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Vietnam’s industry: grows fast but not stably

06/08/2010 - 116 Lượt xem

SOEs down, huge progress in non-state sector

2005 witnessed many disadvantageous events for industry production. Gold, crude oil, chemical, and plastics prices continuously skyrocketed, badly affecting all the industries.

Total industrial value in 2005 was estimated at VND416,863bil ($28bil), an increase of 17.2% over 2004. The state owned sector continuously led the national economy, accounting for 34.3% of total industrial value, down 2.7% over 2004.

The foreign invested sector amounted to 37.2% and gained a strong growth rate of 29.9%, while the figure was 24.1% for non-state sector. Despite great challenges, including anti-dumping lawsuits, Vietnam still exported $32.23bil worth in 2005, representing an increase of 21.6% over 2004.

Beyond-expectation growth rates in 2001-2005

During the period, industrial production increased 16% per annum on average, well exceeding the set target of 13%. Industrial production value increased four fold over the last ten years, while GDP saw a two fold increase; however, MOI still sees problems in development quality. Added value in products remains modest, reportedly 30% for apparel and 20% for shoes.

Vietnam-made products proved less competitive in the international market than other countries in the region. This should be seen as a worrying sign especially as Vietnam integrates more deeply into the world. Vietnam was successful in calling for foreign direct investment, however, shortcomings were exposed.

The number of projects invested by international groups remains modest, while average registered capital per project remains low, at about $3mil a project, focusing on fields with short-term capital recovery.

Developing an export-oriented industry

Vietnam will aim at an export-oriented industry during 2006-2010, according to MOI plans. Export will be the final end of industry development and the benchmark for integration capability.

Agricultural, forestry products and seafood processing, apparel, shoes, shipbuilding, electronics assembly, motorbike manufacture, and wooden products will be focal industries.

Export turnover from industrial products is expected to gain an annual growth rate of 16%, or three fold above GDP in industry and construction. In its development plan for the next five years 2006-2010, MOI will focus on three groups of industries: those with high competitiveness, potential industries, and those specialising in production materials.

By 2006, Vietnam will have an average industrial production growth rate of 15.2-15.5%, while industry production will amount to 43-44% of GDP. By 2010, Vietnam will export $62-65bil worth of products, a 13-15% increase.

Tran Thuy

Source: VietnamNet, 09/01/2005