Industrial sector bigger but still uncompetitive

Vietnam has continuously enjoyed a growth in its industrial export of between 15-20% over the past decade but its products accounted for only 0.74% of the global market.

According to the Ministry of Planning and Investment, Vietnam ’s turnover from industrial exports inhe first eight months of this year reached nearly 23 billion USD, an annual rise of 16%. However, the increase is due to high prices rather than greater volume of exports as several staples such as crude oil and coal have seen a drop in exports.

In addition to the slow recovery of the world market after the economic crisis, poor competitiveness from out-dated production technologies is a major factor behind the poor sale of Vietnam ’s industrial goods.

Out of the country’s exports, industrial goods account for almost 60%, mainly products from labour-intensive sectors that depend mostly on imported materials. The export turnover of hi-tech products is estimated to make up only 10% of the country’s total industrial export turnover.

Former Trade Minister Truong Dinh Tuyen said Vietnam ’s industrial sector mainly depends on processing and assembling while supporting industries are yet to develop.

He expressed concerns that foreign assembly plants may withdraw from the Vietnamese market as they can’t find local suppliers of spare parts and rising labour costs are putting them under pressure .

To increase the competitiveness of Vietnamese industrial goods’, the Ministry of Industry and Trade has recently submitted a plan to the Government to develop supporting industries.

Under the plan, supporting industries for five key industries, including garments, footwear, electronics, auto parts and mechanical engineering will enjoy preferential policies in terms of investments, developing the market as well as science and technology and infrastructures.

Projects in these fields will be exempt from corporate income tax for four years since they have taxable incomes and enjoy a 50-percent tax reduction in the following nine years. – Vietnam+

Tags: Vietnam industries, Vietnam industry