Red tape is the main hurdle to the development of the mechanical engineering industry in HCM City, businesses in the sector told city authorities at a meeting on Wednesday.

Do Phuoc Tong, chairman of the HCM City Association of Mechanical - Electrical Enterprises, said while businesses importing machinery are exempt from tax, machinery manufacturers importing materials and parts are subject to 10 per cent tax, which hampers their competitiveness.

Few manufacturers benefit from financial assistance from the city, he said. Representative from the Duy Khanh Engineering Co Ltd said it has signed up for an assistance programme, but after two years, due to raft of administrative procedures, the company has yet to benefit.

Other businesses said foreign firms get more attention and support from authorities than local ones, especially in getting access to land.

Even long established local companies have problems getting land to expand their businesses and find industrial parks unaffordable.

For instance, Lap Phuc Co Ltd was unable to get permission to build a new factory even after completing lengthy procedures.

Some businesses also complained that despite of their good capabibility, domestic businesses find it difficult to partner with FDI manufacturers since the latter prefer to work with their familiar foreign suppliers instead of local firms.

Several businesses said favourable conditions are required for domestic businesses to grow.

The city should also adopt policies to encourage manufacturers to work with local suppliers instead of only FDI suppliers, enabling Vietnamese supporting industries to grow, they said.

Some also suggested that the city build low-cost State-owned industrial parks for mechanical businesses and help them form mechanical engineering, electrical and automation clusters, strengthening their capabilities and making them more attractive to FDI companies.

Nguyen Thanh Phong, chairman of the municipal People’s Committee, promised that the city would build more industrial parks and roll out more beneficial policies by August, and instructed authorities to work with businesses to resolve their issues.

Mechanical engineering is one of the city’s four key industries along with electronics, chemical – rubber, and food processing. — VNS