Processing and manufacturing enterprises expected to speed up

VCN - Thanks to many factors from the external and internal economy, many processing and manufacturing enterprises are not only recovering production but also accelerating, bustling with domestic and export orders. Therefore, continuing to expand investment, taking advantage of opportunities is an issue that businesses in this industry must focus on.
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Processing pineapple at Dong Giao Food Export Joint Stock Company. Picture for illustration: VNA
Processing pineapple at Dong Giao Food Export Joint Stock Company. Picture for illustration: VNA

Huge space for growth

According to the Ministry of Industry and Trade, the added value of industry increased by 7.07%, higher than the growth rate of the whole economy (up by 5.03%) and higher than the growth rate of the same period last year (up by 6.44% in the first quarter of 2021), contributing 2.42 points to the growth rate of the total added value of the whole economy.

The processing and manufacturing industry continued to play a leading role in the growth of the economy with an increase of 7.79%, contributing 2.05 points.

In particular, in exports, the group of processed industrial products continued to make an important contribution to the overall growth rate of export activities with a turnover in the first quarter of 2022 reaching US$76.18 billion, up by 11.6% compared to the first quarter of 2021 and accounting for 86% of the total export turnover.

Explaining the reason why production and export of the processing and manufacturing industry has accelerated, from a business perspective, Than Duc Viet, General Director of Garment 10 Corporation, said that the current market situation is better than in 2020 and 2021, even surpassing the production capacity of enterprises.

All traditional items of May 10 are fully booked until the end of June 2022. Even some items such as vestons had closed orders until the end of September 2022, while one year ago, they could only operate at 30% of their production capacity.

Similarly, a representative of Northern Company Limited, said that in the first quarter of 2022, all workers went to work to ensure a capacity of up to 14 million products per year. Effective disease control and openness in freight and logistics along with investment in more equipment have accelerated production progress and improved product supply capacity.

In particular, many businesses also believe that, in the first quarter of 2022, businesses take a long time due to the long Tet holiday and complicated pandemic situation, so the quantity of goods produced is still lower than the actual capacity.

Moreover, Vietnamese businesses can also make good use of Free Trade Agreements (FTAs) to boost exports. Therefore, there is still a lot of room for growth in this industry. It is expected that from the second quarter, production activities will stabilize, and output and revenue will increase.

The results of the survey on business trends of enterprises in the processing and manufacturing industries by the General Statistics Office show that enterprises are optimistic about the situation of production and business in the second quarter of 2022, with 82.3% of enterprises assessed that it would be stable and better compared to the first quarter of 2022.

Expand, increase productivity

Recently, in the Action Program to restructure the economy for the period 2021-2025, the Government set a target of an average labor productivity growth rate of over 6.5% per year, of which the labor productivity growth rate processing and manufacturing industry reached 6.5-7% per year.

Therefore, many businesses have focused on investing tens to hundreds of billions of VND to build processing factories and warehouses to improve productivity and quality to meet export requirements.

For example, Dong Giao Foodstuff Export Joint Stock Company has invested in building Doveco Son La Fruit and Vegetable Processing Center. This is a deep processing complex with a total capacity of 52,000 tons of products per year, including three lines with modern equipment and technology.

The project is put into operation to ensure the consumption of more than 500,000 tons of vegetables and fruits (mango, passion fruit, avocado) per year in the province.

Not only to increase production capacity but also with the desire to become a partner of large technology corporations and participate in the global value chain, a representative of Pavonine Vina Co., Ltd. said that in 2022, the company plans to process about 2 million products, an increase of 30% compared to 2021 and the company has orders until the end of 2022. Therefore, the business has been planning to invest in more machinery in the production line system to increase capacity by 30%.

However, according to businesses, in order to develop more smoothly, businesses still need more support. For example, according to the Vietnam Steel Association, management agencies need policies to encourage investment, promote and protect domestic steel production as well as support enterprises in applying trade remedies to protect domestic production, responding to trade remedy lawsuits.

In addition, experts also said that many export products of Vietnam that are dependent on imported materials will be affected by the price of basic goods and freight rates, which have not shown any signs of decreasing, causing input prices to continue to rise.

Therefore, the Ministry of Industry and Trade said that it will continue to implement solutions focusing on removing difficulties for production and business enterprises, restoring production, supply chains, and broken value chains, supporting enterprises in finding export and import markets for raw materials, fuels, materials, and spare parts. Along with that, focus on adjusting the industrial growth model from mainly based on quantity to based on productivity, quality and efficiency, promote the development of industries and industrial products with high added value and large export value; while linking production with industrial service development.

By Binh Nam/ Kieu Oanh

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