A series of increasing costs make it difficult for processing and manufacturing enterprises to expand their markets.

Despite strong growth, a series of rising costs are making it difficult for processing and manufacturing enterprises to expand their markets.

The manufacturing and processing industry has a strong breakthrough.

On the afternoon of October 24, Cong Thuong Newspaper organized a discussion with the topic: "Promoting trade, creating "leverage" for processed and manufactured industrial products".

Assessing the development of the processing and manufacturing industry in recent times at the seminar, economic expert Nguyen Minh Phong emphasized that currently, in our country, the processing and manufacturing industry accounts for nearly 40% of the total net production revenue of the economy.

Speakers participating in the seminar "Promoting trade, creating "leverage" for processed and manufactured industrial products"

In recent times, many industries have developed very rapidly, such as electronics, textiles, footwear... with export value ranking in the "top 3-5" in the region and the world. Many large private economic groups in the industry have affirmed their internal strength and reputation such as Thaco, Thanh Cong, Vinfast...

"If comparing the entire economy, in the industrial sector in general, the processing and manufacturing industry in particular has the strongest breakthrough. The growth rate of added value of this sector is much higher than GDP growth in the past 5 years," said Mr. Phong.

Currently, many Vietnamese processing and manufacturing enterprises have seized the opportunity of digital transformation and applied the smart factory model in the fields of precision mechanics, automation, etc., helping to improve competitiveness, production efficiency and be ready to welcome new waves of investment from multinational corporations. Some Vietnamese enterprises are also increasingly participating more effectively in regional and global supply and production chains, continuously expanding output and input markets for products manufactured in Vietnam.

The Government has identified specific targets for the socio-economic development plan for the 2021-2025 period, including 23 targets; including a number of important targets such as: Average GDP growth rate of about 6.5-7% in the 5-year period; the proportion of processing and manufacturing industry in GDP reaching more than 25%; the contribution of total factor productivity (TFP) to growth reaching about 45%. These targets show that the processing and manufacturing industry is identified as one of the factors creating growth momentum in the coming period, contributing to promoting the process of transforming the growth model from breadth to depth.

Economist Nguyen Minh Phong shares at the seminar

"In terms of scale, this industry attracts over 7.5 million workers, generating annual revenue of over 8 million billion VND, much higher than agriculture, wholesale and retail, or minerals," said expert Nguyen Minh Phong.

Export businesses continue to face difficulties in expanding markets.

Although the industry is facing many new development opportunities, experts say that in the last months of 2024, production and trade development will still face many difficulties and challenges. Industrial enterprises, especially export enterprises, continue to face difficulties in expanding and diversifying markets due to high input material costs and compliance costs (especially with new regulations and standards).

Referring to the current difficulties of processing and manufacturing enterprises in general and supporting industrial enterprises in particular at the seminar, Mr. Chu Viet Cuong - Director of the Center for Industrial Development Support, Department of Industry (Ministry of Industry and Trade) said that one of the difficulties that enterprises are facing today is the increasing costs.

Specifically, the issue of high input material costs is due to many reasons such as dependence on foreign supply; many manufacturing enterprises have to import raw materials and components from abroad due to lack of domestic supply. This dependence increases costs due to fluctuating raw material prices, especially in the context of global economic instability, epidemics and geopolitical crises.

In addition, transportation, warehousing and logistics costs related to imported raw materials have increased, especially during periods of rising fuel prices and disruptions to global supply chains.

In addition, prices of raw materials such as metals, chemicals, and agricultural products increased due to high demand from many major producing countries, especially China and developing markets.

The cost of compliance with international standards is high because international markets, especially the US, EU, and Japan, require businesses to comply with standards on quality, occupational safety, environment, and social responsibility. Compliance with these standards requires businesses to make large investments in infrastructure, equipment, and inspection processes.

Mr. Chu Viet Cuong - Director of Industrial Development Support Center, Department of Industry (Ministry of Industry and Trade)

International quality certification processes often require inspections from professional organizations, which entails significant costs for businesses. At the same time, production costs increase as businesses must invest in equipment, quality management systems, and testing activities to meet international requirements.

At the same time, product costs are high and industrial export enterprises find it difficult to expand production scale or invest in new technology, leading to delays in penetrating new markets and diversifying products. Therefore, businesses are at high risk of being eliminated from the market due to not meeting strict requirements.

To overcome difficulties for the industry and promote enterprises in the processing, manufacturing and supporting industries to participate in the global supply chain, according to Mr. Cuong, in recent times, the State has been offering financial support packages or tax incentives to help enterprises reduce costs in complying with international standards; Establishing domestic quality inspection centers that meet international standards to reduce costs and time for enterprises when having to carry out inspections from abroad; Building training programs on quality management and compliance with international standards will help enterprises improve their management capacity, thereby minimizing the risk of non-compliance and saving costs in the long term.

On the business side, Mr. Cuong Chi recommended that it is necessary to invest in research and development (R&D) to find and develop alternative domestic raw material sources, reducing dependence on imports; Optimizing the supply chain to reduce transportation costs and delivery times; Applying advanced production technologies, such as lean manufacturing, to minimize material waste and improve production efficiency;

"In addition, businesses need to proactively seek new markets with easier-to-meet standard requirements; invest in product innovation, increase value by improving quality and features; and cooperate with FDI enterprises to access advanced resources and technology," said Mr. Cuong.

In particular, the Director of the Industrial Development Support Center emphasized that in order to regain growth momentum, many opinions also said that enterprises in the industry currently need support, facilitation and assistance from the Government, ministries, branches, banking system and localities for industrial enterprises to participate deeply in the global supply chain.

Source: https://congthuong.vn/loat-chi-phi-gia-tang-khien-doanh-nghiep-che-bien-che-tao-gap-kho-khi-mo-rong-thi-truong-354445.html