Economic recovery rests on cutting costs in manufacturing sector hinh anh 1The average CPI in the first six months of 2022 increased by 2.44 percent over the same period last year, leading to a 1.25 percent rise in core inflation. (Photo: VNA)

In the first six months of this year, the world situation has witnessed many fluctuations such as the price hike of petrol and input materials, which significantly affected business production and the economy as a whole.

Difficulties surrounding businesses

According to a report of the General Statistics Office, domestic gasoline prices continuously increased in tandem with global fuel prices. Accordingly, prices of essential consumer goods and services also escalated. As a result, the average consumer price index (CPI) in the first six months of 2022 rose by 2.44 percent compared to the same period last year, leading to a 1.25 percent increase in core inflation.

The price index of raw materials used for production as well as exports and imports in the second quarter and the first half of 2022 all recorded year-on-year rise, which posed numerous obstacles for enterprises.

Vu Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors (VACC), said the construction industry is facing an inordinate number of setbacks due to the increasing costs of iron, steel, cement, sand, gasoline, oil and transportation. As a result, industry profits plummeted.

Although the construction industry recorded very high growth in the first six months of this year, it mainly focused on large enterprises to serve FDI projects. Meanwhile, most of small and medium-sized enterprises seriously suffered from COVID-19.

Nguyen Duy Minh, General Secretary of the Vietnam Logistics Association (VLA), said all domestically produced goods were affected by the price hike of petrol and transportation services. Currently, logistics costs have put a burden on the shoulders of exporters, and this obstacle may be more amplified this year.

Similarly, the tourism industry recorded a positive recovery in the past six months, but travel firms have undertaken huge efforts to reduce service costs to attract visitors, while transportation costs increased sharply, affecting tour prices, according to Vu The Binh, Chairman of the Vietnam Tourism Association.

"In the current context, to sell tours, businesses have to balance a lot of things,” Binh said.

Synchronous support solutions needed

Deputy Minister of Planning and Investment Tran Quoc Phuong said it is necessary to put forth specific support solutions in the short term, which can be carried out immediately, along with mid-and-long-term measures to improve linkage between foreign direct investment (FDI) sector and domestic enterprises.

“This will help increase the competitiveness and autonomy of the economy,” he said.

The important thing is to ensure feasibility, timeliness, efficiency and concentration to facilitate business production and avoid the wasteful use of resources, he added.

Economic recovery rests on cutting costs in manufacturing sector hinh anh 2Short-term policy objectives focus on supporting businesses to resume production. (Photo: VNA)

In that spirit, the Ministry of Finance had a meeting with the Vietnam Petroleum Association and key petroleum traders to discuss issues related to business activities.

In order to diversify petroleum supply, apart from importing from the Republic of Korea and other Southeast Asian countries, the Ministry of Industry and Trade and the Ministry of Finance has been collecting opinions from other ministries and localities about a decree on the preferential export and import tariff. The decree will be submitted to the government in August.

Earlier, the Ministry of Finance had proposed a plan to reduce excise tax on gasoline and reduce value-added tax on gasoline to contribute to reducing the price of petroleum products, supporting business production recovery, and developing the economy as a whole./.