Nguyen Xuan Phu, chairman of management board of Sunhouse Group, said that barriers in administrative procedures have deterred the development of mechanical firms. — File Photo

HA NOI (Biz Hub) — Businesses in the mechanical sector in Ha Noi are facing shortage of capital, production area and high quality human resources, as well as shortcomings in import taxes levied on materials.

Nguyen Xuan Phu, chairman of management board of Sunhouse Group, said that barriers in administrative procedures have deterred the development of mechanical firms.

Phu said his group had bought land in the city's Hoai Duc District in 2007 to build a factory, but they have still to complete the administrative procedures. They have found it difficult to access bank loans with low interest rates. In addition, the lack of technology and equipment together with small production scales has made it difficult for mechanical companies to meet the strict requirements.

"Mechanical firms need support from the Government in administrative reforms and trade promotions while facilitating them to build their brand," he said.

He said the Government should support companies which have already built their brand nationally, and added that with the current level of support it would not be possible for Viet Nam to have prestigious trademarks.

Participants at the meeting between the Ha Noi Small- and Medium-sized Enterprises Association and the Department of Industry and Trade held in Ha Noi earlier this week also said that one of the barriers facing the sector were the shortcomings in the tax policies.

For example, the imported tax on mechanical products is zero per cent while for imported spare parts it is five per cent. These tax policies have discouraged domestic businesses which have preferred importing products to producing their own.

Moreover, the anti-dumping tax levied on stainless steel, which is used in home appliances, has not benefited small firms.

Sharing these ideas, the department's director Le Hong Thang asked the association to collect proposals from mechanical companies and find timely solutions to the difficulties they face. — VNS