

- To quickly form and develop supporting industries, such as manufacture of steel sheets for shipbuilding, assembly of hydraulic engines of a capacity of up to 6,000 HP and manufacture and assembly of onboard equipment, electric and electronic equipment, maritime facilities and devices, with a view to raising the localization rate to 60% for newly-built ships, and to 70% by 2020.

g/ Electric equipment:

- To build a modern electric equipment manufacturing industry to reach by 2020 the advanced level in the region in electric equipment and materials.

- To make new investment and intensive investment in electric equipment with advanced technologies to quickly raise the electric equipment manufacturing capacity and products� competitiveness, with a view to largely meeting the domestic demand, substituting for imported equipment and boosting the export of products to regional and world markets.

- For the immediate future, to intensively invest in and expand the production of the existing establish-ments to make them capable of manufacturing large-sized transformers of an output of up to 125 MVA and for a voltage of 220 kV, distribution and transmission equipment for the electricity branch, pressure equipment and other electric equipment for industrial and civil use.

h/ Automobile engineering and communication and transport engineering

- Regarding automobile engineering:

To develop Vietnam�s automobile industry on the basis of absorbing and applying the world�s advanced technologies, in combination with exploitation and step-by-step elevation of the existing technologies and equipment, in order to largely meet the domestic automobile market demand, with a view to exporting automobiles and spare parts thereof.

+ Regarding common-type vehicles: To meet 40-50% of the domestic quantitative demand with the localization rate of up to 40% by 2005; and over 80% of the domestic quantitative demand and the localization rate of 60% by 2010 (particularly, for engines and gear boxes, the localization rates shall reach 50% and 90% respectively).

+ Regarding special-purpose vehicles: to meet 30% of the domestic quantitative demand and attain the localization rate of 40% by 2005, and proceed to meet 60% of the domestic quantitative demand and attain the localization rate of 60% by 2010.

+ Regarding high-class vehicles: tourist automobiles manufactured by joint-ventures shall have to attain the localization rate of 20-25% by 2005 and 40-45% by 2010, to meet 80% of the demand for high-class trucks and buses with the localization rate of 20% by 2005 and 35-40% by 2010.

- Regarding the communications and transport engineering:

+ To make intensive investment and supplementary investment in assembly technologies and equipment for manufacturing project vehicles and machinery, such as thermal bituminous concrete mixers, bituminous concrete spreaders, road rollers of all types, stone-grinding and screening stations of an output of 100-300 tons/hour, etc.

+ To make intensive investment in the renewal of technologies for manufacturing high-class train cars with the localization rate of over 70% by 2005 and up to 90% by 2010.

4. Policies and measures to support the development of the mechanical engineering industry

a/ Market policy:

- The State promulgates technical standards of key mechanical products to serve as basis for inspecting quality of home-made and imported products.

- The State provides conditional and definite-term protection for a number of home-made mechanical products and promulgates policies to promote and enhance the salability of home-made mechanical products.

b/ Policy on creation of capital for the mechanical engineering industry

- The State adopts a mechanism to support the borrowing of working capital for manufacturers of mechanical equipment and projects on manufacture of complete equipment which require large capital and long production cycles.

- Projects on manufacture of key mechanical products shall be entitled to borrow capital under the Government�s Resolution No. 11/NQ-CP of July 31, 2000 with the credit interest rate of 3%/year, the borrowing term of 12 years and a grace period of 2 years. The borrowers shall begin to repay loans as from the fifth year or have interest rate difference subsidized if the borrowed capital is commercial loans.

- To step up the equitization of engineering enterprises, including the sale of equities to foreigners, in order to create new investment capital and diversify capital sources.

- The State adopts policies to encourage all economic sectors to invest in the manufacture of spare parts and components along the direction of raising the capability for specialization and cooperation in the entire mechanical engineering industry.

c/ Tax policies

- To exempt or reduce import tax on raw materials and components and parts of key mechanical products in service of the domestic production.

- To effect tax exemption or reduction for certain periods for mechanical products made for the first time in Vietnam.

d/ Policy on investment in research and development

- For key mechanical products, the State shall consider and provide capital support for technical services, such as hiring of experts, procurement of designs and technologies and technology transfer, which exceed the enterprises� capability.

- Mechanical engineering enterprises shall be entitled to set aside a maximum of 2% of their sale turnover for research and development activities.

e/ Policy on human resource training

The State prioritizes the investment in upgrading training establishments in the mechanical engineering industry and provides funding support for sending brilliant officials and workers abroad for training and practice under the already approved programs and projects.

Article 2.- To set up the Steering Committee for the Program on Key Mechanical Products, which shall be composed of a Deputy Prime Minister as its head, the Industry Minister as its deputy head and vice ministers of Industry, Planning and Investment, Defense, Finance, Science and Technology, Communi-cations and Transport, Construction, Trade, Agriculture and Rural Development, the chairman of Vietnam Mechanical Engineering Society and the chairman of the Vietnam mechanical enterprises association as its members, to direct the materialization of the program according to the set objectives and schedule.

Article 3.- Organization of implementation

- The Industry Ministry shall assume the prime responsibility and coordinate with the ministries, branches and localities in implementing this strategy; and direct the formulation of the planning on development of mechanical specialties till 2010 and submit it to the Prime Minister for approval.

- The Finance Ministry shall propose financial and tax policies to promote the development of the mechanical engineering industry.

Article 4.- The ministries, branches and People�s Committees of the provinces and centrally-run cities, in the course of implementing this Strategy and within the ambit of their respective functions and tasks, shall have to ensure consistency and synchronism between the mechanical engineering development Strategy and planning of each ministry, branch or locality.

Article 5.- This Decision takes effect 15 days after its signing.

Article 6.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People�s Committees of the provinces and centrally-run cities and the heads of the concerned bodies shall have to implement this Decision.

Prime Minister
PHAN VAN KHAI