Production serving as a crucial driver for growth

According to the General Statistics Office’s (GSO) official report on Vietnam’s industrial performance for 2024 released last week, Vietnam’s industrial production has kept increasing on the back of growing demand at home and abroad.

The on-year index for industrial production (IIP) for the year is estimated to have climbed 8.4 per cent, the highest increase over the past four years, with 3.3 per cent in 2020, 4.7 per cent in 2021, 7.4 per cent in 2022, and 1.3 per cent in 2023.

Compared to the previous year, the 2024 IIP rose 9.6 per cent for the manufacturing and processing industry – a rise from an on-year 1.5 per cent expansion in 2023 and creating 8.4 percentage point in IIP increase; 9.5 per cent for the electricity production and distribution industry, and 10.7 per cent for waste and wastewater management and treatment.

“Industrial production has been recovering both qualitatively and quantitatively, especially in the context the global economic situation remaining in difficulty. It has continued acting as a key driver of economic growth,” said Deputy Minister of Industry and Trade Phan Thi Thang.

The economy grew 7.09 per cent in 2024 as compared to the previous year. The growth rate was nearly 3 per cent for the agro-forestry-fishery sector, generating 4.86 per cent growth for the economic growth; 8.35 per cent for the industrial and construction sector, creating 44.03 per cent; and 8.21 per cent for the service sector, responsible for 51.11 per cent.

The Ministry of Industry and Trade (MoIT) last week said that the key industries of the economy have continued to develop strongly, such as oil and gas exploitation and processing; mineral exploitation and processing, electricity, electronics, telecommunications, and IT; metallurgy, iron, and steel; cement and construction materials; garments, textiles, and footwear; mechanical processing and manufacturing, automobiles, and motorbikes. “This has created an important foundation for long-term growth, as well as promoting the country’s industrialisation and modernisation,” the MoIT said.

Under an MoIT survey, some export industries including garments and textiles, footwear, and electronics have basically successfully integrated into the global value chain, with high competitiveness and a solid position in the international market.

“Many industrial products such as footwear, textiles and garments, and electronics have high export rankings compared to the rest of the world,” the MoIT said. “Some fundamental industries such as steel, chemicals, and mechanical manufacturing have gradually met the demand for materials and production capacity of the economy.”

Samsung is the biggest foreign investor in Vietnam, with total cumulative investment totalling $22.4 billion, with six manufacturing plants, one research and development centre, and a sales entity established throughout the country. This extensive footprint has contributed significantly to Vietnam’s exports.

Last month, Samsung Vietnam president Choi Joo Ho told Vietnamese National Assembly Chairman Tran Thanh Man that in 2023 it achieved an impressive export turnover of nearly $58 billion, or 16 per cent of Vietnam’s total export turnover. In the first 11 months of 2024, the group’s export turnover hit about $50.8 billion, the same as in the corresponding period of 2023.

Last September, Samsung Display Company inked an MoU with the northern province of Bac Ninh for investing an additional $1.8 billion in a new manufacturing plant in Yen Phong industrial park. The new facility will focus on producing advanced organic light-emitting diode displays for automobiles and technology equipment. This investment will elevate Samsung’s total capital in Bac Ninh to $8.3 billion, up from the current $6.5 billion.

Under the GSO’s Q4/2024 survey on more than 6,300 manufacturing and processing enterprises released last week, up to nearly 80 per cent of respondents assessed that their production and business situation has “become better and kept more stable than in Q3”, and only 20.2 per cent reported their performance has got more difficult.

In Q3 of last year, 77.3 per cent of enterprises in the manufacturing and processing industry assessed that their performance was better than in Q2/2024.

Last week, the National Assembly Standing Committee provided comment for the draft amendments to the Law on Employment, which will be considered and commented by the 15th National Assembly’s ninth session, scheduled to take place in May and June. The new law will help create high-quality labourers for the economy, with more support – for example regarding insurance, employment opportunities, access to loans, working time, and connectivity between educational and training establishments with enterprises to increase labour productivity.

The World Bank has warned that if Vietnam wants to grow sustainably, it must quickly improve its productivity growth, which remains relatively weak. “Productivity growth will be key to sustaining Vietnam’s economic miracle. Vietnam’s labour productivity grew by about two-thirds since 2010, faster than all its regional peers, largely driven by improvements in the business environment, increases in the quality of human capital, and large inflows of foreign direct investment,” the bank said. “However, despite recent growth, labour productivity levels are well below their peers.”

Key balances maintained for industrial production Domestic industrial production in Vietnam continues on a recovery trajectory, bolstered by a rise in electricity consumption and growing business confidence.

Confidence consolidated with industrial production recovery The year’s positive progress for industrial production has aided the country’s goals for this sector, with a rise in trade and enterprises demonstrating increased confidence.