Investment News

Restore industrial production growth momentum




The industry always plays a leading role in the overall growth of the entire economy. However, in the first months of the year, industrial production encountered many difficulties due to the impact of the global economic recession and high inflation in many countries. Many businesses continuously lack orders, especially export orders.

 Production operations at the mechanical workshop of Hong Ha Shipbuilding One Member Company Limited (Hai Phong). (Photo ANH SON)

According to forecasts, production and business activities of industrial enterprises in the remaining months of 2023 still face many difficulties and cannot regain high growth momentum in the short term. However, with the drastic management and action of the Government, ministries, branches and localities, industrial production will prosper by the end of the year.

It is no longer the driving force for growth

This time of year is usually the peak winter production for leather, footwear, and textile enterprises, but in reality, businesses in many localities are currently in a state of moderate production.

Chairman of Hanoi Leather and Footwear Association Pham Hong Viet shared that businesses are going through a very difficult period when the number of orders has decreased by 50-70%; In particular, some businesses have completely run out of orders to maintain production. Meanwhile, information from outside has not yet shown positive signs, businesses are very confused, not knowing how to shape their activities in the last quarters of the year. Regarding the garment industry, General Director of Vietnam Textile and Garment Group (Vinatex) Cao Huu Hieu said that the situation of small and fragmented orders has lasted since the fourth quarter of 2022 until now and has shown no signs of recovery.

There are garment enterprises with several thousand employees, but now they have to accept individual orders of 500-1,000 jackets. Some businesses even have to accept orders that are not in line with their "forte": specializing in pants takes orders for shirts, specializing in woven fabrics switches to knitting and vice versa. Small orders are "backhanded", businesses have to invest in more machinery, equipment, train more skills for workers ,... leading to losses in costs, but if they do not accept orders, they will lose customers as well as customers. there are no jobs for workers.

In the first six months of the year, the world economy continues to fluctuate unpredictably. Although inflation has cooled down, it is still at a high level, and there is a tendency to tighten spending and purchase goods from common to luxury goods, especially in some countries. Large consumer markets for products such as textiles, footwear, wooden furniture, electronic components such as the US, European Union (EU ), etc. cause import demand to decrease.

According to Director of Industry and Construction Statistics (General Statistics Office) Phi Thi Huong Nga, Vietnam's economy is highly open, so the production activities of domestic enterprises, especially textile, garment, and footwear enterprises , electronics ,... depend a lot on demand from abroad. Although businesses have made great efforts to overcome difficulties in product consumption, increase inventory and seek new markets, production activities are still at a low level.

According to the Ministry of Industry and Trade, the domestic market maintains a good growth rate (mainly due to rising prices), but the increase has continuously decreased over the months, showing that domestic consumption is increasingly narrowing due to falling income. reduce. Domestic purchasing power is still weak and has not stimulated production; Inflationary pressure and high interest rates also affect consumption of luxury products (such as cars) and common consumer products (such as textiles, garments, shoes, etc. ).

Therefore, the production of many key industries in the past six months has decreased sharply over the same period, such as: Mobile phones decreased by 19.2%; automobiles and steel bars and angle steel both decreased by 18.2%; Casual clothing decreased by 7.1%; phone components decreased by 5.4%; Cement decreased by 3.9%; motorbikes reduced by 3.5 %;…

The added value of the industry in the first six months of the year only increased by 0.44% over the same period in 2021 (the lowest increase of the same period of the years 2011-2023), contributing only 0.15 percentage points to the growth rate. the increase in total added value of the entire economy; Of which, the processing and manufacturing industry alone increased by 0.37%, contributing 0.1 percentage points, no longer retaining its role as a driving force for growth.

Remove difficulties and clear the market

To regain momentum for industrial production, the urgent task is to support businesses to stand firm, overcome immediate difficulties to gradually stabilize and wait for opportunities to expand production activities. Chairman of the Vietnam Association of Small and Medium Enterprises Nguyen Van Than recommends immediately resolving the loan issue that is heating up day by day; Immediately establish a special working group to promote the implementation of business support policies.

The Government or the National Assembly Standing Committee can issue a resolution granting strong enough authority to the Working Group to resolve pressing issues, while promoting policy response and promoting reform administrative procedures, improve the capacity of management levels in directing and operating, especially at the local level.

Implementing the Prime Minister's direction in Official Dispatch No. 470/CD-TTg on continuing to drastically and effectively implement tasks and solutions to remove difficulties for people and businesses in production and business. industry, the State Bank of Vietnam has adjusted the operating interest rate. Currently, basically deposit and loan interest rates tend to decrease:

The average deposit interest rate of commercial banks is about 5.8%/year (down 0.7% compared to the end of 2022); The average lending interest rate in VND is about 8.9%/year (down 1.0%/year compared to the end of 2022). The Prime Minister requested banks to continue reducing costs to lower interest rates, creating favorable conditions for businesses to promote production and business; promote stimulus packages. On the other hand, ministries, branches and localities must regularly organize dialogues with businesses to share and grasp the difficulties of businesses and promptly propose solutions to overcome them.

According to Deputy Minister of Industry and Trade Phan Thi Thang, the Ministry of Industry and Trade will continue to focus on supporting businesses to take advantage of commitments in free trade agreements (FTAs); Promote negotiations of new agreements, commitments, and trade links to diversify markets, especially in places that previously did not have the ability to penetrate deeply, such as the Vietnam-Israel FTA (VIFTA) or the FTA between Vietnam and the United Arab Emirates (UAE)...

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