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Vietnam Today

Industrial production still driver of economic growth

Released at: 13:46, 28/10/2015

Industrial production still driver of economic growth

GSO report shows industrial production increasing at a solid rate.

by Minh Duc - Nguyen Quynh

The latest report from the General Statistics Office shows that industrial production in the first ten months of the year continued to be stable, growing 9.7 per cent, or 2.8 per cent higher than in the same period last year. Manufacturing and processing maintained its position as leader and is an important driving force for the economy’s continued prosperity in the closing months of the year.

It also contributed the most to the overall growth in the industrial sector in the first ten months, with 6.8 percentage points (ppts), followed by mining with 2.1 ppts, generation and distribution of electricity 0.7 ppts, and water utilities and wastewater treatment with 0.1 ppts.

In secondary industry, some production increased much higher than in the same period last year, including electronic products, computers and optical products, with 38.9 per cent, motor vehicles 27.4 per cent, leather and related products 16.8 per cent, and textiles 15.6 per cent.

Other sectors recorded lower growth, such as food processing with 7.9 per cent, beverages 7.1 per cent, chemicals and chemical product manufacturing 5.6 per cent, coal production 5.2 per cent, clothing production 5.1 per cent, pharmaceutical production 3 per cent, and tobacco 2.7 per cent.

A number of industrial products saw high production indexes against the same period of last year, such as motor vehicles, TVs, mobile phones, steel, footwear, powdered and fresh milk, and aquatic feed. Those recording only slight increases or declines included beer, water, aquatic product processing, coal, clothing, tobacco, and raw iron.

Industrial products with rising production indexes in first 10 months

Regarding consumption indicators, in September the manufacturing and processing sector rose 5.3 per cent against August and 13.4 per cent year-on-year. In the first nine months the consumption index increased 13.1 per cent over the same period of 2014, in which sectors seeing high increases included electronics, computers and optical products, motor vehicles, and steel production.

Industrial products with high consumption indexes in first 9 months

Thanks to the consumption index increasing significantly, inventories in manufacturing and processing remained at safe levels. As at October 1 the inventory index increased 9.8 per cent compared to the same period last year, with some sectors having small increases and some falling, such as rubber and plastics, which increased 9.4 per cent and clothes 6.4 per cent, while chemical products fell 0.7 per cent, paper products 8.5 per cent, and tobacco 20.1 per cent.

The Ministry of Industry and Trade (MoIT) forecast that industrial production in subsequent months will continue to grow due to the following factors: domestic enterprises tend to increase imports of raw materials towards the end of the year to serve production, and textiles, footwear, and electronic components have stable orders. Enterprises have also maintained good business and production, continued to see growth momentum, actively strengthened trade promotions, sought customers both domestically and overseas to diversify markets, increased exports, and developed the domestic market.

Despite these advantages, industrial production over the remaining months of the year will face numerous challenges. In particular, while the global economy continues to recover its growth is slower than forecasted and still contains many risks, especially geo-political risks, unpredictable changes in financial markets, and a falling oil price.

Vietnam’s economy will continue to rebound with higher growth rates. Investment efficiency and competitiveness is improving and macro-economic stability will facilitate the development of industrial production. There are issues to be addressed, however. In particular, the formation of the ASEAN Economic Community (AEC) at the end of the year and the conclusion and implementation of free trade agreements (FTAs) will create the conditions for development but also present challenges, especially in developed markets, while increasing competitiveness in domestic and international markets.

To accomplish the goal of industrial production growing this year by some 10 per cent and industrial added value increasing 7-7.5 per cent per year, contributing to GDP growth of 6.3 per cent, MoIT has set a specific orientation for industry, in particular focusing on the implementation of restructuring industrial production. At the same time measures will be implemented to promote the development of production, expand markets, encourage consumption, and accelerate cutting inventories.

MoIT also proposed gradually implementing solutions to the internal restructuring of industry towards reducing the proportion of machining and assembly. The focus needs to be on the development of in-depth industrial production to create products with national brands competitive in the global value chain, and to promote support industries.

Regarding enterprises, MoIT asked that they actively take on technological innovation, increase management capacity, and expand, while at the same time building business strategies and plans that are suitable with their businesses and with each particular product.

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