Urgent solutions needed to revive the domestic market

Mr. Phan Van Chinh speaking at the meeting.

On August 13th, in Ho Chi Minh City, the Domestic Market Department of the Ministry of Industry and Trade (MoIT) held a meeting with several industry associations and businesses in the southern region to discuss the implementation of programs to boost domestic consumption and support economic growth.

Phan Van Chinh, Director of the Domestic Market Department, stated that with a population of approximately 100 million, the domestic market has great potential. Promoting domestic trade will help businesses take full advantage of the significant opportunities available in this market.

However, since 2021, purchasing power in the domestic market has shown slow growth at various times due to multiple reasons, negatively affecting the government's economic growth targets. This has impacted business activities and the income of the population, leading to a decline in social consumption demand.

From 2021 to 2023, the total retail sales of goods and services increased by an average of about 7.2% per year, significantly lower than the target set in the Domestic trade development strategy until 2030, with a vision to 2045 (13-13.5% per year). In the first six months of 2024, total retail sales of goods and services only increased by 8.6% compared to the same period last year, lower than the sector's target for 2024 and much lower than the target set in the Domestic trade strategy.

According to the MoIT, the decline in the growth rate of total retail sales and services since 2021 will affect the contribution of domestic trade to the growth of the service sector and the overall GDP of the country. Therefore, it is urgent to assess the current situation, market prospects, forecast trends, and implement urgent, practical, and specific solutions in both the short and medium term to stimulate social consumption.

Speaking at the meeting, representatives of major distribution units and supermarket chains in HCM City shared that consumer purchasing power has significantly decreased recently. Although purchasing power is gradually recovering, consumer habits have changed, focusing more on essential goods and health-related products. Therefore, businesses are making efforts to adapt to meet new consumer demands.

Nguyen Thi Ngoc Hue, External Relations Director of AEON Vietnam, stated that AEON's private-label products have shown positive results recently. This approach allows manufacturers to improve product quality standards, provides consumers with affordable yet high-quality products, and ensures AEON can source quality goods at reasonable prices by reducing intermediaries.

Businesses propose solutions to restore domestic purchasing power

Nguyen Thi Thu Hien, External Relations Director for Southern and Central regions of Central Retail, mentioned that Central Retail is actively implementing promotional programs to stimulate purchasing power. For example, the Dong Thap Lotus Festival and an upcoming supply-demand connection program in Phu Tho. In the first half of 2024, purchasing power was on par with the same period in 2023, but the situation has improved since July.

Discussing solutions to support domestic manufacturers, Huynh Bich Thuy, Supplier Transaction Office Director of Saigon Co.op, suggested that given the trend towards essential goods, there should be policies to support the production of non-food items. This segment is currently facing strong competition from Chinese products.

A representative from Saigon Trading Group pointed out that sourcing goods from local areas was challenging due to small-scale production, inconsistent and unstable quality. Therefore, localities need to establish a central unit to collect goods according to orders from distribution enterprises, ensuring quality and supply stability.

After listening to business opinions, Phan Van Chinh stated that to support businesses and revive domestic purchasing power, the MoIT would focus on two solutions: developing supply sources and improving distribution, logistics, and transportation channels to connect producers with wholesalers and retailers, ensuring goods reach consumers. "If we organize the distribution and logistics well, production activities can scale up, instead of remaining at the current small-scale level," said Chinh.