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THE PRIME
MINISTER
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THE SOCIALIST
REPUBLIC OF VIETNAM
Independence - Freedom – Happiness
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No. 1901/QD-TTg
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Hanoi, October
22, 2014
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DECISION
APPROVING
THE PLAN OF ACTION FOR DEVELOPMENT OF THE SHIPBUILDING INDUSTRY IN
IMPLEMENTATION OF VIETNAM’S INDUSTRIALIZATION STRATEGY WITHIN THE FRAMEWORK OF
VIETNAM - JAPAN COOPERATION THROUGH 2020, WITH A VISION TOWARD 2030
THE PRIME MINISTER
Pursuant to the December 25, 2001 Law on
Organization of the Government;
Pursuant to the Prime Minister’s Decision No.
1043/QD-TTg of July 1, 2013, approving Vietnam’s industrialization strategy
within the framework of Vietnam - Japan cooperation through 2020, with a vision
toward 2030;
At the proposal of the Ministry of Transport,
DECIDES:
Article 1. To promulgate together with this Decision the Plan of Action
for development of the shipbuilding industry in implementation of Vietnam’s
industrialization strategy within the framework of Vietnam - Japan cooperation
through 2020, with a vision toward 2030, under the Prime Minister’s Decision
No. 1043/QD-TTg of July 1, 2013.
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Article 3. Ministers, heads of ministerial-level agencies, heads of
government-attached agencies, chairpersons of provincial-level People’s
Committees and related units and individuals shall implement this Decision.
PRIME MINISTER
Nguyen Tan Dung
PLAN OF ACTION
FOR
DEVELOPMENT OF THE SHIPBUILDING INDUSTRY IN IMPLEMENTATION OF VIETNAM’S
INDUSTRIALIZATION STRATEGY WITHIN THE FRAMEWORK OF VIETNAM - JAPAN COOPERATION
THROUGH 2020, WITH A VISION TOWARD 2030
(Promulgated together with the Prime Minister’s Decision No. 1901/QD-TTg of
October 22, 2014)
I. ANALYSIS OF SITUATION
1. In the world and the region
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In the 1980s, the global shipbuilding industry saw
a vigorous move from Europe to Asia. Since the early 1990s, Asia has become the
world’s new shipbuilding center. By 2011, China had received the largest number
of shipbuilding orders while the Republic of Korea’s shipbuilding industry had
revived its prime position. India, Vietnam, Brazil, the Philippines and Turkey
are striving to increase their market niches.
Europe still has advantages in high-class ships
while China dominates the low-class ship market. The shipbuilding industry will
continue to shift from Europe to Asia with the Republic of Korea and Japan
still leading the world in building complicated ships such as large-tonnage
liquefied natural gas (LNG) carriers and container ships. The Republic of
Korea’s shipyards are expanding to new markets of special-use ships such as
drilling ships, drilling platforms and renewable energy projects using
infrastructure facilities and workforce previously used for building commercial
ships.
The shipbuilding industry is witnessing such major
changes as increase in the number of service ships for oil and gas
exploitation, LNG carriers and new types of ships which are subject to high
standards of environment, exhaust reduction, energy efficiency, automation and
information technologies, etc. Besides, financial institutions have provided
more loans for energy-related sectors and paid less attention to the industry.
2. Position and role of Vietnam’s shipbuilding
industry
Vietnam, with a coastline of 3,260 km to the East,
South and Southwest and an exclusive economic zone of over 1,000,000 km2 in the
East Sea, is ranked among 10 countries having the longest coastline and holds a
favorable position for shipbuilding development.
Vietnam’s marine strategy through 2020 has
determined marine economy as a driving force for promoting the development of
other sectors, creating a radical and comprehensive change in the economic
structure toward industrialization and modernization. One important solution to
implementing the marine strategy through 2020 is to develop the industry of
building and repairing seagoing ships. The Government has decided to develop
five groups of coastal economic zones that are eligible for concentrated state
investment during 2013-15: Chu Lai economic zone (Quang Nam province) and Dung
Quat economic zone (Quang Ngai province); Dinh Vu - Cat Hai economic zone (Hai
Phong city); Nghi Son economic zone (Thanh Hoa province); Vung Ang economic
zone (Ha Tinh province); and the economic zone of Phu Quoc island and South An
Thoi islands (Kien Giang). Once formed, these zones will create a more
favorable investment environment for coastal areas and stimulate the
development of the shipbuilding industry.
The ten-year 2011-20 socio-economic development
strategy adopted by the XIth Party Congress stresses “Strongly
developing marine economy to match the marine position and potential of our
country’s sea, combining the development of marine economy with maintenance of
security and national defense and protection of sea sovereignty. Quickly
developing a number of coastal economic zones and industrial parks, giving
priority to development of energy, shipbuilding, cement and high-quality
aquatic product processing industries, etc. Developing seaports, seaport
services and ocean and river-ocean shipping; developing ship fleets and the
industry of building and repairing seagoing ships.”
Vietnam’s aquatic resource development strategy
through 2020 requires development of ship building and repair industry and
provision of fishery logistic services: Concentrating investment in developing
synchronous mechanical engineering, building and repair of fishing ships,
stepping up research and application of advanced technologies to building of
ship hulls, engines and fishing gear.
3. Actual development of shipbuilding industry
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In addition to Vinashin, which was founded in 2006
(now the Shipbuilding Industry Corporation - SBIC) and holds the key role,
Vietnam’s shipyards are also owned or managed by (1) Vietnam National Shipping
Lines, (2) Vietnam National Petroleum Group and some other state groups and
corporations, (3) the Ministry of National Defense, (4) local and private
enterprises, and (5) foreign-invested enterprises.
Regarding ship building and repair capacity:
Vietnam has 120 yards for building and repairing ships of over 1,000 D WT, with
17 0 elevating and launching facilities (including only 2 facilities for ships
of between 300,000 - 400,000 DWT, while others are mainly for ships of under
5,000 DWT). The total design capacity of these shipyards is around 2.6 million
DWT/ year though their practical capacity reaches only 800,000 - 1,000,000
DWT/year (31-39% of the design capacity), which can meet 50% of the domestic
demand (300,000 - 400,000 DWT/ year); the total export output is 500,000 -
600,000 DWT/year, accounting 0.3 - 0.4% of the global market. The repair
capacity of these yards can meet only 41.7- 46% of the national ship fleet’s demand,
partly because most elevating and launching facilities are used for
shipbuilding. In 2010 alone, some USD 75 million was spent on overseas repair
of Vietnamese ships. Thus, the domestic and global markets’ potential has not
yet been fully tapped and depends on the recovery of the global economy as well
as efforts of Vietnam’s shipbuilding industry to improve its administration
effectiveness, manufacture efficiency, product quality and price
competitiveness. Though the manufacturing capacity in terms of tonnage has been
maintained, ship delivery schedule and localization rate remain unsatisfactory.
Regarding support industries: The Ministry of
Industry and Trade’s Decision No. 2840/QD- BCT of May 28,2010, promulgates a
list of machinery, equipment, supplies and materials which can be domestically
made, including a number of equipment for use in shipbuilding industry,
including boilers of a capacity of up to 25 kg/h; diesel engines of a capacity
of 50 HP (for use for small-sized motor boats); a number of working machines
such as lathe, drilling machine, plane machine and compressor; and the ability
to install various kinds of ship derricks and manufacture pumps and valves. The
Motor and Agricultural Machinery Corporation has been able to manufacture
various kinds of anchor chain, ball bearings and power generators, a number of
joint-ventures and wholly foreign-invested enterprises have managed to
manufacture boilers, propellers, electric equipment, paints, interior
furniture, cranes and lifeboats; and a number of private establishments have
been able to manufacture anchor winders, anchors, anchor chains, propellers,
board devices, welding materials, axial systems, etc. However, the development
of support industries remains slow with thinned-out investment, failing to
achieve the localization rate target.
Regarding labor: By 2010, the entire industry had
nearly 100,000 workers, including 43,797 working for Vinashin (reduced to
around 26,000 by July 2013), of whom there were few internationally certified
workers compared to the demand.
Regarding engineering: Vietnam’s shipbuilding
industry is capable of technological engineering to serve manufacturing
activities of shipyards. The technical engineering ability can only meet
requirements for building small-sized and common-use ships. There has been no
model test tank up to international standards for development of design models;
all technical designs of ships for export have been bought from foreign
countries. This is currently and will continue to be the weakest point of
Vietnam’s shipbuilding industry in the future unless policies on prioritized
investment and training of designing engineers are introduced.
Regarding registration and inspection: Vietnam
Register is a member of the International Association of Technical Survey and
Classification Institutions (OTNK) and a founding member of the Asia
Classification Society. At the same time, it has established bilateral and
interchangeable relations with almost all members of the International
Association of Classification Societies (IASC) but not yet entered into many
export ship building contracts and provided independent registration and
inspection for large shipbuilding orders for domestic ship owners.
Regarding training: In addition to the Polytechnic
University, Vietnam Maritime University, University of Transport and
Communications and professional transport training schools, there are technical
and professional training and intermediate vocational training establishments
which can train 8,000 -10,000 primary- and intermediate-level workers to fully
meet the industry’s demand. However, the quality of these workers has not yet
satisfied the requirements of the industry.
4. Existing problems facing the shipbuilding industry
Firstly, the lack of a strategic vision and
specific programs of action toward development of a shipbuilding industry
suitable to the cyclic development of the global shipbuilding industry. At
present, the industry’s development remains passive and unsustainable for the
reason that no research institution has been assigned to make statistics and
forecasts and conduct strategic researches.
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Thirdly, the research and development (R&D)
capacity remains poor; investment in R&D in maritime and shipbuilding
industry is negligible; skills and size of the workforce remain inadequate to
meet the industry’s development requirements. The capacity of designing human
resources/engineers remains poor and the proportion of designing engineers to
total human resources, even in SBIC, remains low (1%). The framework program of
training designing engineers, maritime engineers, manufacture planning experts
and shipbuilding engineers is falling far behind the international standards
and incapable of training those who can design ships meeting the market demand.
Recent difficulties facing the economy in general and shipbuilding
establishments in particular have also affected the working environment and
motive of the industry’s workforce.
Fourthly, at present too many shipyards are
scattered throughout the country, of which many remain uncompleted due to
insufficient investment through many phases and few attain international
standards. Shipbuilding industry lacks an inherent linkage with other economic
sectors such as transport, oil and gas, tourism and fisheries.
Fifthly, domestic support industries have developed
in a spontaneous and asynchronous manner and heavily depended on material and
equipment manufacturers in China and other Asian and European countries.
Sixthly, domestic shipping companies have
encountered numerous difficulties in seeking investment capital sources for
expanding their fleets.
Finally, the shipbuilding management and
organization and business administration capacity of, and information
transparency in, most shipyards remain inadequate.
II. OBJECTIVES SET FOR 2020
To turn shipbuilding into a spearhead industry in
the implementation of the marine economy strategy; to concentrate on
manufacturing a number of products suitable to Vietnam’s development
conditions; and to win the global market’s trust in Vietnam as a country with
high-quality shipbuilding industry. To strive to achieve the following
quantitative targets by 2020:
- The industry’s output value growth rate will be 5
- 10%.
- Between 70 - 80% of the industry’s manufacturing
capacity will be used to build ships to serve socio-economic development,
national defense and security, except for submarines, cruisers and warships
which require high technologies and techniques.
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Specific tasks are as follows:
1. Forming 3 linked shipbuilding clusters in
northern, central and southern regions. Giving priority to manufacturing types
of ships highly demanded by the domestic and global markets based on existing
infrastructure and cooperation with such partners with experience and high
scientific and technical levels as Japan and the Republic of Korea.
Intermediary targets: To sharply reduce the number
of ship-assembling yards and form/ consolidate several key enterprises, with a
view to stopping thinned-out investment.
Group of ships prioritized for development: On
November 27, 2013, the Prime Minister issued Decision No. 2290/QD-TTg, approving
the master plan on development of Vietnam’s ship industry through 2020, with a
vision toward 2030, which requires maintenance and promotion of the capacity of
existing ship building and repairing yards to meet demands of the domestic and
foreign markets. Building of seagoing ships will focus on the group of ships
with a tonnage of between 30,000 and 50,000 DWT suitable to use needs of local
ship owners, including passenger ships, small-sized transport ships, offshore
search and rescue ships, patrol ships and ordinary cargo ships (dry cargo
ships, container ships, chemical carriers, bulk cargo ships of up to 50,000
tons, loose cement earners of up to 30,000 tons); and special-use ships for
export, such as oil and gas exploitation service ships, fishing ships, work
ships, tugboats, towing ships and dredgers.
2. Building 3 centers for repair of low- and
medium-class ships in regions with geographical advantages and close to major
seaports and/or international shipping routes.
The Prime Minister’s Decision No. 2290/QD-TTg of
November 27, 2013, approving the master plan on development of Vietnam’s ship
industry through 2020, with a vision toward 2030, also mentions the issue of
ship repair: Environment-friendly equipment should be acquired to repair ships
of a tonnage of 100,000 - 300,000 tons when the demand is high.
Intermediary targets: By 2020, ship repair centers
will be capable of meeting 90% of the low-class ship repair demand and 60-70%
of the medium-class ship repair demand.
3. Raising the localization rate based on
guaranteeing linkage between the shipbuilding industry and domestic support
industries and attracting foreign investment in support industries for the
shipbuilding industry, with priority given to types of ships with a competitive
edge on domestic and foreign markets.
4. Developing institutions and formulating legal
documents for the industry, developing product types and production scale, and
building the R&D capacity.
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1. To develop the shipbuilding industry for a long
term to meet the market demand and financial and management capabilities.
2. To form a number of centers capable of building
special-use ships using high technologies and generating large economic value,
including also container ships, oil tankers and floating oil storage facilities
of up to 100,000 tons up to international standards for domestic use and
export.
IV. STRATEGIC ISSUES
1. To restructure (rearrange, reorganize) the
existing shipyards nationwide, concentrating on using existing infrastructure and
manpower.
2. To develop support industries for the
shipbuilding industry (machines, special-use electric equipment, small-sized
diesel engines, small-sized power generators, propeller shafts, steel sheets,
shapes and tubes) and ensure the supply-cooperation relationship among these
industries.
By 2020, to focus on hydraulic machine parts, deck
equipment and accessories, special- use electric tubes and mechanical products;
to step by step form an industry of manufacturing ship-hull steel for low- and
medium-class ships.
3. To develop the domestic and export markets for
ships and ship repair services; to give priority to types of ships with a
competitive edge on the market. To perform the general tasks of Vietnam’s
fisheries development strategy through 2020: “consolidating and developing the
mechanical engineering to build and repair fishing ships, adopting an
appropriate roadmap to quickly building fishing ships with steel or
new-material hulls in replacement of wooden-hull ships...”
4. To train highly qualified and professional human
resources for all levels, including managers, engineers and workers, with
special priority given to ship designing engineers and shipbuilding project
managers.
5. To build R&D capacity for the three linked
shipbuilding clusters in the three regions.
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V. PLAN OF ACTION
1. Restructuring the existing shipyards nationwide,
concentrating on using existing infrastructure and manpower
No.
Plan of action
Implementation
duration
Implementing
agency
Coordinating
agency
1.1
To form 3 linked shipbuilding clusters and build
several key shipbuilding enterprises:
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- Continuing the restructuring to achieve the
objective: to form 3 linked shipbuilding clusters and build several key
enterprises, encourage enterprises to join value chains of transnational
corporations
Commencing in the fourth quarter of 2014 and
expected to be completed in the second quarter of 2015
Ministry of Transport
Ministry of Industry and Trade, Ministry of
Planning and Investment, Ministry of Finance, Ministry of Science and
Technology, and Vietnam Association of Mechanical Engineering Enterprises
1.2
To enter into shipbuilding joint ventures with
foreign partners:
Selecting one yard to enter into a joint venture
with a strategic partner to build types of ship with efficient and
environment-friendly energy use
From the fourth quarter of 2014 to the first
quarter of2018
Ministry of Transport
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2. Developing support industries for the
shipbuilding industry
2.1
Regarding tax policies:
To review all preferential duty rates for
imported materials and parts and proposing import duty rates/ list of
materials and parts eligible for incentives. To reconsider tax mechanisms and
policies currently applied to enterprises manufacturing ship equipment for
export and providing incentives to them when they sell equipment to local
shipyards. To review all relevant current legal documents and incentives for
support industries and incentives under the key mechanical engineering
program integrated with the tax reduction roadmap under AFTA and WTO, and
propose the list/preferential duty rates
Commencing in the Ministry fourth quarter of 2014
and expected to be completed in the second quarter of 2015
Ministry of Finance
Ministry of Transport and Ministry of Industry
and Trade
2.2
Tax incentives:
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Commencing in the fourth quarter of 2014 and
expected to be completed in the second quarter of 2015
Ministry of Finance
2.3
Customs and tax procedures:
To elaborate and publicize procedures and
standards applicable to enterprises. To review, simplify and minimize
administrative procedures; to modernize administrative and customs
procedures, and appraisal procedures for enjoyment of incentives.
To apply the bonded warehouse mechanism to yards
building ships for export (simplified procedures) to reduce costs and time
for import, building and re-export of ships
Commencing in the fourth quarter of 2014 and
expected to be completed in the second quarter of 2015
Ministry of Finance
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2.4
Creation of a credit mechanism:
To form a support fund for development of the
shipbuilding industry in the 2015-20 period
Commencing in the fourth quarter of 2014 and
expected to be completed in the third quarter of 2015
Ministry of Transport
Ministry of Finance and Ministry of Planning and
Investment
2.5
Reduction of expenses for accessing and borrowing
capital:
To provide guarantee for projects eligible for
guarantee at time suitable to project progress and with appropriate terms and
interest rates to ensure project efficiency
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Ministry of Transport
Ministry of Finance, Ministry of Planning and
Investment and State Bank of Vietnam
2.6
Industry planning:
Under the master plan approved by the Prime
Minister in Decision No. 2290/QD-TTg of November 27, 2013
Commencing in the first quarter of 2014 and
expected to be completed in the fourth quarter of 2020
Ministry of Transport
2.7
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To build a strategic partnership among potential
investors in shipbuilding enterprises in order to build and consolidate the
supply-cooperation relationship and form support industries
Commencing in the fourth quarter of 2014
Ministry of Transport
Ministry of Planning and Investment
2.8
Application of international standards:
To elaborate and promulgate a set of standards of
Vietnam’s shipbuilding industry, and step by step apply international
standards on technologies and environmental protection to Vietnam’s shipbuilding
industry
Commencing in the first quarter of 2015 and
expected to be completed in the first quarter of 2018
Ministry of Transport
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3. Developing the market for domestic sale and
export of ships and ship repair services
3.1
Identification of types of ships for which
domestic and foreign markets have demands and in which Vietnam has a
competitive edge, and develop support industries first of all for the
manufacture of these types of ships:
To study and promulgate mechanisms and policies to
improve the competitiveness of local shipbuilding enterprises for types of
ships for which Vietnam has development conditions and enhance the
relationship between other economic sectors and the shipbuilding industry
Commencing in the fourth quarter of 2014 and
expected to be completed in the second quarter of 2015
Ministry of Transport
3.2
Performance of the general task in Vietnam’s
strategy for fisheries development through 2020: “consolidating and
developing the mechanical engineering to build and repair fishing ships,
adopting an appropriate roadmap to quickly build fishing ships with steel or
new-material hulls in replacement of wooden-hull ships...”:
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Commencing in the fourth quarter of 2014
Ministry of Transport
Ministry of Planning and Investment, Ministry of
Agriculture and Rural Development and Ministry of Finance
3.3
Simplification of procedures for sale of products
in the domestic market by export enterprises in order to develop support
enterprises and increase the localization rate of shipbuilding enterprises
Commencing in the fourth quarter of 2014 and
expected to be completed in the second quarter of 2015
Ministry of Industry and Trade
4. Training highly qualified, professional and
international-level human resources for all levels
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Training of high-quality human resources:
To review training programs, especially those for
training of high- quality human resources, currently implemented (applicable
to both trainers and trainees); to review training and vocational
establishments which provide training in professional skills related to
support industries for the shipbuilding industry; to evaluate and revise
training curricula to meet the development requirements of support industries
and the shipbuilding industry.
To select one tertiary education institution and
two vocational training establishments to cooperate with foreign countries
for training high- quality human resources for the shipbuilding industry.
Regarding training funds:
To provide support funds for vocational training
and allocate overseas training quotas for support industries, especially in countries
with developed shipbuilding industry;
To elaborate standards for examination and
evaluation of professional skills in support industries
Commencing in the fourth quarter of 2014 and
expected to be completed in the fourth quarter of 2015
Ministry of Transport
Ministry of Planning and Investment, Ministry of
Labor, War Invalids and Social Affairs, Ministry of Education and Training
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To build one R&D center in the North to serve
the three shipbuilding clusters with the participation of the State and
enterprises
Commencing in the second quarter of 2015 and
expected to be completed in the fourth quarter of 2019
Ministry of Transport
Ministry of Planning and Investment
VI. ORGANIZATION OF
IMPLEMENTATION AND SUPERVISION MECHANISM
1. Assignment of tasks
a/ The Ministry of Transport shall:
- Form a working group with the participation of
involved parties to organize the implementation of the Plan of Action in a synchronous
and effective manner.
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b/ Related ministries and sectors shall:
- Elaborate and implement contents and tasks of the
Plan of Action within the ambit of their functions and tasks prescribed in Part
V of the Plan.
- Work with the Ministry of Transport in evaluating
results and effectiveness of the performance of assigned tasks and
implementation of assigned contents before summarizing and reporting them to
the Prime Minister.
c/ Enterprises operating in the shipbuilding
industry shall base themselves on the contents and tasks in this Plan of Action
to formulate specific schemes and investment projects for implementation of the
Plan.
2. Supervision of the implementation of the Plan of
Action
The Ministry of Transport shall supervise the
implementation of the Plan of Action and report it at annual meetings of the
Working Group for the Industrialization Strategy. The working group shall
report supervision results to the Steering Committee for the Industrialization
Strategy.
3. Adjustment of the Plan of Action
Any difficulties or problems arising in the course
of implementation of the Plan of Action should be reported to the Ministry of
Transport and the Working Group for the Industrialization Strategy for
consideration and settlement.
The Ministry of Transport shall work with the
Working Group for the Industrialization Strategy and related ministries and
sectors in summarizing and evaluating implementation results by 2016 as well as
relevant experience of Japan, then adjust the Plan of Action for implementation
from 2017.
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Funding sources for the implementation of the Plan
of Action shall be mobilized from the central budget, local budgets,
international aid, social and community sources and other lawful sources. -
PRIME MINISTER
Nguyen Tan Dung