Useful information for mechanical processing and precision engineering enterprises

With powerful Industrialization and Modernization, mechanical industry plays a very important role and has a great influence on the overall national economy. In fact, countries which had successfully implemented industrialization in the world have a very strong mechanical industry. Therefore, investment promotion and technical improvement in this key industry should be focused and implemented by the State and domestic enterprises.

In order to do that, first and foremost, investors are required to understand the State’s regulations on establishment methods, permitted operating locations, especially general directions of development strategy in this field for the best achievements in our economy.

1. Procedures for establishment of mechanical processing company/factory

Before entering the stage of mechanical engineering activities in Vietnam, investors should know basic information and regulations on legal conditions and procedures for registering establishment of a mechanical equipment manufacturing company or factory.

• What are conditions for establishing a mechanical processing company/factory?

Since this is a normal business and can be easily operated in the form of private factories, the condition is providing establishment dossiers in compliance with law and in accordance with the registered type of business.

• Procedures for establishing a mechanical processing company/factory

Individuals or organizations will submit their dossiers directly at Dossier Receipt and Result Delivery Division, Business Registration Office under the Department of Planning and Investment of the province / city where company or ready-built factory is available for the enterprise to lease for conducting main production operation.

• Code of mechanical engineering industry for registration

2. Where are mechanical processing factories allowed to operate?

Though being one of the key industries, the manufacture and processing of mechanical products hides potential hazards to people living around the production area due to the amount of radiation, ionization, chemicals, dirt generated. According to field research and survey of the Department of Natural Resources and Environment in collaboration with related agencies, the mechanical manufacturing industry is on the list of 17 business lines which are not licensed in residential area due to negative impacts on the air and the environment. Therefore, pursuant to Decision No. 78/2002 issued by the People’s Committee of Ho Chi Minh City, mechanical processing or precision engineering are not allowed to operate in residential areas.

In order to address this issue appropriately, the development of built-up factory service areas for rent which are far from the city center is considered an optimal solution for enterprises to save factory construction investment cost.

3. Directives of Ministry of Industry and Trade on mechanical engineering development strategies in Vietnam

In order to overcome remaining constraints and concentrate human resources on development of Vietnam’s mechanical industry as a key industry, a directive of the Ministry of Industry and Trade was issued as follows:

a) To select and prioritize manufacture of mechanical products serving automotive industry, shipbuilding; mechanical transportation; dynamic machines; machines and equipment for agro-forestry-fishery mechanization and processing industry; metal processing and coating using modern technology; processing and manufacturing high-precision mechanical parts; highly exchangable products with high productivity to join the global value chain of multinational corporations.

b) To coordinate with Ministry of Planning and Investment, Ministry of Finance and the concerned ministries and departments in studying and formulating mechanisms and policies to support the production and promotion of domestic mechanical product consumption in line with Vietnam’s international commitments.

Above are useful information about basic regulations in the mechanical engineering industry and the directives of the Ministry of Industry and Trade that any business facility or ready-built factory system in the field of mechanical engineering or precision mechanics need to understand so that the production and business process goes smoothly.

By Marketing Department – Kizuna JV Corporation