Decision No. 87/2004/QD-BCT on approving the Project "Developing the Mechanical Industry until 2010 to serve Industrialization and Modernization of Agriculture and Rural Areas"

DECISION

Regarding the approval of the Project “Development of the Mechanical Industry until 2010

to serve industrialization and modernization of agriculture and rural areas

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THE MINISTER OF INDUSTRY

Pursuant to Decree No. 55/2003/NĐ-CP dated May 28, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Industry;

Pursuant to Directive No. 24/2003/CT-TTg dated October 8, 2003 of the Prime Minister on developing processing industries for agriculture, forestry, and fisheries;

Pursuant to Action Program of the Industry Sector No. 2749/CV-KHĐT dated July 22, 2002 of the Ministry of Industry sent to subordinate units for implementation of Resolution of the Fifth Plenary Session of the Ninth Central Committee of the Party;

At the proposal of the Director of the Machinery, Metallurgy and Chemical Department, the Director of the Local Industry Department;

 

DECISION:

Article 1. Approves the Project "Development of the Mechanical Industry until 2010 to Serve Industrialization and Modernization of Agriculture and Rural Areas" with the following main contents:

1. View on developing mechanical industry serving agriculture and rural areas:

- Developing mechanical industry serving agriculture and rural areas must be consistent with the Strategy for the Development of the Mechanical Industry of Vietnam until 2010, vision until 2020 approved by the Prime Minister, while closely linking with the planning of economic regions, planning of agricultural, forestry, fishery industries, and planning of economic and social development of localities.

- Developing in a concentrated and selective manner certain sub-sectors and types of mechanical products such as power machines; equipment for mechanizing land preparation, harvesting, post-harvest preservation; processing equipment (primarily equipment for processing large-volume agricultural, forestry, fishery products with export markets but low current processing rates); hydraulic machinery; production of spare parts and repair services for mechanical equipment serving agriculture and rural areas. Meeting domestic demand, while encouraging exports of competitive mechanical products serving agriculture.

- Developing mechanical industry serving agriculture and rural areas based primarily on internal strength (through mobilizing the capacity of the entire industry on the basis of enhancing specialization and cooperation); combining with maximizing external resources, first and foremost technology and capital.

- Encouraging and creating favorable conditions for all economic sectors to participate in the mechanical industry program serving agriculture and rural areas.

2. Objectives:

- Mechanizing stages and fields requiring substantial labor; high intensity of labor; urgent seasonal work in agriculture, forestry, and fisheries. Mechanizing the processing stage of agricultural, forestry, and fishery products.

- Creating conditions for applying technological advancements; advanced technologies; and modern equipment in agricultural, forestry, and fisheries production to increase labor productivity and business efficiency.

- Enhancing the degree of mechanization in irrigation, ensuring water supply, proactively meeting the requirements of intensive cultivation of various crops, and proactively preventing, limiting, and mitigating damage caused by natural disasters.

- Developing services for providing and repairing, maintaining mechanical equipment serving agriculture, contributing to mechanizing agriculture, increasing labor productivity, gradually improving working conditions for farmers.

3. Orientation for developing the mechanical industry serving agriculture and rural areas:

3.1. For the agricultural and forestry production stage:

a) Regarding crop cultivation.

- Equipping suitable tractors according to each area's conditions and scale of production.

- Mechanizing planting activities for certain crop types such as sugarcane, vegetables, short-term industrial crops, long-term industrial crops, and fruit trees.

- To achieve these goals, it is forecasted that from now until 2010, approximately 600-700 large tractors, 4,000-4,500 medium-sized tractors, 5,000-6,000 two-wheeled tractors with 6-12 horsepower, and 150-180 chain tractors will be needed annually. Each year, about 30,000-40,000 agricultural machines including plowing machines (plow, disc harrow, rotary tiller, roller...), planting machines, care machines, harvesting machines, initial processing, and post-harvest preservation machines will be required.

- The domestic mechanical industry produces and supplies approximately 140,000-150,000 gasoline and diesel engines annually to meet the needs of agriculture and rural areas.

- The domestic mechanical industry ensures the manufacture of most engines, some small tractors, and agricultural machines, almost all spare parts for repairs and replacements of existing machines.

b) Regarding animal husbandry.

For livestock farms, focusing on mechanizing sanitation of animal houses; supplying water; supplying feed; creating microclimates (heating, cooling); bathing animals; incubating eggs; milking; preserving and transporting milk.

c) Regarding forestry.

In the coming years, the focus will mainly be on encircling and nurturing existing forests and protecting forest resources. It is necessary to enhance the degree of mechanization in stages of production from seedling preparation to planting, caring for, and protecting forests, contributing to implementing the program of greening barren hills and mountains and planting five million hectares of forests. From now until 2010, most excavators; large power machines; heavy transport vehicles for logging, transportation, and road construction in forests will be imported.

Domestic mechanical industry manufactures 80-100% of machines for planting forests, pesticide spraying machines, 50-60% of sawing and trimming machines, and performs maintenance, major and intermediate repairs, and production of some replacement parts.

d) Regarding water conservancy.

It is necessary to equip machines for digging reservoirs, building dams, dredging canals, constructing water conservancy works.

Equip axial flow pumps and low-head centrifugal pumps for irrigation in the delta region, and high-head pumps for water supply for daily use and irrigation of industrial and fruit trees in the midlands, northwest, and southeast regions. For high-value cash crop cultivation areas (coffee, tea...), advanced irrigation technologies such as sprinkler irrigation, drip irrigation should be applied to save water and meet agronomic requirements.

To ensure proactive irrigation, about 26,000 pumps with a capacity of 100-540 m3/h and 1,000 large and medium-sized pumps for fixed drainage stations and large pumping stations are needed annually.

Domestic mechanical production covers all types of axial flow pumps, centrifugal pumps including irrigation pumps up to 15,000 m³/h with pressure ranges from 2.5 to 10 meters, small water pumps with high lift. It also focuses on manufacturing equipment for hydraulic projects such as various types of sluice gates, gate opening and closing devices, valves, small and medium hydro-turbines, pressurized pipes and butterfly valves, gantries, roller bridges, specialized equipment for revetment and dike construction, and dragon boat release equipment.

3.2. For the processing stage of agricultural, forestry, and aquatic products:

a) Grains.

* Regarding storage.

Manufacture and supply machinery and equipment to upgrade existing warehouses with a capacity of 140,000 tons, construct new modern warehouses with a capacity of approximately 650,000 tons, mechanize handling, transportation, and quality inspection of goods.

Supply drying machines of different sizes (for individual and family households: supply drying machines with a capacity of 0.5 to 2 tons/batch, for service providers: supply drying machines with a capacity of 3 to 5 tons/batch, for grain processing enterprises: supply drying machines with a capacity of 6 to 10 tons/batch) to dry rice, especially for summer-autumn rice in the Mekong Delta.

* Regarding processing.

Rice for domestic consumption: mainly equip small-scale milling machines with a capacity of 0.8 to 1 ton/hour or simple milling lines with a capacity of 1 to 2 tons/hour.

Rice for export: equip complete milling lines with a capacity of 100 to 120 tons per shift, including milling, grading, polishing, and color sorting, combined with drying machines and storage facilities.

b) Sugar.

- From now until 2005: Due to existing factories not reaching full capacity (only achieving 50 to 80% of designed capacity), no additional factories will be invested in. Therefore, the mechanical industry will focus on manufacturing spare parts for repair and replacement for current factories and those planned for relocation.

- From 2006 to 2010: Manufacture equipment for some new factories to fully utilize the advantages of concentrated raw material areas, mainly in the Mekong Delta provinces.

c) Coffee.

- Equip machinery suitable for processing scale and technology (dry or wet) for coffee processing facilities. For household and family clusters, it is necessary to equip fresh fruit hulling machines with a capacity of 0.3 to 1 ton/hour, small drying equipment with a capacity of 0.1 to 0.5 tons/batch.

- Research and manufacture processing equipment with appropriate features and capacity to equip coffee processing stations in areas with about 100 hectares or more. Equip processing workshops with suitable technology and equipment for coffee processing facilities with an output of 1,000 to 1,500 tons/year (mainly in the Central Highlands and Southeast region). Equip complete processing lines, including initial processing, grading, polishing, and packaging for coffee processing plants with a capacity of 5,000 to 10,000 tons/year, corresponding to areas with about 5,000 hectares of coffee.

- Research and manufacture processing equipment for soluble coffee to supply three soluble coffee processing plants (planned to be invested in three regions) with a capacity of each plant from 1,000 to 2,000 tons/year, corresponding to raw material areas with about 1,000 to 1,500 hectares to serve both domestic and export markets.

d) Rubber.

- Manufacture equipment to serve the renovation and upgrading of existing rubber processing plants and equip new 25-30 lines with a capacity of 6,000 tons/year. Upgrade and replace equipment to improve the quality of dried rubber granules and blocks. Equip sufficient specialized vehicles to transport latex to the factory to properly address environmental hygiene issues at the processing site.

- Increase the level of mechanization in medium and small processing workshops to produce rubber granules with a capacity of 3,000 to 12,000 tons/year.

- Manufacture equipment to supply small processing workshops with a capacity of 1,200 to 1,500 tons/year, serving smallholder rubber.

đ) Tea.

- By 2005, the mechanical industry will conduct research, manufacture, and supply equipment to build 6-8 black tea processing plants with a capacity of 12 tons of fresh buds/day and several green tea processing plants with a capacity of 6-12 tons of fresh buds/day. By 2010, manufacture and supply equipment to build additional modern tea processing plants with a total capacity of 5,000 tons of fresh buds/day.

- Research, manufacture, and equip small-scale tea roasting and kneading machines for farmers.

e) Vegetables and fruits.

- Conduct research, design, manufacture equipment, and produce replacement parts to meet the needs of repairing and upgrading 22 existing vegetable and fruit processing plants. Manufacture equipment to build new processing plants with a total capacity of 250,000 tons/year by 2010. Equip industrial-scale processing lines with a capacity of 30,000 to 35,000 tons/year, and equip can and packaging lines for various vegetable and fruit processing facilities. For concentrated raw material areas, the mechanical industry needs to research and manufacture equipment to build vegetable and fruit processing plants with a capacity of 5,000 to 10,000 tons/year. For scattered raw material areas, the mechanical industry needs to research and manufacture equipment to build small vegetable and fruit processing plants with a capacity of about 1,500 tons/year.

g) Cashew nuts.

- Combine mechanical and manual methods for cashew nut processing. Select modern technology and equipment to diversify processed cashew products such as high-end cashew paste, cashew shell oil, and beverages made from cashew pulp.

- Research and manufacture equipment to expand the capacity of existing cashew processing facilities. By 2005, it is necessary to research and manufacture equipment to build an additional 15-20 cashew processing facilities. During the period 2006-2010, it is necessary to manufacture equipment to build an additional 50 cashew processing facilities with a capacity of 3,000 to 5,000 tons of kernels/year depending on the raw material area.

h) Coconut and vegetable oils.

- Modernize production lines for coconut products. In addition to refining oil, it is important to focus on researching and manufacturing equipment for other production stages using coconut oil. Improve technology and update equipment to increase the efficiency of crude oil pressing. Upgrade and invest in new equipment to produce shortening, glycerin, fatty acids, etc., to serve the food, pharmaceutical, and other industries.

- Manufacture equipment to support the investment in building export-oriented coconut rice production enterprises with a total capacity of 3,000 to 5,000 tons/year, and activated carbon production with a capacity of 1,000 tons/year.

i) Meat, dairy, and animal feed.

* Meat.

- Study, manufacture machinery and equipment for meat processing to deepen investment for two large meat export production plants.

- Equip slaughterhouse equipment for small-scale meat production facilities with a capacity of approximately 10-20 tons/day. For cities and industrial zones, the mechanical industry needs to research, manufacture, and supply integrated meat processing equipment chains, including slaughterhouse equipment combined with veterinary inspection, refrigeration, raw material transport vehicles, cold storage vehicles, and technology for processing by-products such as pâté, sausages, and dried pork sausages.

* Milk:

- The mechanical industry needs to improve technology and equipment for milk processing to keep up with advanced global technology. Research and manufacture suitable equipment to serve the upgrading and expansion of existing dairy factories, and build new factories in provinces and cities. In addition to cattle milk processing equipment, the mechanical industry should also focus on researching and manufacturing plant-based milk processing equipment, such as soy milk.

- Participate in the manufacture of equipment for new dairy factories being invested in Lâm Đồng, Hải Phòng, Quảng Ninh...

* Feed for livestock.

Research and manufacture modern equipment, combine with technology transfer to establish feed processing facilities with a capacity of 30,000-100,000 tons/year, ensuring the processing of 2 million tons of industrial feed by 2005 and 4 million tons by 2010.

k) Wood and forest products.

- Wood and forest product processing mainly serves paper production, artificial boards, and household wooden furniture. The mechanical industry can participate in manufacturing various types of equipment, spare parts, and tools for the wood processing industry. Initially, implement the task of manufacturing equipment for the Thanh Hoá pulp mill, followed by Bắc Kạn and other mills, manufacturing equipment for veneer, bamboo board, and log processing lines with a capacity of 1,000-4,000 cubic meters of products per year, suitable for different regions' raw materials.

- Equip resin processing lines with a capacity of 1,000-1,500 tons/year.

l) Aquatic and marine product processing:

- Actively participate in the manufacture of equipment and spare parts for aquatic and marine product processing factories.

- Manufacture and supply ice-making and dry ice equipment with different capacities for preservation during fishing.

- Manufacture equipment for cold storage warehouses.

- Produce and assemble specialized vehicles (refrigerated trucks).

Additionally, the mechanical industry must also participate in manufacturing equipment for salt processing...

4. Solutions and policies for development:

a) Some main solutions:

- Focus on directing the rapid implementation of mechanical industry projects serving agriculture under the Priority Mechanical Products Program approved by the Prime Minister. Research, select, and propose to the Prime Minister the inclusion of new products in the Program.

- Gradually reorganize the agricultural and rural mechanical industry system from central to local levels towards:

+ Strengthening state-owned corporations (under the Ministry of Industry and the Ministry of Agriculture and Rural Development) to be able to play a leading role, develop the parent company-subcompany model, gradually transform some agricultural machinery enterprises at the local level into subsidiaries or satellite enterprises of large companies. Promote the shareholding reform of state-owned agricultural machinery enterprises.

+ Organize production towards specialization and cooperation; enhance coordination among mechanical enterprises nationwide to be able to manufacture complex products such as tractors, combine harvesters, processing lines, and equipment.

+ Develop a distribution network for equipment, spare parts, materials, fuel oils, etc., provide good warranty services and post-sales services. Create conditions for all economic components to participate so that the distribution network reaches every village.

- Accelerate deepening investment; innovate technology and equipment to enhance production capacity; maximize the utilization of existing investment capacity to produce mechanical products for agriculture.

- Consolidate research and design agencies, gradually form strong and specialized research and design bases for mechanical products serving agriculture and rural areas, capable of designing complex equipment and processing lines.

- Consolidate and promote the role of the Vietnam Association of Mechanical Enterprises.

- Conduct market surveys, grasp, and forecast demand for agricultural mechanical products; select and determine machine sizes suitable for cultivation practices, raw material regions... From there, choose key products in each sector and field for focused production investment. For machines and equipment that cannot yet be manufactured, plans should be made to import samples for research, manufacture, and testing, eventually moving towards mass production.

- Encourage and mobilize all sources of capital for the development of the mechanical industry serving agriculture and rural areas. Actively call for foreign investment, primarily in the manufacture of complex processing lines and equipment.

- Vigorously combat smuggling and trade fraud to protect and expand the domestic market.

a) Policies:

Currently, the State has credit support policies for manufacturers and traders of machinery and equipment serving agriculture through the following channels:

+ The Development Support Fund implements investment credit policies for projects encouraged for domestic investment and provides loans with preferential interest rates for key sectors such as the mechanical industry and forestry (Decree 106/2004/NĐ-CP).

+ The Social Policy Bank provides loans with preferential interest rates for poor households, job creation, and development of economic zones II and III...

However, successfully implementing the program to provide mechanical services for agricultural and rural development primarily requires the efforts of the mechanical industry itself; state policies are merely supportive. All mechanical enterprises (not just those specialized in agricultural machinery) must recognize that participating in the program to provide mechanical services for the industrialization and modernization of agriculture and rural areas is not only a political task of the industry but first and foremost a great opportunity for its development due to the vast market for mechanical products serving agriculture and rural areas.

To facilitate the mechanical industry's entry into this market, in addition to continuing to implement the aforementioned policies, the Ministry of Industry will continue to coordinate with relevant ministries and sectors to submit to the Government for promulgation certain supportive policies in the following directions:

1. Policies supporting investment in the production of machinery for agriculture; processing of agricultural, forestry, and aquatic products:

+ Propose the Prime Minister to expand the list of beneficiaries of investment incentives under Decree 106/2004/NĐ-CP to include some types of mechanical products serving agriculture and rural areas (primarily equipment for cultivation, irrigation, and processing).

+ Support enterprises in the manufacture of new products such as: propose the State to provide interest-free loans to purchase sample machines, trial manufacturing, and funding to purchase machine design samples.

+ Particularly encourage foreign direct investment projects in the mechanical industry serving agriculture.

+ Prioritize domestic mechanical facilities in receiving contracts to manufacture equipment serving agriculture.

+ Expand international cooperation in the manufacture of mechanical products serving agriculture and rural areas.

2. Financial and tax policies:

+ Prioritize mechanical enterprises producing products serving agriculture and rural areas to obtain sufficient working capital loans with simplified procedures (especially for private enterprises) to support production.

+ Reduce or exempt import duties on raw materials and components for mechanical production that must be imported; grant tax exemptions or reductions on corporate income tax for new mechanical products for a limited period.

+ Reduce land use fees and grant temporary exemptions from land rental fees for projects in the mechanical industry serving agriculture and rural areas.

3. Market support policies:

+ Apply high import tariffs (within the framework allowed by the integration roadmap) on agricultural machinery products domestically produced and with production capacity sufficient to meet market demand.

+ Severely penalize illegal imports and fraudulent trade practices involving mechanical products serving agriculture and rural areas.

4. Policies encouraging and supporting the transfer and application of new technology for the manufacture of agricultural machinery and processing of agricultural and forest products.

+ Propose the Government to partially fund the costs of transferring and applying new technology for the manufacture of agricultural machinery and processing of agricultural and forest products using budget funds.

Article 2. Implementation:

- Propose to the Prime Minister to supplement additional members to the Board of Directors of Vietnam Coal-Mineral Industries Group.

1.1. Department of Machinery, Metallurgy, and Chemicals:

- Coordinate with the Institute of Industrial Strategy Research to develop planning for the development of certain specialized industries and product groups in the mechanical sector serving agriculture and rural areas (to implement Decision 186/2002/QĐ-TTg of the Prime Minister approving the Development Strategy for the Mechanical Industry of Vietnam until 2010, with a vision to 2020).

- Coordinate with related Bureaus, Departments, and Institutes to study and propose specific policies outlined in Points 1, 2, 3, 4; Section b; Clause 4; Article 1 of this Decision to encourage and support enterprises producing mechanical products serving agriculture and rural areas.

- Coordinate with the Vietnam Association of Mechanical Enterprises and the Vietnam Mechanical Association to research and propose solutions to form a network of mechanical enterprises producing products serving agriculture and rural areas from central to local levels, creating close and effective collaboration between enterprises.

- Assist the Ministry in directing the implementation of investment projects in the mechanical sector serving agriculture and rural areas according to set objectives and ensuring effectiveness.

- Guide provincial Industry Departments and General Companies in the mechanical industry to implement the Development Program for the Mechanical Industry until 2010 serving the industrialization and modernization of agriculture and rural areas after approval.

1.2. Local Industry Bureau:

- Coordinate with provincial Industry Departments, functional Departments, and General Companies in the mechanical industry to implement the contents of the Development Program for the Mechanical Industry until 2010 serving the industrialization and modernization of agriculture and rural areas at the local level; coordinate with provincial Industry Departments to incorporate the contents of the Program into the process of building, reviewing, and adjusting industrial development plans of the provinces.

- Participate in building mechanisms, policies, and solutions to encourage and support the production of mechanical products serving agriculture and rural areas suitable to the requirements and specific conditions of the locality.

1.3. Science and Technology Department:

- Study and propose mechanisms and policies to encourage and support the transfer of technology, investment in technological innovation, and research and development activities for new products for enterprises producing mechanical products serving agriculture and rural areas.

1.4. Institute of Industrial Strategy Research:

- Coordinate and assist according to the requirements of the locality in building, reviewing, and adjusting industrial development plans in the area, specifically detailing the contents of the Program to suit the characteristics of the locality.

- Study and propose mechanisms and policies for the development of mechanical services for agriculture and rural areas.

5. Provincial Industry Departments:

- Advise provincial People's Committees on directing and organizing the implementation of this Program at the local level.

- Based on this Program, study and build a local Program for developing mechanical services for agriculture and rural areas, including the establishment of a network of mechanical enterprises in the locality for major repairs, maintenance, and distribution of mechanical products, submit to the provincial People's Committee for approval and implementation.

3. The Vietnam Association of Mechanical Enterprises and the Vietnam Mechanical Association:

- Participate in building and proposing mechanisms and policies for the development of mechanical services for agriculture and rural areas.

- Coordinate the activities of members and associates to promote scientific and technological research activities, allocate and cooperate in production according to the contents of the Project.

4. Mechanical industry enterprises:

- Organize the implementation of the contents of this Project at their own enterprises.

- Strengthen cooperation and linkage among enterprises to leverage strengths and utilize the capacity of the entire industry; intensify the production of mechanical products serving agriculture and rural areas; seize opportunities to dominate the market during the process of integration.

- State-owned corporations actively play their core and leading roles, organize specialized production allocation, accelerate the formation of parent company-subcompany models, satellite enterprises, and develop subcontracting forms with small and local enterprises; intensify research and development activities; select and focus on developing certain new product types as directed in this Project.

5. Research Institutes of the mechanical industry:

- Proactively review capabilities, understand the market, and proactively build plans for researching, designing, and manufacturing products serving agriculture and rural areas.

- Train specialized mechanical staff serving agriculture and rural areas.

6. Vocational Training Schools, vocational training institutions under the Ministry of Industry:

- Intensify the training of teams of mechanical cadres and workers serving agriculture and rural areas. Provide vocational mechanical training for farmers, support localities with mechanical knowledge serving agriculture and rural areas.

Article 3. The Standard Measurement Quality Control Department shall be responsible for organizing and guiding the implementation of the Regulations adopted herein.

Article 4. The Head of the Ministry's Office, the Inspector General of the Ministry, Heads of Departments, Directors of Bureaus under the Ministry, Directors of the Institute for Industrial Strategy and Policy Research, Directors of the Institute of Machinery and Tools, General Directors of the Vietnam Industrial Equipment Corporation, General Directors of the Vietnam Engine and Agricultural Machinery Corporation, General Directors of the Vietnam Electrical Equipment Corporation, Directors of Provincial Industry Departments, and heads of related units are responsible for implementing this Decision.