Wednesday, 17 Jan 2018

Vietnam’s economy: Grasping opportunities from the Industrial Revolution 4.0

Updated at Saturday, 14 Oct 2017, 20:26
The Hanoitimes - A newly formed manufacturing would require necessary transformation to catch up with the industrial revolution 4.0 to take the advantage of reducing tax, attracting investment and expanding market with 16 Free trade agreement (FTA).
In this environment, fierce comepetition will be a real test for enterprises to develop or even survive. This is evaluations of exprts with the aim to facilitate and create new business ideas for Vietnam’s manufacturers , as well as to bring new direction for Vietnam’s market. Vice Director of Reed Tradex (Thailand) – Mr. Suttisak Wilanan said, recently signed FTA will improve competitiveness of enterprises in the marke,t but also expand the international connectivity. Currently, enterprises with low financial capabilities or lack of technologies are disappearing in the market. This is a warning to the business community, especially for small and medium enterprises (SME), which are facing challenges in accessing capital to invest in production and technologies. More than ever, there is an imbalance in the supply – demand when there are only a few number of manufacturing enterprises, while the number of investors are increasing, along with higher demands for products quality. 

Meanwhile, in the recent report of the Ministry of Industry & Trade, there are positive news in the processing and manufacturing industries – the core sector in the effort toward industrial revolution 4.0 According to the evaluation of the Ministry of Industry & Trade, the processing and manufacturing industries in the first 9 months continue maintaining high growth, which is higher than the growth rate of previous year, and is the driving force for the growth of the whole industry. Statistics show the consumption rate of the processing industry in the first 8 months has increased 9.8% (higher than the increase rate of 8.3% for the same period of 2016). While this number for the first 9 months has also increased, all sectors in the processing and manufacturing industries have increased in range 5.5% - 30%.

According to the evalution of the Ministry of Industry & Trade, many processing industry have grown in two digit number, for example: textile & garment, fashion, leather related products, pharmacy, chemistry, rubber related products and plastics, metal prodcution, electronics, computer, furniture. 

With regard to export activities, according to statistics from the Ministry of Industry & Trade, after 8 months, total value of Vietnam’s export is 133.5 billion USD, which is an increase of 15%. In the context of the current difficult global economy, the growth rate of Vietnam’s export is a positive result. As such, this has come from the effectiveness of Vietnam’s participation in free trade agreements. This has influenced enterprises paying more attention in production, which results in an increase in export. Besides, price for goods in the global market is increasing, including the input price, as well as the processed goods. As such, with the increase amount of export has lead to proportional increase of value. 

Moreover, it worth mentioning the effort from the government in administrative reforms and removing difficulties for enterprises, which are in forms of discarding barriers and simplifying administrative procedures. Though the current situation is showing that it is a long term effort, but with the preliminary result, Vietnam has partially success and received positive responses from the business community. Besides, Vietnamese goods and products such as textile & garment, shoes, smart phones, computers are increasing as a result of increasing demands for these products in the global market. 

In order for export to grow sustainably, at present, Vietnam export focuses on growing in quantity, which has a certain limit to grow. However, this cannot be a long term solution, as grow in quantity will not lead to sustainable development. In long term, Vietnam need to focus on stabilizing production and increasing added value.  Besides, export activities should go in the direction of increasing in quality and the objective of socio-economic development in poor areas, as well as raising the living standard of citizens.
Nguyen Tung
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