Stimulating consumption, expanding markets for industrial products

Production activities at Hyundai Thanh Cong Vietnam's factory. Photo: Hong Nu

Many key industrial products show significant growth

Continuing the recovery momentum from the end of 2023 to the present, industrial production continues to show positive trends. Output has surged due to new orders improving for the fourth consecutive month.

According to S&P Global (a multinational corporation engaged in providing financial information and data), the production output growth rate in July was faster than in June, reaching the highest level since March 2011. Thus, industrial production maintained a positive growth momentum, with the industrial production index in July estimated to have increased by 0.7% compared to the previous month and by 11.2% compared to the same period last year.

Among them, compared to the same period last year, the manufacturing and processing industry increased by 13.3%; the production and distribution of electricity increased by 9.9%; water supply, waste management, and wastewater treatment increased by 12.1%; while the mining industry decreased by 7%. Notably, July's production in Ho Chi Minh City, the economic locomotive, showed recovery in all three indices: IIP increased by 9.6%, consumption in manufacturing and processing increased by 13.4%, and inventory decreased by 17.8%.

According to the Ministry of Industry and Trade, some key industrial products in the first seven months of 2024 increased significantly compared to the same period last year. Notably, steel bars and angles increased by 31.4%; rolled steel increased by 17.8%; fabric woven from natural fibers increased by 17.0%; NPK compound fertilizer increased by 14.2%; powdered milk increased by 12.3%; granulated sugar increased by 12.0%; and phone components increased by 11.7%.

Despite the growth momentum, the Ministry of Industry and Trade assessed that industrial production growth was not comprehensive, with six localities having reduced IIP; some manufacturing industries had decreased industrial production indices; and some key industrial products decreased compared to the same period last year. Notably, the steel and construction materials industries faced difficulties due to the continued downturn in the domestic real estate market and reduced global demand, leading to supply exceeding demand, with both domestic and export orders declining.

Industrial manufacturing enterprises continue to face many difficulties due to challenges in accessing capital despite reduced interest rates, increased costs of imported raw materials along with the high exchange rate of the USD, and increased logistics costs, reducing the price competitiveness of export products. The domestic production sector is heavily dependent on imported raw materials.

The level of linkages and business cooperation between enterprises in the same industry and between industries is still limit ed. Linkages between FDI enterprises and domestic enterprises are still slow, not yet promoting the development of management skills, technology transfer, formation of supply chains for materials, and industry clusters. The strong participation of domestic enterprises in global production and supply chains has not yet improved markedly.

Enhancing product competitiveness

At the trade promotion briefing conference with the overseas Trade Office system at the end of July, Mr. Pham Tuan Anh, Deputy Director of the Department of Industry (Ministry of Industry and Trade), suggested that there should be many measures to support production and stimulate consumption, and clear inventory.

Accordingly, support and facilitation from the Government, ministries, sectors, the banking system, and localities are needed to continue more positive measures to support industrial production, especially in output through measures to stimulate domestic consumption, strengthen trade promotion to expand export orders, and clear inventory.

Localities need to urgently have financial support policies and solutions for industrial enterprises, especially manufacturing and processing enterprises, to ensure stable production and business conditions. Building and effectively implementing industrial and industrial support development programs in the area, focusing on enhancing the capacity of small and medium enterprises.

Manufacturing and business units need to closely follow the market to expand activities to find new customers; strengthen the connection of production-consumption chains; balance inventory and consumption to ensure cash flow as well as product quality, and arrange flexible production to maintain optimal production activities.

"Importantly, industry associations need to strengthen business connection activities, promoting the consumption of each other's products," said the leadership of the Department of Industry, suggesting that enterprises need to restructure, reduce costs and production costs to enhance product competitiveness, thereby improving efficiency and flexibly adapting to new situations.

Especially, enterprises and industry associations need to make the most of opportunities from new-generation free trade agreements to seek new orders and customers. Be more active in coordinating with industry enterprises, associations, and state agencies to find and expand new export markets alongside traditional markets, reducing inventory pressure.

The Department of Industry will focus on key solutions to effectively implement government-approved support policies to remove difficulties and obstacles in business operations, especially in major export sectors such as textiles, footwear, and foundational industries like automobiles, mechanics, and steel. Promoting the operation of new industrial production projects to serve exports and domestic consumption, increasing production capacity and export goods sources.