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Growth momentum from industrial production

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Continuing the growth momentum since the end of 2023, industrial production in the third quarter of 2024 grew more positively than the previous quarter with an estimated added value of 9.59% over the same period in 2023, which is the highest level in the period from 2012 to the present (only after the 9.93% increase in the third quarter of 2017).

In the first 9 months, the added value of the entire industrial sector is estimated to increase by 8.34% over the same period in 2023, contributing 2.71 percentage points to the growth rate of the total added value of the entire economy, effectively promoting its role as a growth driver.

According to experts, the positive results of industrial production partly come from the export market on the rise, manufacturers receiving many new orders for the last months of the year. The processing and manufacturing industry has recovered strongly thanks to increased international demand after the global supply chain improved, helping the industry regain its important role as a driving force for economic growth in the first 9 months of 2024.

Broad-based growth

After storm No.3 (storm Yagi) made landfall, many industries such as mining or electricity production and distribution suffered heavy damage, but the production activities of processing and manufacturing enterprises were not much affected thanks to the strong direction of local authorities in ensuring quick resolution of power outages and early restoration of power supply to enterprises. In addition, businesses have also proactively taken measures to prevent storms, overcome post-storm damage, and reorganise production, work overtime to compensate for damaged finished products caused by storms, overcome production downtime, and ensure delivery progress according to signed contracts.

Many other positive factors have also created momentum for the growth of the processing and manufacturing industry, such as garment and footwear enterprises taking advantage of foreign markets and electrical and electronic enterprises increasing production volume due to many export orders. All of these factors have helped the processing and manufacturing industry continue to have strong growth, clearly demonstrating its role as the main driving force for growth in the third quarter, offsetting the decline in the agriculture, forestry and fishery sectors.

According to the Ministry of Industry and Trade, the consumption index of the entire processing and manufacturing industry in the first 9 months increased by 12.5% compared to the same period in 2023 (the same period in 2023 increased by only 0.6%). Meanwhile, the inventory index of the entire processing and manufacturing industry as of September 30 is estimated to have increased by 5.2% compared to the same period last month and only increased by 8.5% compared to the same period last year (the same period last year increased by 19.4%).

At the same time, the average inventory ratio of the entire processing and manufacturing industry in the first 9 months of 2024 was 76.8% (the average level in the first 9 months of 2023 was 85.3%), demonstrating a positive recovery in production and consumption of products. Industrial production also increased across the board as the industrial production index (IIP) in the first 9 months increased in 60/63 localities. Some localities have IIP increases quite high at double digits thanks to the processing and manufacturing industry or the electricity production and distribution industry (IIP of Lai Chau increased by 43.3%; Tra Vinh increased by 41.9%; Phu Tho increased by 38.7%; Khanh Hoa increased by 36.4%; Bac Giang increased by 27.7%; Son La increased by 27.3%; Thanh Hoa increased by 20.4%; and so on).

Removing difficulties, stabilising and developing production

Entering the fourth quarter of 2024, the General Statistics Office assessed that Vietnam’s economy continues to face many difficulties and challenges, and is affected by risks and instabilities in the world regarding economics, politics, natural disasters, epidemics, etc. Phi Huong Nga, Director of the Department of Industrial and Construction Statistics (General Statistics Office), said that in order for the processing and manufacturing industry to continue to play an important role and be the growth engine of the economy, all levels and sectors need to synchronously implement solutions to support industrial production, remove difficulties, and stabilise and develop production.

Accordingly, due to the fact that crude oil and gas prices in the world remain high, logistics costs are increasing, and input materials are being affected, businesses are in great need of support to remove difficulties. All levels and sectors of the government need to promote the timely and effective disbursement of business support packages, create favourable and quick conditions for businesses to borrow preferential loans; simplify administrative procedures; quickly disburse public investment; create conditions to promote production activities; and solve issues relating to jobs and income of workers.

Functional units need to strengthen the prevention of smuggled goods, fight against transfer pricing, and label fraud; at the same time, promote and promote domestic consumption policies, stimulate domestic consumption according to the “Vietnamese people consume Vietnamese goods” movement.

The Ministry of Industry and Trade said that it will continue to focus on removing difficulties and obstacles and supporting businesses to restore production and business, especially those affected by storm No. 3, while putting large industrial projects with important roles into operation to increase production capacity. The Ministry will actively advise on summarising mechanisms and policies on international economic integration, especially the implementation of policies to attract FDI in the industrial sector.

From there, propose appropriate solutions to encourage and bind FDI enterprises to spread, share, and substantially support domestic enterprises to promote technology transfer, develop management skills, form supply chains of materials, raw materials and industry clusters, and improve the competitiveness of Vietnamese enterprises to gradually participate in the global production and supply chain.

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Promoting circular economy in industrial parks

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The benefits of green transformation in industrial parks are both huge and lasting, according to leaders of the Ministry of Planning and Investment. However, in the short term, many challenges and obstacles have meant the transition process has not been as strong as expected.

The Ministry of Planning and Investment and the United Nations Industrial Development Organization (UNIDO) held a conference entitled “Advancing circular economy in Vietnam’s industrial parks for sustainable development” on the afternoon of April 12.

In his opening speech, Le Thanh Quan, Director General of the Department of Economic Zones Management under the Ministry of Planning (MPI), said that in the more than 30 years of establishment and development, industrial and economic zones have been recognised as playing an important role in fostering socio-economic development, accelerating the process of industrialisation and modernisation, and promoting international integration.

Circular economic development is a trend that many countries around the world consider to be the green industrial revolution of the 21st century and is consistent with the country’s development orientation in the coming period. In particular, the eco-industrial park model is seen as the driving force to boost the circular economy.

According to Quan, the benefits of this transformation are great and long-lasting, but in the short term, many obstacles are preventing the transformation process from taking place as strongly as expected.

Smail Alhilali, Industrial Development Officer at the Department of Environment, UNIDO, said: “Promoting circular economy in industrial zones can help Vietnam to not only reduce environmental impacts but also create opportunities for innovation and green growth.”

Vietnam has a lot of potential. With existing support and available directions, Vietnam should learn from previous countries and successfully implement digital and energy transformation. The country should not only focusing on cleaner production and reduced emissions but also address the consumption issues.

The conference included discussion sessions on the important role of industrial parks in implementing circular economy principles, the opportunities and challenges of integrating circular economy activities between different industries in industrial parks, and others.

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Foreign offshore wind power investors can sell projects, Vietnam SOEs prioritized to buy

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Foreign investors of offshore wind power projects in Vietnam can sell their projects, and wholly state-owned enterprises (SOEs) or subsidiaries of those SOEs are prioritized to buy them.

The transaction is only permitted if the Vietnamese investors in the company refuse to purchase, according to the government’s Decree 58/2025 on renewable and new energy, effective from March 3, 2025.

Transactions of a part of an offshore wind project or an entire project must comply with the Electricity Law 2024 and other laws related to investment, enterprises, and sea.

They must be approved by the Ministry of National Defense, the Ministry of Public Security, the Ministry of Foreign Affairs, and the Ministry of Industry and Trade if there is involvement of foreign investors.

A sea-based wind power project in Tra Vinh province, Mekong Delta, southern Vietnam. Photo courtesy of Trungnam Group.

A sea-based wind power project in Tra Vinh province, Mekong Delta, southern Vietnam. Photo courtesy of Trungnam Group.

In cases of not-yet operational projects, the foreign buyers must meet the following requirements.

First, they must have experience in investing and developing at least one offshore wind power project that is operational in Vietnam or in the world. “Experience” includes direct investment, contributing a minimum 15% of the project’s total investment capital, and the ratio of equity to capital contribution being at least 20%.

Second, the foreign buyers must ensure that the offshore wind power project has the participation of domestic enterprises with at least 5% of chartered capital or voting shares of the company that implements such projects. The “domestic enterprises” must be wholly state-owned enterprises (SOEs) or firms with SOEs holding more than a 50% stake.

Third, they must commit to utilizing domestic supplies (workforce, service, products) during their investment, construction and operation, on the basis of ensuring competitiveness of prices, quality, schedule, and available capability.

For operational projects, the transations must meet the “second” requirement mentioned above.

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Law on national defence, security industry, industrial mobilisation passed

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The 15th National Assembly (NA) on June 27 passed the law on national defence-security industry and industrial mobilisation in its ongoing seventh plenary session.

Specifically, all the 464 deputies present in the sitting, or 95.47% of the total number of deputies, said “yes” to the law.

The law comprises seven chapters and 86 articles.

Article 80 in the draft law proposed earlier about the responsibilities of People’s Court was removed, while Article 28 was added on the development of technologies with dual purposes and Article 71 on training, research, and expert exchanges to serve defence-security industry.

The law will take effects from July 1, 2025.

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