Vietnam in fine fettle for new growth

Garments and textiles are among the industries that reported double-digit import turnover in H1 of this year, Photo: Le Toan

The General Department of Vietnam Customs last week reported that to July 15, the economy’s total import value this year has hit nearly $195.4 billion, up 17.6 per cent on-year. This has helped exports gained a revenue of $207.3 billion, up 15.2 per cent on-year. Total trade surplus sat at $11.87 billion.

The Ministry of Industry and Trade (MoIT) highlighted that such a big rise in imports are reflecting a recovery of domestic industrial production. This will also help facilitate exports.

“Importation of input materials has been boosted in the recent months, and this demonstrates a fact that exports in the months to come will continue to be increased strongly,” stated Minister of Industry and Trade Phan Thi Thang.

“Cyclically, demands for goods are augmenting both at home and abroad in the remaining months of the year. Vietnam is benefiting from a surge in shifting orders from the US and it also has many advantages in boosting exports to China,” Thang added.

According to the MoIT, since early this year, the structure of imports “is showing very positive signals” as nearly 90 per cent of the total import turnover is for goods and materials necessitated for domestic production such as machinery, equipment, tools, and materials. Their total value reached $158.2 billion in the first six months of the year, up by more than 18 per cent as compared to the corresponding period last year.

“This showed very positive signals for recovery of production and exports as demands for importing machinery, equipment, tools, and materials have increased to a high level,” the MoIT said.

For example, the import turnover of computers, electronics, and spare parts thereof is estimated to reach nearly $49 billion, up close to 27 per cent on-year and accounting for 27.4 per cent of the country’s total six-month imports of $178.5 billion. The key producers of these products include Samsung, LG, Intel, and Cannon, among others.

In addition, the six-month import turnover of many other key items also recorded a double-digit increase, such as assorted mobile phones and spare parts thereof (22 per cent), assorted steel (24 per cent), electrical wires and electrical cable (30 per cent), material plastic (15 per cent), materials for footwear, garments, and textiles (17.5 per cent), and assorted apparel (11 per cent).

In Vietnam, the remaining average 10-15 per cent of materials in general are locally produced because the country’s supporting industries remained weak.

The General Statistics Office (GSO) reported that as compared to the same period last year, the added value of the whole industrial sector in the first six months of this year rose 7.54 per cent on-year, only lower than the on-year ascension of 8.32 per cent in the corresponding period of 2022 in the 2020-2024 period, generating 2.44 per cent in the added value increase in the economy.

Under the GSO’s Q2 survey on enterprises’ manufacturing and processing released in July, when it comes to production volume, about 39 per cent of the respondents said their production volume in Q2 was higher than in Q1; some 44.5 of the surveyed companies said their Q2 volume was kept stable. Only nearly 21 per cent said the volume decreased. Meanwhile, in Q3 as compared to Q2, 40 per cent of the respondents said that they expect a rise in production volume, and 45.8 per cent expect stable production, and merely 16.2 per cent of the survey enterprises said they predict a reduction.

The global economy and trade are recovering and expected to grow better in 2025. According to the World Trade Organization, the world’s commodity trading volume is projected to increase 2.6 per cent in 2024 and 3.3 per cent in 2025.

“This has consolidated confidence that Vietnam’s exports will continue witnessing positive growth in the latter half of 2024,” the MoIT said. “Many enterprises have already secured orders until the end of Q3.”

The government has set a goal that in 2024, the total export turnover will be $376 billion – up 6 per cent from the recorded figure in 2023 of $354.7 billion, and total import turnover will be $352.5 billion – up 8 per cent from $326.4 last year. Total trade surplus will be $23.5 billion.

According to the MoIT, with positive export performance since early this year, the whole-year export target will possibly be reached due to rising demands in the remaining months of the year. However, more efforts must be made.

“The MoIT is required to make frequent updates about the new developments and new regulations, standards, and conditions of foreign markets, and to advance recommendations for localities, associations, and enterprises so that they can adjust their production and business plans, and also can look for new orders from suitable markets,” stated the prime minister in a dispatch sent to ministries and localities on key related tasks for Q3.

The Ministry of Finance, meanwhile, has been ordered by the PM to effectively implement policies on extending the time for paying taxes and land rental, and on keeping VAT reduced as well as lowering fees and charges that have been already promulgated.

In the second half of this year, the government will continue carrying out the policy of exempting and reducing lending rates from bank loans. It will also postpone and restructure debts, and exempt, reduce, and extend the payment of assorted taxes, fees, charges, and land rental for businesses and individuals so that they can soon escape from difficulties.

The government will apply this fiscal policy in the latter half of 2024, with the total value of about $4.08 billion, including VAT remaining at 8 per cent.

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