According to Minister and Chairman of the Government Office Tran Van Son, under the chairmanship of Prime Minister Pham Minh Chinh, the government convened the July regular meeting to assess the socio-economic situation in July and the first seven months; the situation of capital allocation and disbursement of public investment; the implementation of three National Target Programs, along with other important matters; and to propose key tasks and breakthrough solutions for the coming time.
The government members unanimously assessed that the socio-economic situation in July and the first seven months of the year continued to show positive trends, with July’s results higher than June’s, and the cumulative results for the seven months better than the same period in 2023 in most fields.
Notably, Vietnam’s industrial recovery in the first seven months of 2024 showed many remarkable bright spots, with important indices increasing strongly. Specifically, the PMI in July 2024 reached 54.7 points, increasing for four consecutive months and reaching the highest level since November 2018.
In addition, the growth rate of industrial production in July was higher than that of June and reached the highest level since March 2011. The Index of Industrial Production (IIP) in the first seven months increased by 8.5% over the same period last year, the highest cumulative level since February 2024, of which the processing and manufacturing industry increased by 9.5%.
By locality, industrial production basically grew in 60/63 localities in July, with only three localities recording a decrease. Some localities with high growth rates included Khanh Hoa, Bac Giang, Hai Phong, and Quang Ninh…
The high consumption index in the processing and manufacturing industry helped reduce inventory compared to the same period last year. Some key industrial products increased sharply compared to the same period last year, such as steel bars and angles; fabric woven from natural fibers; rolled steel; NPK compound fertilizer; electricity production…
Commenting on these results, Deputy Minister of Industry and Trade Phan Thi Thang said that the growth results of the processing and manufacturing industry reflected a very positive picture of domestic production. It can be seen that industrial production is recovering strongly compared to 2023 and is on an upward trajectory.
“The processing and manufacturing industry has returned to its role as the driving force of the economy,” said the Deputy Minister of Industry and Trade.
Also, according to the Deputy Minister of Industry and Trade, there are five main reasons for the positive results in the domestic manufacturing industry. First, the effectiveness of the government’s support measures and the strong direction of the Prime Minister in disbursing public investment and implementing key industrial projects.
Second, the positive results in attracting and disbursing FDI have added capacity to domestic production.
Third, the government, ministries, sectors, and localities have accompanied associations and enterprises in taking advantage of opportunities brought about by FTAs that Vietnam has signed in the context of the global market recovery, with export orders growing positively in Vietnam’s key export industries such as textiles, leather and footwear, electronics, and food processing.
Fourth, the outstanding results in economic diplomacy, especially with Vietnam’s major trading partners such as the US and China, have helped reinforce the confidence of investors and businesses.
Fifth, the capacity of enterprises, especially domestic enterprises, has been improved thanks to the comprehensive impact of the government’s support policies (a positive signal that the growth rate of domestic enterprises has nearly doubled that of FDI enterprises) and this confidence has been reinforced by the stable domestic macroeconomic environment and the recovery trend of the world market.
Deputy Minister of Industry and Trade Phan Thi Thang – Photo: VGP/Nhat Bac
Challenges Remain
Despite the bright spots in the manufacturing sector, the economy in general and industrial production, in particular, will continue to face a number of challenges in the coming time.
Specifically, Deputy Minister Phan Thi Thang pointed out that although it has improved, the internal strength of the domestic manufacturing industries remains weak. The bottlenecks in industry over a long period have not been effectively addressed.
Production is still largely dependent on external factors, especially the FDI sector. The added value of domestic industries remains low. The supporting industries are underdeveloped, and there are not many domestically-produced industrial products with high technology content.
In addition, industrial production has not fully recovered. In the first seven months of 2024, 3/63 localities saw a decrease in IIP. Some key manufacturing industries still decreased compared to the same period, such as smartphones, televisions, automobiles, crude iron and steel, and draught beer… Some key export commodities (footwear, wood, phones of all kinds, and components…) have recovered positively but have not returned to the peak of the same period in 2022.
Moreover, the context of fluctuations in the domestic and international situations in the coming months and years will also pose challenges for domestic manufacturing industries.
Specifically, geo-political tensions and great power competition are increasing, the recovery of major trading partners is still slow, and there are risks of disruptions in global supply and production chains. Exports still depend heavily on some markets, items, and the FDI sector. Some key export items to major markets (EU, US) continue to face pressure from trade remedy investigations and technical barriers.
Domestically, the real estate market is still recovering slowly. The domestic market is growing at a lower rate than in the same period last year. Domestic prices are under pressure to increase after the implementation of some new policies.
Ministry of Industry and Trade Proposes Four Groups of Solutions
Given this situation, the Ministry of Industry and Trade has also proposed four groups of solutions to continue promoting industrial production in the coming time.
First, continue to proactively and effectively implement support policies for enterprises that have been approved by the Government, thereby removing difficulties and obstacles in production and business activities of enterprises, especially in key export industries such as textiles, leather and footwear, and fundamental industries such as automobiles, machinery, and steel…; promote the operation of new industrial production projects to serve export and domestic consumption, creating more capacity for production development and export sources.
Second, focus on advising and completing the institutions, policies, laws, and strategies for the development of some fundamental industries, giving priority to creating a basis for new growth drivers in the short and long term.
Third, continue to effectively implement the working programs with localities and the existing enterprise support programs to restore and promote the growth momentum of industry in localities and key economic regions.
Fourth, support enterprises to continue taking advantage of opportunities from large public investment projects and the government’s policies to restore the real estate market; encourage the increase in purchasing domestically-produced goods and the maximum limitation of the use of imported products and raw materials that can be produced domestically; promote the search for new markets for key export industries such as textiles, leather and footwear, electronics…
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