Vietnam focuses on industrial production recovery

Vietnam focuses on industrial production recovery

The temporary suspension of production, especially in southern provinces and cities, has lowered Vietnam’s index of industrial production (IIP) in September. Creating favorable conditions for businesses to take advantage of market opportunities and restore production is urgently necessary to help the industrial sector recover.

Difficulties for manufacturing, processing

According to the Ministry of Industry and Trade, industrial production in the first nine months of 2021 was heavily affected by the pandemic. In the northern provinces of Bac Ninh and Bac Giang, Hanoi the capital, and southern provinces and cities, operations were suspended, causing a sharp drop in commodity output, greatly affecting the production supply chain and the global value chain.

The fact that a large number of employees quit their jobs will have a great impact on staffing upon production recovery. As a result, the IIP growth in the first nine months only reached 4.1 percent compared to the same period last year. The growth rates in 2019 and 2020 were 9.6 and 2.4 percent, respectively.

The sales index of the processing and manufacturing industry in September 2021 increased 12.4 percent compared to the previous month but decreased 11.2 percent compared to the same period in 2020. Stable production in the first several months of the year resulted in an IIP growth of 2.8 percent in the first nine months of 2021. According to a survey conducted by the General Statistics Office of Vietnam (GSO) in the third quarter of 2021, 13.2 percent of the surveyed processing and manufacturing enterprises gave better assessments for their operations in the third quarter than in the second quarter of 2021, 25.4 percent of the surveyed said their operations were stable, and 61.4 percent said they encountered difficulties.

The Ministry of Industry and Trade said production recovery will be slow due to the lack of labor force and difficult production reorganization although the forth outbreak of the pandemic has been basically controlled. The 2021 IIP is expected to only grow about six percent (2-3 percent lower than the target) although enterprises in northern and central regions have speeded up and increased production.

Production facilitation

According to the GSO’s survey, 43.4 percent of the surveyed enterprises said they believe that the situation in the fourth quarter will be better than in the third quarter, and 26.3 percent said it would deteriorate, while 30.3 percent said their operations would be stable in the fourth quarter.

Many have an optimistic outlook for the market, while the flexible direction and efforts of the entire political system, and the close coordination between central and local authorities have helped gradually control the pandemic. Consistent solutions to facilitate production and trading have begun to take effect. According to the Ministry of Industry and Trade, if the pandemic control continues to be as favorable as it is now, industrial production in the fourth quarter will reach a higher growth than in the third quarter, contributing to the 2021 target fulfillment.

The Ministry of Industry and Trade has been trying to create favorable conditions for industries to resume production. Specifically, the ministry is closely eyeing industrial production nationwide, and providing guidelines for provincial and city departments of industry and trade, and industrial zones to prepare production and trade plans in the context of the complicated Covid-19 pandemic.

The ministry will focus on removing difficulties for producers and traders, especially large production enterprises in industrial zones, to help them quickly restore production and trading activities, maintain production and supply chains, speed up production and trade to meet the high demand for goods at the end of the year, accelerate public investment capital disbursement, and ensure that key projects are put into operation ahead of schedule or on time.

VietNam Economic News