Deep decline in industry: Identifying challenges, promoting growth

To make good use of FTAs, in the coming time, Vietnam must meet increasingly higher conditions and standards regarding the origin of goods... if it wants to export and enjoy preferential tariffs.

Processing and manufacturing industry accounts for more than 80% of total export turnover. (Photo: Duc Duy/Vietnam+)

The added value of the entire industry in the first 6 months of 2023 only increased by 0.44% over the same period last year, which is the lowest increase of the same period of years - in the entire 12-year period from 2011-2023.

Notably, the processing and manufacturing industry - accounting for more than 85% of export turnover in the past 5 years - has no longer played the role of driving force for growth - when it only increased by 0.37%, accounting for contributed 0.1 percentage point to the overall growth of the entire economy in the first half of this year.

So what are the causes of the deep industrial decline and solutions to support key export industries in the last months of the year to contribute to promoting the overall growth of the economy.

The recovery momentum is still slow

Looking back at the first 6 months of 2022, the added value of the entire industry is estimated to increase by 8.48% over the same period in 2021. Of which, the processing and manufacturing industry increased by 9.66%, contributing 2 .58 percentage points to the increase in total added value of the entire economy.

However, entering 2023, the entire Vietnamese industry has witnessed a sharp decline, with a "negative" growth rate of 6.3% in the first 2 months of the year, of which the processing industry created a decrease of 6.9%. Although there has been positive growth again since March, it only increased the added value of the entire industry in the first 6 months of the year by 0.44% compared to the same period in 2022.

Mr. Truong Thanh Hoai, Director of the Department of Industry (Ministry of Industry and Trade) analyzed that although the authorities have made many efforts in advising on State management of processing and manufacturing industries, In the first 6 months of 2023, domestic industrial production will still decline significantly and recover very slowly.

The country's key and fundamental industries such as mechanics, automobiles, electronics, textiles, footwear, metal and steel production... all declined significantly in both production index and production output. and export turnover.

When returning to positive growth from March, many commented that Vietnam's industry had "bottomed out" and was likely to soon recover and develop. However, along with difficulties in finding new orders, the average inventory rate in the entire processing and manufacturing industry in the first 6 months of 2023 is more than 83%, showing that there are still many difficulties ahead.

Currently, the localization rate of Vietnam's textile and garment industry is over 50%. (Photo: Duc Duy/Vietnam+)

Ms. Phan Thi Thanh Xuan, General Secretary of the Vietnam Leather, Footwear and Handbag Association, informed that enterprises in the leather and footwear industry still encounter great difficulties and challenges. Order status also declined. For traditional customers, the decline is about 30-40% and for some businesses, especially small and medium enterprises, small orders have almost no positive signs...

According to Mr. Huynh Cong Tien, Toan Tien Limited Liability Company, which specializes in processing garment products, also said that in the first half of the year, the order situation was very difficult, many shipments were left in stock and could not be exported.

According to Vietnam+