|Attempts would be made to accelerate automobile projects developed by domestic firms, including Truong Hai Auto Corporation, Thanh Cong Group, and VinFast LLC. (Illustrative photo: VOV)
The first quarter of 2019 saw industrial production jump by 9.2 per cent per annum, largely fueled by the significant contribution of the manufacturing and processing sector.
Nguyen Van Ket, director of the Hanoi-based mechanical engineering firm SKD VINA CO., LTD, said that the mechanical engineering sector has enjoyed optimistic developments since the beginning of the year. This was attributed to the efficient implementation of many support packages aimed at boosting the sector’s growth and business networking.
Meanwhile, the steel sector enjoyed an upward trajectory during the first quarter of the year with crude and rolled steel output increasing by 64.8 per cent and 6.1 per cent on year, respectively. The sector was predicted to see a growth rate of some 10 per cent during 2019, primarily driven by two key projects in the central region.
A steel mill developed by the Taiwan-invested Formosa Ha Tinh Steel Corporation is set to become the first facilitating factor. The Formosa factory, based in Vung Ang Economic Zone in Ha Tinh province, is scheduled to put its two blast furnaces into full operation later this year. Once operational the furnaces will yield a combined capacity of 7.5 million tons per year.
Another driving factor comes from the Dung Quat steel factory in Quang Ngai province. The mill, which has received investment from the domestic industrial manufacturing Hoa Phat Group, is expected to have three blast furnaces come into operation by the end of the year. When at full capacity, the project could yield as much as 2 million tons of steel per year.
Do Thang Hai, Deputy Minister of Industry and Trade, said that first-quarter growth across most industrial sectors is on the right track set by the ministry.
The domestic manufacturing and processing sector obtained a growth rate of 11.1 per cent in the year’s first quarter, failing to reach the projected ratio of 12 per cent. This represents a significant drop in comparison to the rate of 15.7 per cent seen in the corresponding period last year.
The slowdown in growth has been attributed to the fact that the Nghi Son petrochemical refinery suspended its operations during February due to an electrical-related incident. Samsung meanwhile, a key contributor to the country’s manufacturing and processing sector, witnessed changes related to their product’s life cycle. These changes resulted in a slight rise of 1.02 per cent in its output and exports, much lower than that seen in the same period last year.
The deputy minister said the pace of industrial production growth has fallen when compared with the figure recorded in the same period last year. Despite this, it remained rather high in comparison with the growth rate of some Southeast Asian countries. He noted that domestic firms significantly contributed to the growth of the manufacturing and processing sector in the three-month period.
During the remaining quarters of the year, the ministry will review and ease difficulties that local firms and their industrial projects face, particularly those dedicated to manufacturing and processing. This looks to help companies increase their productive capacity and business scale.
Deputy Minister Hai said that extra focus would be put on enabling the Formosa steel project to reach maximum capacity and the Hoa Phat steel project to gain an additional output of 3 million tons, and facilitating the Nghi Son refinery to make up for its lack of capacity during February and retain its total capacity set for the entire year.
Attempts could be made to accelerate automobile projects developed by domestic firms, including Truong Hai Auto Corporation, Thanh Cong Group, and VinFast LLC, a subsidiary of conglomerate Vingroup.
As for the garment and textile sector, Hai revealed that non-stop efforts will be maximized to perfect and release the sector’s development strategy within 2019.
This is hoped to keep the sector in pace with trends in global integration, the free trade agreements (FTAs) which Vietnam is the signatory, and Industry 4.0.
The ministry will outline a scheme aimed at increasing trade promotions for Vietnamese garment and textile products in the United States and other major export markets. It also plans to put forth solutions on utilizing opportunities emerging from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that took effect in Vietnam as of January 14.
Furthermore, the ministry will aid local firms in joining the supply chain, increasing their localization rate, satisfying principles regarding origins of products, and benefiting from tariff incentives from the FTAs, Hai stressed. He added that labeling, branding, and distribution could be improved so that local firms can become more competitive in both domestic and overseas markets.
In the light of the Law on Investment, the ministry is scheduled to make adjustments to the existing special consumption tax levied on automobiles with high localization rates within 2019.
This will happen alongside the ministry’s proposal on adding key mechanical engineering projects, including those in the field of automobile and motorbike manufacturing and assembly to the list of beneficiaries from preferential corporate income taxes.