How does the processing industry maintain its position as a driving force for export growth?

VCN - Forecasting that the situation in 2023 will still be difficult, the processing and manufacturing industry needs to implement many solutions to maintain its position as a driving force for export growth.
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The entire processing-manufacturing industry was greatly affected by the long Tet holiday in January 2023. (Photo courtesy: VNA)
The entire processing-manufacturing industry was greatly affected by the long Tet holiday in January 2023. (Photo: VNA)

January growth slows down

As a result of the structure of export commodity groups in January 2023, the processing and manufacturing industry decreased by 22.7% over the same period last year, but this figure did not fully reflect the reality, because the first month of the year saw two extended holidays.

The results of industrial production in the first month of the year show that in the remaining 11 months of 2023, businesses need to increase their speed to shoulder the deficit at the beginning of the year and maintain the growth rate until the end of the year.

According to the Ministry of Industry and Trade, in January, most businesses operating in the processing and manufacturing industries had to suspend production for the Tet holiday, except for a few businesses in the paper, cement, steel, and fertilizer industries, protein, chemicals and a number of processed products, confectionery still maintained a certain output due to the characteristics of the production lines that must operate continuously of these industries.

Some enterprises in other industries such as electronics, automobiles still operate some parts/lines with continuous production nature (such as powder coating lines in automobile enterprises), but do not produce a new finished product.

Therefore, the production index of the processing and manufacturing industry in January 2023 decreased by 9.1% over the same period last year. Some localities with large industrial scale decreased sharply compared to the previous month (Vinh Long decreased by 22.8%; Vinh Phuc decreased by 28.7%; Ho Chi Minh City decreased by 21.4%; Dong Nai decreased by 15.7%; Binh Duong down 17.4%; Hanoi down 23.2%; Ba Ria-Vung Tau down 13.8%; Hai Duong down 20.2%; Quang Binh down 26.5%) which affected the index general industrial production of the country this month.

Regarding the structure of export commodity groups in January 2023, the processing and manufacturing industry is no longer a driving force for export growth when the growth in export turnover of this group of products decreased the most compared to the group of agricultural, forestry and fishery products and mineral fuels.

The export turnover of most products of the processing industry group decreased compared to the same period last year, so the total export turnover of processed industrial goods in January 2023 was estimated to decrease by 22.7% compared to the same period last year with the same period last year, estimated at 21.52 billion USD. Fuel and mineral goods were estimated at USD 245 million, down 9.7% over the same period last year; agricultural and forestry products was estimated at 2.14 billion USD, accounting for 19.8%.

Making the most of the export potential of an advantageous industry

Industrial production decreased at the beginning of the year, but the target index of industrial production (IIP) in 2023 increased from 8-9% compared to 2022, the proportion of the processing and manufacturing industry in GDP reached about 25.5%.

At the beginning of 2023, Hoa Phat's steel exports received a good signal with many export orders to markets in the Americas, Asia and Australasia such as the US, Canada, Mexico, Puerto Rico, Australia, Malaysia, and Hong Kong. Kong, Cambodia.

Steel export output (bar, construction coil, high quality coil) in January reached 46,000 tons. Regarding downstream products, Hoa Phat steel pipe recorded more than 53,000 tons, up 6% compared to the first month of 2022. Galvanized steel sheet of all kinds reached 21,000 tons, equivalent to 50% compared to the same period in 2022. Steel production capacity of the Group is currently 8.5 million tons of steel per year. Currently, the Group continues to implement the Hoa Phat Dung Quat 2 Iron and Steel Complex project on schedule to catch up with demand.

Or with the supporting industry, currently there are quite a few enterprises supporting the automobile industry in Vietnam, with only about 300 enterprises in all economic sectors. In which, there are more than 40 enterprises manufacturing and assembling cars; 45 enterprises producing chassis, bodywork, body; 214 enterprises producing auto parts and accessories.

According to the Ministry of Industry and Trade, businesses in Vietnam have just produced and processed less than 300 parts while the whole car has about 30,000 components. In addition, the technology content and value of these components and spare parts are not high when they are just bulky, labor-intensive components such as chairs, electrical wiring, wheel rims, door panels, tubeless tires and some businesses invest in body and tire stamping lines. Therefore, this is also an area with potential for growth.

According to the leader of the Department of Industry, one of the focuses that will be implemented in 2023 to further develop the industrial production industry is to effectively implement the supporting industry development program, focusing on investment solutions, consulting and training human resources; supporting the construction and operation of smart factory models, digital transformation, green production, and clean production, contributing to helping businesses deeply participate in the global value chain.

At the same time, urgently build shared technical centers for research, innovation, absorption and development of industrial technologies in Hanoi and Ho Chi Minh City, especially core technologies and source technologies.

In addition, the Department also strives to focus on solutions to promote international cooperation activities, link with FDI enterprises to maintain, expand and search for markets, and make the most of export surplus.

By Ngoc Linh/ Huu Tuc

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