Pham Xuan Duong, deputy head of the Party's Central Committee’sEconomic Commission, told Thoi Bao Kinh Te Viet Nam (Vietnam EconomicTimes) why the country spends so much on imports.

Q: A lot hasbeen said about the issue that Vietnam depends too much on importedmaterials for local production. There is no proper answer to theproblem. Can you explain the situation?

A: Studies indicate that sectors including energy and mechanics already have their own development plans and strategies.

Forinstance the power sector has been able to satisfy the country's demandfor local production and consumption, thanks to a resolution made bythe Political Bureau and a scheme launched by the government.

However,we don't have a specific development strategy for the materialsmanufacturing sector, but only a general strategy, mainly for theconstruction materials sector such as cement and steel. This is why wehave to import a lot of materials.

Our recent survey showed thatfactories have made profits, but all the raw materials and fuel wereimported. The value of raw materials comprise between 70 and 80 percentof the product costs, while the remaining are worker, labour andelectricity costs. We need to face the facts and look for measures toresolve our shortcomings.

Q: There is a very large gap betweenthe amount of imported raw materials and of locally manufactured rawmaterials. What is your comment on this issue?

A: According tothe General Statistics Office's data, the value of imported rawmaterials has increased from 35.8 billion USD in 2007 to 70 billion USDin 2013. In the processing and manufacturing industries, the industryand trade sector alone imported 50.4 billion USD worth of raw materialsin 2013, compared to 24.1 billion USD in 2007.

Meanwhile, thelocalisation rate in producing raw materials for the manufacturingindustry was very low, at 20 to 25 percent for cast-iron materials inthe manufacturing industry, and two to five percent for aluminium andcopper materials.

Looking back at the reality of raw materialsdevelopment, we have had no manufacturing as well as new materials,though we have a lot of natural resources. We've just stopped at makingschemes and raw materials exploitation and processing for export. Itwill be very dangerous for our country if we just depend on naturalresource exports. Our resources will be exhausted if this situationcontinues.

Japan has said that Vietnam cannot produce a screw fora plane's wings as the country does not attach special importance todeveloping the materials industry. In fact, we can do it if we have rawmaterials that are locally produced at reasonable costs in the country.We cannot produce screws from the construction steel manufactured byThai Nguyen Steel and Iron Factory. The costs will be high if we useimported steel.

Q: What should we do to develop the manufacturing materials and new materials industry in Vietnam?

A:To develop the manufacturing materials and new materials industry, acomprehensive strategy, scheme and mechanism should be drawn up, whilethe State should provide capital and scientific and technologicalsupport to the enterprises.

In order to do this, the governmentmust issue the criteria required of an industrial country, regarding keyVietnamese products, and lists of national products or products oflocalities and groups. Then the products in which Vietnam has anadvantage will be added to global value chains.

I think thegovernment should immediately issue a direction or even a resolution onbuilding strategy for the development of the manufacturing materials andnew materials industry in Vietnam, in efforts to meet the country'sdemand for industrialisation and modernisation.

We have to striveto produce some manufacturing materials in the short, medium andlong-term plans. From producing a few new manufacturing materials in thenext decade, we could produce hundreds in the following decades. Thenwe may think about providing materials for meeting the production demandof local enterprises.-VNA