Industrial production index in the first quarter of 2023 decreases by 2.2% compared to the same period last year. (Photo: VietnamPlus)
Hanoi (VNA) - The decline of the processing and manufacturing industry in the first quarter of 2023, leading to a decline in economic growth, signals an urgently need to have effective policies and solutions to support the economy.
A report by the Ministry of Industry and Trade showed that the added value of the industrial sector in the first quarter of 2023 decreased by 0.82% compared to the same period last year. This is the largest decrease of the same period in the past 12 years.
Notably, the processing and manufacturing industry, accounting for more than 85% of export turnover, is no longer the driving force for economic growth in the first quarter of the year. Therefore, to achieve the growth target for the year, it is necessary to clearly recognize the difficulties and challenges to have the appropriate solutions to help the sector maintain the supporting role of the economy.
Still heavily dependent on FDI
Experts said foreign direct investment (FDI) projects in the processing and manufacturing of consumer goods such as electronic products and components, computers, textiles, footwear, quickly create jobs and growth for many localities. However, when the FDI sector encountered "troubles" due to a change in investment plans or because of the impact of foreign markets, many businesses in these localities have their export orders cut off.
Le Thuy Trung, Deputy Director of the Department of Industrial Economy and Services, Ministry of Planning and Investment, said there should be regulations that request FDI enterprises in Vietnam to transfer technology and increase the localization rate.
Vietnam has been importing billions of USD per year for mechanical equipment in the transportation, electricity, agriculture, medical sectors. Meanwhile, Vietnamese mechanical enterprises can completely manufacture these machines and equipment domestically. Vice Chairman of the Vietnam Association of Mechanical Enterprises Nguyen Chi Sang stressed the need to have a strategy on localization of equipment, and this should be regulated in the law.
Enhancing deep processing to create great value
Nguyen Ngoc Thanh, Deputy Director of the Department of Industry under the Ministry of Industry and Trade affirmed that the decline in the processing and manufacturing industry in the first quarter of 2023, and subsequent decline of economic growth, signals the need to have timely and effective policies. These will help to find markets for industrial products, thereby increasing domestic production capacity and improving growth.
The question is what will be the suitable sub-sectors and groups of industries for investment and development in the context of the world's current fluctuations with rapid and unpredictable impacts.
Economist Vo Tri Thanh stated that in a world full of uncertainties, difficult times are certain. The intensity may be higher, and the economy is very unpredictable, plus the financial, monetary, natural disasters, climate change, epidemics can occur. Thus businesses must prepare scenarios and risk assessment and risk management, to be able to overcome the challenges.
Workers of An Phat Company working on export orders. (Photo: VietnamPlus)
Experts also suggest promoting the advantages of agriculture to develop export processing industries. They also stressed the importance of the mechanical industry as the foundation for providing construction equipment. Vietnam is promoting the construction of transport infrastructure, electricity, modernization of agriculture and rural areas to reduce dependence as well as to be proactive against external difficulties./.
