Activities in industrial production heat up

There is a strategic focus on varied production capabilities, according to recent surveys on foreign business plans in Vietnam, photo Le Toan

The Ministry of Planning and Investment reported that manufacturers have been making efforts in looking for orders to fulfil their production and business plans for 2023 and to prepare goods for growing demands at the year’s end, so industrial production for November continues its “positive trend”.

In November, Vietnam’s index for industrial production is estimated to climb 3 per cent on-month and 5.8 per cent on-year. In October, the index rose 4.1 per cent on-year.

In the first 11 months of this year, the index ascended 1 per cent on-year – higher than the on-year 10-month ascension of 0.5 per cent on-year. In which the manufacturing and processing sector creating over 80 per cent of industrial growth increased 1.1 per cent on-year.

The GSO reported that the economy’s production and distribution of electricity in the first 11 months rose 3.2 per cent on-year, while the management and treatment of wastewater climbed 4.9 per cent.

State-run Vietnam Electricity (EVN) reported that all of its activities were increasing on-year in the first 10 months of this year.

The group’s total electricity output in October reached 24.3 billion kWh – up 11.3 per cent on-year. Cumulatively in the first 10 months, the figure hit nearly 234.13 billion kWh, up 3.9 per cent on-year.

The ratios of electricity contributors vary, with hydroelectricity (over 66.74 billion kWh – accounting for 28.5 per cent), coal-fired power (107.74 billion, 46 per cent), gas turbines (22.9 billion, 9.8 per cent), oil-fired power (1.23 billion, 0.5 per cent), renewable energy (31.58 billion, 13.5 per cent), and imported electricity (3.56 billion, 1.5 per cent).

So far this year, EVN has commenced construction of 62 works and put into operation over 70 power projects.

The GSO said that in the first 11 months of this year, business confidence has continued to rise. Specifically, the Vietnamese economy witnessed over 146,000 enterprises newly established, with total registered capital of $57.64 billion and employed 974,100 people – up 6 per cent in the number of enterprises, down 7.9 per cent in capital, and 7.2 per cent in labourers, all as compared to those in the same period last year.

“Despite difficulties, production and business activities continued to recover, especially the service sector, which is forecasted to be more active in the coming time,” said Nguyen Thi Huong, general director of the GSO.

Meanwhile, the AHK World Business Outlook Fall 2023 survey was unveiled a fortnight ago, providing valuable insights into the perspectives of German investors worldwide and in Vietnam.

When it comes to investment plans, the survey, conducted from September 25 to October 20, reveals that 42 per cent of German companies in Vietnam prioritise diversifying production and manufacturing, indicating a strategic focus on varied production capabilities. Sales and marketing (41 per cent), services (35 per cent), and logistics (31 per cent) closely follow, underscoring a comprehensive approach to business development. This year, Germany has taken a bold step in further solidifying its presence in Vietnam. A total of 26 foreign-invested projects have been initiated, representing a combined investment of nearly $221.5 million.

“Vietnam’s government has implemented a suite of measures designed to attract foreign investments. These include tax incentives, preferential tariffs, and streamlined bureaucratic processes. Moreover, transparent regulatory frameworks protect investors’ interests and provide a stable foundation for long-term collaboration,” Marko Walde, chief representative of AHK in Vietnam, Myanmar, Cambodia and Laos, told VIR.

“Furthermore, the spectrum of investment opportunities in Vietnam is extensive and diverse. These encompass the establishment of large-scale solar and wind farms, the implementation of energy-efficient technologies in various industries and residential buildings, as well as collaborative efforts in research and development, technology transfer, and capacity building,” Walde said.

Global analysts FocusEconomics told VIR that after slowing this year, Vietnam should be among ASEAN’s fastest-growing economies in 2024 as industrial output and goods exports rebound. Moreover, a further recovery in tourist arrivals will buoy the services sector. An economic deterioration in key partner China and a repeat of the financial turbulence in real estate observed in early 2023 are downside risks.

FocusEconomics panellists see GDP expanding 5.9 per cent in 2024 and 6.6 per cent in 2025; and industrial production expanding 6.7 per cent in 2024 and 9 per cent in 2025.

“The latest data showed some encouraging signs that activities may have turned around as exports expanded in September after six consecutive months of declines while manufacturing output recorded its fourth consecutive month of on-year increases,” said United Overseas Bank’s Suan Teck Kin.

“Despite the uncertain outlook, foreign enterprises continued to commit to the country in the current wave of de-globalisation, de-risking, and supply chains shifts. Despite firmer growth in Q3 of 23, the drag from the first six months of the year remains significant. As such, we are adjusting lower Vietnam’s full-year growth forecast to 5 per cent.”

More investment expected within industrial property Industrial property has been one of the hottest segments for mergers and acquisitions over the last two years. Bich Ngoc spoke with Marco Forster, head of ASEAN Advisory at Dezan Shira & Associates, on his assessment of the sector.

Industrial real estate gaining M&A interest Although not dominating in terms of the number and value of deals, the industrial real estate market is starting to record more interest in mergers and acquisitions from foreign investors.