The manufacturing sector has become the main growth driver of the whole industry. In 2020, manufacturing played a key role in leading the growth of the economy with a growth rate of 5.82%.
The manufacturing industries have developed positively in line with the industry restructuring orientation. The key manufacturing industries, such as electronics, textiles, footwear, etc., have grown at a high rate and have become the main factor that contributes to the development of Vietnam's industry.
The manufacturing industries have developed positively in line with the industry restructuring orientation. The key manufacturing industries such as electronics, textiles, footwear, etc. have grown at a high rate and have become the main factor that contributes to the development of Vietnam's industry.
According to the General Statistics Office (GSO), realized foreign direct investment (FDI) capital in the first five months of 2021 was estimated at 7.15 billion USD, up 6.7% over the same period last year, of which the processing and manufacturing reached 5,172.4 million USD, accounting for 72.3% of the total realized FDI capital.
Although impacted by the COVID-19 pandemic, the manufacturing industries still gained impressive growth in 2020. For example, medicine, pharmaceutical chemicals, and herbal ingredients production increased by 27.1%; metal production increased by 14.4%; petroleum production increased by 11.4%; manufacturing electronic products, computers, and optical products increased by 11.3%.
Other notable industries include manufacture of paper and paper products which increased by 7.9%, food production, and processing which increased by 5.3%, production of rubber and plastic products which increased by 5.1%, etc.
Over the years, Vietnam's food production and processing industry has gained important achievements. The industry made great contributions to the growth of the industry as well as the country's economic growth with an increase of 7% a year in the average production index from 2016 to 2020.
The production value of the food processing industry accounts for 19.1% of the processing and manufacturing industries of Vietnam. Thus is the industry that accounts for the highest proportion in the processing and manufacturing industries.
The enterprises operating in the food production and processing industry account for only nearly 1% of the total enterprises in Vietnam. However, this is one of the spearhead industries with great potential for development.
Electronics is a crucial business, accounts for 17.8% of the whole Vietnam’s industrial sector. Its main products include electronic products, computers, and optical products.
From 2016 to 2020, Vietnam’s electronics industry has experienced strong development. Within this period, the index of manufacturing electronics products, computers, and optical products increased by 13.94%.
There has been an increase in FDI projects, and major electronics firms in the world have invested in constructing production factories for high-tech electronic products in Vietnam. Samsung, LG and Foxconn are among those that chose Vietnam as an investment destination.
In the first half of 2021, the electronics industry was affected by the COVID-19 pandemic, which led to a decrease in the index production of electronic products. However, the export turnover of mobile phone and phone components have the largest value of 14.1 billion USD, accouting for 18.2% of total export turnover by 9.3% compared to the same period in 2020.
The textile and apparel industry has been among the top manufacturing industries of Vietnam for many years.
According to GSO, the index of industrial production (IIP) of the textile industry in the first 11 months of 2020 decreased by 0.4% compared to the same period last year. In particular, the September IIP decreased by 6.3%; October decreased by 5%. But by November, the IIP had increased again by 1.3%.
The apparel manufacturing industry also witnessed a decrease in IIP compared to the same period last year, 7.2% in August; 4.1% in September, and 3.1% in October. However, in November, the industry recovered strongly with an increase of 3.6%.
Export turnover of textiles and garments in the first 11 months of 2020 reached 26.73 billion USD, accounting for 10.5% of total export turnover, down 10.5% over the same period of 2019. Although the export turnover of textile and garment products decreased, this decrease was still lower than that of many other countries, especially in the context that the world's total demand for textiles and garments decreased by 25% due to the negative impact of the Covid-19 epidemic.
Leather and footwear is an important industry in the economic structure of Vietnam. Statistics of the General Department of Customs showed as of up to June 2020, Vietnam's leather, footwear, and handbag industry is was still among the top five exporting industries.
The shift in global supply chains caused by the COVID-19 pandemic along with new-generation Free Trade Agreements (FTAs) have opened up many great opportunities for Vietnam's leather, footwear, and handbag industry to develop.
The leather and footwear industry is one of the most affected by the pandemic. The export turnover of the industry in 2020 decreased by 9.6% compared to 2019, reaching 16.6 billion USD. However, the industry has been gradually recovering in 2021. The Vietnam Leather, Footwear and Handbag Association said that the industry's goal in 2021 is to have an export turnover of over 20 billion USD to compensate for the losses in 2020.
Source: GSO
Compiled by VietnamCredit
