Vietnam’s industry growth rate in 2011 is facing many difficulties

CA - Data from the General Statistics Office (GSO) showed that in the economic crisis in 2009, Vietnam’s industry sector grew only 7.1% against 2008 and started to recover in 2010 and regained growth of 9.3% on year.

Vietnam’s industry growth rate in 2011 is facing many difficulties, Pham Dinh Thuy, head of the GSO’s Industry and Construction Statistics Department, told the local newswire VnEconomy on November 7.

“In 2011, the country’s industry sector remains instable and is seeing slow growth” Thuy said. Totally in the first ten months of this year, the country’s industry sector grew only 7%, even lower than the period suffering impacts from the world economic recession.

But the decline of the state-owned enterprises (SOEs) sector is noteworthy.

“Generally in recent years, SOEs sector has been declining its contribution to the economy in general and in industry field in particular” Thuy said.

“But overall, the operation of SOEs in most economic sectors for many past years has been less efficient and less flexible than the two remaining areas namely FDI (foreign direct investment) enterprises and non-state enterprises sector”, according to Thuy.

The production value of the whole industry sector is expected to grow averagely 15.7% in 1995-2011 period, and the figure in 2011 will increase 8.9 folds against 1995. Of which, SOEs would grow 9.3% and 3.8 folds respectively.

“SOEs sector is reducing sharply its contribution to the economy, while also reducing its annual growth rate compared with the two remaining areas,” Thuy concluded.

But, the country’s industrial production is still suffering challenges. Lower growths are seen in all three industry sectors namely exploitation and processing, manufacturing, and production and distribution of electricity, water together with the situation of lower consumption and higher inventories in some sectors.

For sectors of processing industry and manufacturing that now accounts for approximately 90% of total industrial production value, the consumption index in September 2011 decreased by 4.8% compared to August, while the inventory index as of October 1 increased over 21% over the same period last year.

“This shows that the production and consumption of some industry sector remain difficult” Thuy said. If the consumption continues to face difficulties, it will result in higher inventory, forcing firms to reduce production to balance supply and demand and inventory.