Da Nang Industry - New High Achievement

Da Nang Industry -  New High Achievement 

According to the latest statistical data of the Industry Department of Da Nang, by the end of the first quarter of 2005, industrial production value reached VND1,957 billion, an increase of 19.5 per cent over the same period of 2004, equalling 22.9 per cent of the annual plan. Of which, the central industry accounted for VND1,063 billions, up by 21.2 per cent; the local industry made up VND 502 billion, increased by 13.7 per cent. This is a significant figure, especially in the context when the national industry growth rate has stopped at 14.4 per cent against the previously set rate of 16per cent in the 2005’s plan.

According to Mr Pham Kieu Da - Director of the Industry Department of Da Nang, “Despite a rather high growth rate, the industry sector has met difficulties in many aspects”. One of the easily seen reasons are the continuous fluctuations in the world and domestic markets, which make the prices exceed the ceiling level with impossibility of decreasing to the previous level. This has caused difficulties for enterprises in investment, expansion of business and production activities as well as innovation of equipment and technologies. The scarcity and price increase of energy, petroleum and gases have provided difficulty to various local industrial enterprises, whose production activities depend very much on imported materials like steel, garment accessories, mechanical and power equipment, plastics, basic chemicals and fibres.

For a long time, the central industrial sector in Da Nang has been ranked in a key, leading position. However, many of them have felt a little tired in the price race, which has caused the increase in the price of inputs. For example, in the garment industry, not mentioning the severe competition with Chinese and Thai products, only the dependence on imported materials, orders from partners as well as accessories and designs, the export market of this strategic type of product is facing many difficulties, especially for small and medium enterprises having no traditional partners and large orders. Another example is Da Nang Rubber Company, which has faced big difficulties in latex shortages and the price increase of other inputs materials and chemicals. The consumption market of fertilisers and detergents of Da Nang Chemical Industrial Company have been seriously affected with severe market competition. The Thuan Phuoc Aqua Products and Trading Company has also met difficulties in its input sources due to sharp increase in the petroleum price. While the competition pressure of international economic integration is increasing, the rate of enhancing the competitiveness in many enterprises in Da Nang is limited. Therefore, the development quality of the industry sector is not high.

The enterprise’s year of 2004 has gone, however, various problems related to management and monitoring activities such as the equitisation rate, enterprises’ re-arrangement, re-settlement of enterprises for facilitating planning and site clearance, creation of investment incentive mechanisms and loan support have remained unsolved. While the attraction capacity of domestic and foreign investment is still weak, many large licensed industrial projects are being carried out at a “snails pace”. For example, the Dairy-Farm project has not yet finished its technical design and financial estimation for its production workshops, the 250,000 tonnes-per-year Steel Mill has not carried out its bidding package because it cannot find a contractor, the Tyres and Tubes Factory, with a capacity of 2-3 millions sets/year has come to nothing. In addition to that, trade promotion activities, export support, domestic and the provision of information on international markets in Da Nang have been insufficient. 

What are the solutions?

One of the solutions for boosting production and creating stable growth rates for the industry sector in the last months of 2005 is the activeness in removing obstacles and adapting to the new economic situation of the industrial enterprises themselves. Currently, many enterprises are implementing the strategy of minimising production cost by saving 10 per cent of the inputs as well as researching and improving the technology for maximising the productivity and business production efficiency. The plan on consumption market expansion through marketing and promoting their trademarks and products as well as improvement of product quality and reduction of production cost for improving the competitiveness are a good trend in the current context.

From the management point of view, Mr. Pham Kieu Da said, in the coming time, besides accelerating the planning of industrial parks, complexes and promoting investment projects to go into operation, the Industry Department will keep close supervision on removing obstacles and resolving difficulties for enterprises, especially for those who suffer from frequent price fluctuations of inputs as well as for newly-resettled enterprises to assist them to enhance their production effectiveness, competitiveness and export capacity. Accordingly, the Industry Department has suggested to Da Nang Municipal People’s Committee to work out concrete programmes focusing on the industry development with priority given to information technology development in an effort to become a leading locality in industrialisation and modernisation. In the coming period, the province will accelerate its implementation of large licensed projects like the Steel Mill, the Dairy-Farm, the Han River Ship Building Factory and the Export Aqua Products Processing Factory. At the same time, it will actively assist enterprises in grasping information on markets, prices, joining the WTO, especially tax reduction in the trade relations between Vietnam and the countries in AFTA and ASEAN, with China, America, Japan and EU as well as the trade policies of these big markets. This will be a good chance for enterprises to expand the consumption markets and create a firm foothold for their trademarks and products on domestic and international markets. For the long-term, the Municipal People’s Committee has committed to improve the investment environment by generating incentive mechanisms, implementing administrative reform in seaports and airports, simplifying investment formalities as well as providing preferential loans and production sites to facilitate the investment of enterprises in Da Nang.

Hopefully, the rational and necessary changing actions at macro and micro levels of Da Nang will provide new vitality and create high and sustainable development impetus for the industry sector of Da Nang in the coming time.                                                                          

• Minh Tuan