Vietnam industrial production seen to slow down in Q2

Increasing fuel and materials prices, and high interest rates will slow down Vietnam’s industrial production during the second quarter of this year, Vietnam Investment Review quoted a senior official as saying.

“Difficulties have already been felt by local industries since last month and things will become harder during the next several months,” minister of Industry and Trade Vu Huy Hoang said, forecasting that global commodities prices would climb as a result of rising oil prices, which would have serious impacts on the local manufacturing and production sectors.

The Ministry of Industry and Trade (MoIT) statistics show that some key industries reported lower production output and domestic sales in April against March, particularly steel, air-conditioners, urea fertiliser, garments, vegetable oil and chemical products.

Steel makers produced 478,000 tonnes in April, down 1.2 percent from March. VnSteel, Vietnam’s biggest steel manufacturer, said the industry was hit hard by public investment cuts under the government’s Resolution 11 dated February 24 to control inflation and stabilise the macro- economy.

“High interest rates have also seriously affected steel production during the last month,” said VnSteel’s deputy general director Le Phu Hung.

State-run Vinatex, the country’s biggest garment and textile producer and exporter, saw a 7.4 percent monthly fall in out- put to 7.5 million units in April. general director Tran Quang Nghi said the slower production was due to expensive imported raw materials and increased electricity prices, and particularly high export costs.

The cost for a container of exported products in April almost tripled from one year earlier, which Nghi said “has created a very great pressure on export-led manufacturing enterprises in Vietnam, including those in the garment and textile industry”.

The MoIT said electricity prices would possibly be raised further in June as a result of higher global oil prices.

“Local production activities will face a much harder period in the next few months due to high oil and input material prices,” Hoang said.

Vietnam’s industrial production value rose 14.2 percent on year to 270.5 trillion dong ($12.94 billion) in Jan-April, the general Statistical Office (GSO) said. – VIR

Posted by VBN on May 12 2011. Filed under Industry, Industry. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry