Vietnam’s industries, especially the processing and manufacturing industry, are developing.
In the 2011-2019 period, industry accounted for more than 32% of the country's GDP on average; of which, the processing and manufacturing industry made up about 16.5% of GDP.
Vietnam’s labor productivity is the lowest in the Southeast Asia region and labor productivity in industry is even worse. Photo: Le Anh Dung
In terms of the contribution to GDP of various economic sectors, statistics since 2010 show that the structure of Vietnam's economy is undergoing a positive transition towards industrialization, with the decline of agriculture and the increase of industry and services.
The index of industrial production (IIP) increased continuously in the 2011-2019 period, with the average increase of 9.44% per year during the 2016-2019 period, compared to 7.3% year in the 2011-2015 period. Particularly, the IIP of processing and manufacturing industries rose by 10.5% per year on average, the highest among industrial sectors.
However, most of the country's industrial enterprises are still using technology that lagged behind the world for 2-3 generations on average, according to the Ministry of Industry and Trade. Particularly, up to 76% of equipment, technology, and production lines were imported in the 1960-1970 period, 75% of equipment have been fully depreciated, and 50% of equipment have been refurbished.
Vietnam’s labor productivity is the least in the region and labor productivity in industry is even worse. The growth rate of labor productivity in industry in the 2011-2020 period was only 2.71%, and only 1.5% in 2016-2020, the lowest increase compared to all other economic sectors, according to the Ministry of Industry and Trade.
No internal forces
In the main export industries such as electricity - electronics, textiles and footwear, the number of FDI enterprises is only about 20% but they account for more than 80% of export turnover. FDI enterprises hold more than 70% of Vietnam's total export turnover, and over 50% of industrial production value. However, they are concentrated in a downstream area to take advantage of tax incentives and input costs such as cheap labor and the low requirements on labor and the environment.
In fact, Vietnam’s economic restructuring in the past was mainly based on FDI, not domestic capital or internal resources. The economy grew, but the country did not have adequate development. For example, for a $100 pair of shoes that Vietnam outsources for foreign investors, GDP has $100 but the economy actually has only $22.
The 8th Party Congress (1996) defined the goal of industrialization and modernization as follows: “From now to 2020, strive to basically turn our country into an industrialized country". The 9th, 10th, 11th Party Congresses identified the goal as: "Creating a foundation for our country to basically become a modern industrial country by 2020."
However, the 12th Party Congress stated: "Many targets and criteria in the goals to basically turn our country into an industrialized country by 2020 cannot be achieved" and the goal of "creating a foundation to basically become a modern industrialized country” did not achieve the set target.
The 12th Party Congress also set out the general goal: "Promoting comprehensively and synchronously renovation; speeding up economic development in a sustainable manner; striving to turn Vietnam into a modern-toward industrialized country soon."
The Politburo's Resolution No. 23-NQ/TW in 2018 on the orientation to formulate a national industrial development policy to 2030, with a vision to 2045, and draft economic reports for the 13th Party Congress still set the goal to become an industrial country in the next 10 years.
Accordingly, by 2030, Vietnam will complete the goal of industrialization and modernization, basically becoming an industrial country in the direction of modernization; Vietnam will belong to the group of three leading ASEAN countries in industry, with a number of industries of international competitiveness which deep involvement in the global value chain. With a vision to 2045, Vietnam will become a modern industrialized country.
To achieve very ambitious goals on the current platform, when the door has opened, the tax rate has fallen to zero percent and protective measures are no longer in effect, it is necessary to have a strong vision and determination.
When we only dominate the processes of assembly, we are lost at the most important stages of the value chain, from invention to design to distribution...