SMEs shaken by import ban on older machinery

Vietnam’s proposed ban on the import of old machinery and equipment has caused concern among Japanese SMEs

Chikara Fujita, an official at the Japanese region of Kansai’s Bureau of Economics, Trade and Industry at a recent meeting between Kansai-based enterprises and the Ministry of Planning and Investment (MPI), said that Japanese small and medium enterprises (SMEs) were concerned over the unclear regulations related to the import of second-hand machinery in Vietnam.

“The unclear regulations seem to discourage foreign SMEs from investing in Vietnam. As most of them are operating in supporting industries, this will negatively affect the economic development of Vietnam,” said Fujita.

Last November, the Vietnamese government issued a decree guiding the implementation of the Commercial Law which involved clauses related to the trade of second-hand machinery. The regulation meant the Ministry of Sciences and Technology (MST) was tasked with setting the criteria for imported second-hand machinery.

But the new criteria have yet to be set, and while waiting, the import of second-hand machinery needs MST approval, delaying projects.

Do Hoai Nam, director of the MST’s Department of Technology Appraisal, Examination and Assessment said the new criteria would be aimed at limiting outdated equipment imports into Vietnam.

“It is necessary to limit the import of older machinery, but the procedures should be simple. The complicated and unclear regulation is delaying many Japanese projects here,” Fujita said.

Yoshilo Kobayashi, an official at Kansai Economic Federation’s International Committee said the new regulation would prevent Japanese SMEs from investing in Vietnam.

“Many Japanese enterprises want to relocate production from China to Vietnam. If Vietnam tightens criteria for importing second-hand machinery this will hamper their investment plans,” said Kobayashi.

Mitsuhiko Lino, president of Toyo Drilube Company – which is building a manufacturing plant in the northern province of Ha Nam, said many small and medium investors had to use second-hand machinery and equipment because of limited finances.

“It’s expensive to buy the newest equipment. The Vietnamese government should resolve this issue,” said Lino.

“We’re currently considering allowing the import of machinery which is up to five year’s old and maintains 80 per cent of its quality,” said Nam. However, he failed to provide any indication when the guidance would be issued.