Industrial oil is driving the economic engine

According to the Ministry of Planning and Investment’s (MPI) Department of Industrial Economy’s latest report on Vietnam’s economy, its industrial value during 2010’s first quarter had visibly recovered.

The country’s industrial value in the first quarter was VND173.49 trillion ($9.13 billion), up 13.6 per cent against the corresponding period last year.

While the industrial value reduced by 1.3 per cent in February against the same period last year due to Vietnam’s Tet traditional festival, it rebounded in March with a 17.8 per cent increase against February and a 14 per cent jump against 2009’s corresponding period.

For example, the processing industry increased by 14.1 per cent and the electricity, gas and water industries grew 19.3 per cent.

“The growth of the electricity and water industries is due to increased demand in production and consumption during Tet,” said Le Dinh An, director of the National Centre for Socio-Economic Information and Forecast.

During the first quarter, Vietnam spent $17.6 billion on imports of materials such as cotton, cloth, fibre, steel ingots, computers, automobiles and motorbike spare-parts, up 38.4 per cent against 2009’s corresponding period.

Imports of assorted cloth hit $995 million (up 13.3 per cent), garments and leather materials $483 million (up 21.7 per cent), computers and electronic spare-parts was valued $1 billion (53 per cent).

The Department of Industrial Economy said increased imports reflected the local production recovery and growth. Fueled with a 24 per cent increase in the country’s total turnover earned from retail activities and services in the first quarter, the country’s industrial growth would continue in the second quarter, with an expected 6.56 per cent rise.

However, local experts also looked at an upward trend in prices of inputs, which could affect the country’s industrial growth in particular and economic growth in general.

An said the average 6.8 per cent electricity price hike from March 1, 2010 had badly impacted on production businesses, particularly those engaged in manufacturing cement, steel, garments, footwear and electricity cables.

Moreover, he said under the World Trade Organization commitments, some products would not be able to continue benefiting from preferential import tariffs. An said local enterprises needed to take measures to stabilise production, expand their distribution networks and revise their product prices, to keep themselves afloat.

Vietnam Investment Review

Tags: Vietnam Industrial Production, Vietnam industry