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  Policy & Strategy

State sets higher industrial output targets

Viet Nam’s industrial output in the first seven months rose 15.2 per cent from the same period last year, reported the General Statistics Office.

Despite the positive performance indicators, though, government ministers insisted that development could be further accelerated with the implementation of far-reaching reforms.

Of the total output of more than VND208 trillion (US$13 billion), the State-owned sector accounted for the largest share, at more than VND77 trillion ($5 billion), though it was the worst performer in terms of growth, posting an 11.6 per cent increase.

The foreign-invested sector grew 14.4 per cent, posting an output of VND75 trillion ($4.8 billion), while the private sector reached VND55 trillion ($3.6 billion).

Transport products topped all industries with 18 per cent growth, with assembled motorbikes increasing by 49 per cent and bicycles by 114 per cent.

Following were cement, up by 6.7 per cent; bricks, up by 15.8 per cent; textiles, leather and footwear, up by 16 per cent; coal, up by 32 per cent; and oil, up by 13.6 per cent.

However, some products decreased, including sugar, which fell 6.2 per cent, and ampoules, which dropped by 5 per cent.

Sector goal of 16% growth

"The growth rate of the gross domestic product (GDP) will not reach 8 per cent for the year unless the industrial sector posts its own growth rate of at least 16 per cent," said Minister of Industry Hoang Trung Hai in an address detailing his proposed scheme of drastic changes for State-owned enterprises.

"Compared with other economic sectors, industry has shown conditions for further growth that will help the State attain its 2004 development goals," Hai said at a recent conference in Ha Noi to review industrial production in the first half of 2004.

The sector’s growth rate reached 15.4 per cent for the first half of the year, but the minister warned that the increase was due largely to increased extraction of natural resources such as crude oil and coal, while State-owned businesses’ production and trade activities had actually declined.

Hai also criticised State-owned enterprises for delays in adopting new technology, their ineffective financial management, and lack of overall competitiveness, saying bankruptcy would be inevitable for many if drastic changes are not made quickly.

He said the problem could be addressed by equitising State-owned businesses or reorganising them into parent-subsidiary companies, and that failing enterprises had to be sold, leased or transferred to other investors in the form of production contracts.

According to current statistics from the Ministry of Industry, 19 of the 327 enterprises affiliated with the Ministry of Industry have lost a combined VND57.8 billion ($3.6 million) in the last six months.

Four paper mills – Van Diem, Viet Tri, Hoang Van Thu and Bai Bang – have lost VND47 billion due to the soaring price of imported pulp and the domestic market’s drop in purchasing power.

To boost industrial production, Deputy Minister of Industry Bui Xuan Khu said, the Government recently issued a decree on industrial extension that creates favourable conditions and a legal foundation for small and medium-sized enterprises, small industry and handicraft production, and craft villages to engage in industrial production and establish market niches at home and abroad.

Khu said export-driven production should be prioritised by the industrial sector, noting that industrial exports made up 71.5 per cent of the country’s export revenue in the first half of the year.

The ministry is attempting to encourage industrial businesses to preserve their traditional markets while opening outlets in new ones. To this end, Khu said, enterprises must improve their competitiveness by reducing production and overhead costs and increasing product quality.

"Industrial enterprises, especially holding companies and their subsidiaries, must consolidate and judiciously develop their market shares through domestic and overseas distribution networks," the deputy minister said.

Khu said he appreciated foreign-invested enterprises’ role in using high-tech production methods to produce high-quality and competitive products.

Minister Hai reiterated the State’s policy on attracting foreign investment in the industrial sector. "The country’s investment environment will be further improved and the legal framework cemented to better facilitate foreign investors’ and business peoples’ operations in the country," he said.

The Ministry of Finance - (03/08/2004)

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