Processing, manufacturing industry sees trade surplus for first time

SGGP
The Ministry of Industry and Trade on December 26 said that ending the year of 2019, the highlights of the industrial industry come from three aspects, consisting of growth rate, export turnover and foreign investment attraction.

Processing, manufacturing industry sees trade surplus for first time

According to Minister Tran Tuan Anh, this year, the global economy faced several difficulties. Global economic growth is slow compared to last year, at the same time, global trade growth is forecast to be at around 1.2 percent compared to the level of 3.6 percent last year due to trade disputes between large economies, including the US, the EU and China.

Vietnam’s economy has a large openness with an import-export turnover of around 200 percent of gross domestic product (GDP) and depends heavily on the global market. Industrial products of Vietnam accounted for more than 80 percent of the total export turnover of the country, so Vietnam’s economic growth in general and Vietnam’s industrial growth in particular were seriously affected by the global economic situation, especially large economies and export markets.

In fact, the global economic downturn in 2019 has significantly affected the industrial growth of Vietnam, as a result, the industrial growth rate this year is forecast to be not as high as that was last year. However, Vietnam’s industry still posted good growth, reaching 9.3 percent. Processing and manufacturing industry is still a highlight of the industry with growth being kept at 10.6 percent compared to a growth of 0.9 percent of mining, a growth of 9.5 percent of electricity and water and a growth of 6.7 percent of water supply and a growth diver of the whole industry. Growth of the processing and manufacturing sector was mainly contributed by metal manufacturing with 31.7 percent, coke production and refined petroleum with 24.5 percent, production of paper and paper products with 12.1 percent, furniture with 11.3 percent and textiles with 11.3 percent.

Remarkably, although global economy and trade grow slowly, Vietnam's exports in 2019 are expected to grow by 7.8 percent, much higher than average level of the region and the world, of which, Thailand increased by 4 percent, Malaysia decreased by 1.8 percent and Indonesia decreased by 5.7 percent, in which, especially, the processed and manufactured goods group grew by 9.8 percent. Products with high export growth such as wood and wooden furniture, textiles, footwear, electronics, electric cables, toys and sports equipment have contributed to enhancing the position of Vietnam's manufacturing and processing industry in the global market.

This year is also the fifth consecutive year that Vietnam has recorded a trade surplus with more than $10 billion. Especially, this year is also the first time that products of the processing and manufacturing industry have reached a trade surplus of nearly $100 million. Although the value is not very high, it is a positive signal, contributing to the improvement of the trade balance of Vietnam. December this year also marked the first time Vietnam has exported completely-built-unit cars when the Vietnamese automobile manufacturer, Truong Hai Auto Corporation, exported busses to the Philippines.

According to the minister, the industry in general and processing and manufacturing industry in particular are also highlights in foreign investment attraction. This year, the country attracted 3,478 new projects with a total registered capital of nearly $31.8 billion. The processing and manufacturing industry also accounted for the highest proportion with a total capital of $21.56 billion, accounting for 67.8 percent of total registered capital.

The experience from countries that successfully carried out industrialization showed that during the period of industrialization, the processing and manufacturing industry must maintain a contribution of 20-30 percent to GDP. Vietnam’s processing and manufacturing industry has made positive changes. The proportion of the processing and manufacturing industry in GDP has risen from 13 percent in 2010 to 16 percent in 2018. From 2015 until now, the processing and manufacturing industry has been maintaining a growth rate of above 10 percent per annum. The fact that the processing and manufacturing industry sees a trade surplus for the first time showed that domestic value-added has been increased and the capacity of supporting industry has been improved and less depended on industrial products and imported materials and components. The competitiveness of Vietnamese industrial products has gradually been strengthened. The shift in structure has positively moved to industries with higher value and ascended to a higher step of the value ladder in the value chain.

The Ministry of Industry and Trade said that it is forecast that next year, the global economy will tend to be positive. For the processing and manufacturing industry to continue to play its leading role, creating motivation for rapid and sustainable economic development of Vietnam, avoiding falling behind and falling into the middle-income trap, besides creating favorable conditions and environment to attract social resources to invest in the industry, it is essential to have drastic solutions to support enterprises financially, including tax policies, preferential credit policies for prioritized industries, such as textiles, footwear, automobiles, mechanics and supporting industry. At the same time, it is necessary to have policies and solutions to keep luring investment to take advantage of investment shift and restructuring value chains of multinational corporations amid the context trade disputes increase more and more. In addition, it requires the participation of provinces, especially provinces with great prospects for industrial development and implementation of policies and measures to support manufacturing enterprises.

According to the ministry, in the context of a volatile global economy and the fourth industrial revolution, in the future, it will continue to give directions for development and issue policies to maintain Vietnam's position in the international arena in the fields of textiles, footwear, wood processing, automobiles and electronics. Moreover, it will perform well the supporting role for the development of domestic industrial enterprises, especially supporting industry enterprises.

Currently, the ministry has established technical centers to support industrial development in key economic regions. These centers will play a key role in implementing activities to support domestic industrial enterprises, helping them to improve competitiveness and participate deeply in global value chains.

By Phan Thao – Translated by Thanh Nha

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