Industrial production – a broad gauge of output across Vietnam factories, mines and power plants – has fallen for all of the past seven months, according to the General Statistics Office.
From a year earlier, the rate of growth in industrial production has contracted by 2.8%.
“Weakness in industrial production evidence the economy has steadily cooled off since the start of the year,” said Dr Le Dang Doanh, former president of the Central Institute for Economic Management under the Ministry of Planning and Investment.
“The latest industrial production rate of decline was steeper than economists had pencilled in and the drop raises legitimate concerns about the ability of Vietnam to generate sustained stronger growth and achieve its national long-term economic targets.”
The figures point to the underlying fact there is not enough production in the domestic sector of manufacturing, said Dr Doanh. As a result, domestic manufacturers aren’t progressing as planned and are far off the mark.
Or to say it in another way, it shows that the domestic support industry in manufacturing is not taking root and attaining the high level of production quality that government economists had been basing their forecasts on.
“It is also that the slump in oil prices has continued to weigh on the output data” in the first months of the year,” he said. We can only remain hopeful that the oil industry will turn around and that activity will pick up shortly.
Dr Vo Tri Thanh, deputy director of the Central Institute for Economic Management, agrees, saying that domestic manufacturers need to step up and face the new era of challenges and opportunity and develop their production capabilities.
"The slowdown in growth of manufacturing is a cause for concern," added Dr Thanh.
It points to a weakening of consumer and investment demand for goods produced in Vietnam and to the fact that the GDP and other financial indicators will fall far below projected levels unless the more deep-rooted structural issues are ferreted out and resolved.
Domestic manufacturers must sharpen their competitiveness, reform technology and promote restructuring, he said, adding that the State should intervene and develop policies to provide them with badly needed working capital and other short and long-term financing.
In addition, the government, he said, should assist manufacturers improve their workforces with better management and production skills.
Simply put, said Dr Thanh, domestic manufacturing is suffering big time due to lack of financing and skilled and experienced people. As a result, the national economic targets are at risk.