Vieät Nam’s engi­neer­ing sec­tor has room to grow

Vieät Nam’s me­chan­i­cal engi­neer­ing sec­tor is on par with those in the re­gion, Nguyeãn Vaên Thuï, chair­man of the As­so­ci­a­tion of Me­chan­i­cal Engi­neer­ing En­ter­prises told the Thoi bao Kinh te Viet Nam (Vieät Nam Eco­nomic Times)

Viet Nam News - - Opinion -

Do you agree that our engi­neer­ing in­dus­try has not lived up to its role as a core in­dus­try in the course of our na­tional in­dus­tri­al­i­sa­tion and mod­erni­sa­tion?

No I don’t think so. In re­cent years, the engi­neer­ing in­dus­try has strongly de­vel­oped. In 2013, the value of the in­dus­try reached VNÑ 700 tril­lion (US$32.9 bil­lion), ac­count­ing for 20 per cent of the to­tal value of Vieät Nam’s in­dus­trial sec­tor. If in 2006, the ex­port turnover of the sec­tor was $1.6 bil­lion, in 2013 the fig­ure had jumped to $13 bil­lion.

How­ever, the sec­tor still faces many chal­lenges, par­tic­u­larly in find­ing long term in­vest­ment cap­i­tal. Do­mes­tic prod­ucts from ba­sic in­dus­tries like met­al­lurgy, chem­istry, and sup­port­ing in­dus­tries can only meet a small quan­tity of the mar­ket de­mand. As a re­sult, we de­pend heav­ily on im­ports.

In ad­di­tion, we don ’ t have the mar­ket as most of the in­dus­trial projects ap­plied the method of ten­der doc­u­ment for the ap­pointed projects or the low­est prices win projects. As a re­sult, win­ners of most projects were Chi­nese con­trac­tors. In the pe­riod from 20032011, Chi­nese con­trac­tors won five out of six chem­i­cal projects in the method of Engi­neer­ing Pro­cure­ment Con­struc­tion (EPC), plus two out of two min­eral pro­cess­ing projects and 49/ 62 of the ce­ment projects and many oth­ers.

In the thermo power in­dus­try, China were se­lected as the EPCs for 16/ 27 projects.

What I should men­tion here is that most of the EPC projects won by Chi­nese con­trac­tors are be­hind sched­ule; the short­est is three months and the long- est is three years. Other points I want to em­pha­sise here is the poor project qual­ity stem­ming from poorqual­ity equip­ment and ma­chines. They are not up to the stan­dards which were writ­ten in the ten­der­ing doc­u­ments. This is the key rea­son caus­ing cost over­runs in many projects.

What are the main causes lead­ing to the above men­tioned sit­u­a­tion?

The main fac­tor was that our old Law on Ten­der­ing gave pref­er­ences to con­trac­tors who had of­fered the low­est prices, pay­ing no at­ten­tion to where the equip­ment came from or its qual­ity. Mean­while, many project own­ers opted for the EPC method and didn ’ t want to break the projects into sev­eral pack­ages for ten­der­ing.

In ad­di­tion, the in­spec­tion and eval­u­a­tion ca­pac­ity of the con­trac­tors of many Viet­namese agen­cies is weak. So is the com­pe­tency in writ­ing con­tract agree­ments, par­tic­u­larly ar­ti­cles re­lat­ing to awards and sanc­tions.

Last but not least, though we have rather com­pre­hen­sive poli­cies on sup­port­ing and de­vel­op­ing the engi­neer­ing in­dus­try, they have not been fully im­ple­mented.

What has the As­so­ci­a­tion of Me­chan­i­cal Engi­neer­ing En­ter­prises done to im­prove the sit­u­a­tion?

Our as­so­ci­a­tion has many times asked the govern­ment to in­crease in­spec­tion mis­sions to im­por­tant projects un­der­taken by Chi­nese con­trac­tors. We have also asked the govern­ment to in­tro­duce tougher mea­sures to force Chi­nese con­trac­tors to use Viet­namese sub-con­trac­tors in their EPC projects as well as the use of sup­port­ing equip­ment made in Vieät Nam in­stead of im­ported equip­ment and fa­cil­i­ties.

In ad­di­tion, dur­ing the ten­der­ing we should be able to se­lect the best ten­ders to do the job to the high­est pos­si­ble stan­dard. And of course, one of the re­quire­ments in­cluded in the call for ten­ders is a man­date to use Viet­namese me­chan­i­cal engi­neer­ing equip­ment and fa­cil­i­ties. This is the only way to help our chem­i­cal engi­neer­ing sec­tor to be on par with oth­ers in the re­gion.

Some peo­ple have ex­pressed con­cern over the qual­ity of Viet­namese con­trac­tors and equip­ment. What’s your opinion?

In the past 15 years, in EPC projects with con­trac­tors from the G7, they have se­lected Viet­namese me­chan­i­cal engi­neer­ing com­pa­nies as their sub-con­trac­tors. The value of our sub- con­tracts was be­tween 1520 per cent of the project value.

One thing I have to con­cede is that our me­chan­i­cal engi­neer­ing com­pa­nies are not able to un­der­take big projects. So work­ing side by side with for­eign con­trac­tors would pro­vide good op­por­tu­ni­ties for Vieät­namese en­ter­prises to learn.

In the last few years, the PV Ship­yard ( Petro Vieät Nam Ship­yard) was the first to be se­lected for an ap­pointed project in de­sign­ing and man­u­fac­tur­ing an oil rig for Petro Vieät Nam ( PVN). Af­ter nearly 30 months, PV Ship­yard was suc­cess­ful in de­sign­ing the 90m self-el­e­vat­ing plat­form off­shore, worth $200 mil­lion.

At present, PV Ship­yard is de­sign­ing a sec­ond self­el­e­vat­ing off­shore Jack-up which can work at a depth of 125 m. —

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