Vietnam will join the emerging industrial economy group in the next 5 years

Vietnam is facing a "one-thousand-year opportunity" to attract investment, strengthen internal resources, improve competitiveness through a long-term strategic vision for FDI and main policies to attract FDI. development policies on the domestic manufacturing and processing industry ... to be able to join the emerging industrial economy group in the next 5 years.
Vietnam will join the emerging industrial economy group in the next 5 years
Vietnam had set a target that by 2020, we will basically become a modern industrial country, but until now, that goal has not been achieved as expected, if not the expectation "to turn into a dragon. tigers "are still far away.

Processing and manufacturing industries must be the driving forces of economic development

In the current context of service activities, trade is growing thanks to the great progress of the internet and science and technology, especially since the concept of the Fourth Industrial Revolution (Industry 4.0). However, many people think that the manufacturing industry, manufacturing and processing industry no longer play an important role in the economy, that in the period of strategic socio-economic development in the period of 2021-2030, Vietnam. should abandon the goal of becoming an industrialized country but focus on service industries and industries having advantages thanks to Industry 4.0.
In the next 5 years, Vietnam will be able to join the group of emerging industrial economies
In the next 5 years, Vietnam will be able to join the group of emerging industrial economies
However, the Department of Industry (Ministry of Industry and Trade) argues that what happened during the 2008 global economic crisis as well as what is happening due to the current Covid-19 pandemic shows that Countries with developed industrial production are able to respond flexibly to crisis and recover quickly after the crisis than those that rely mainly on services, especially from tourism.

Accordingly, the Department of Industry emphasized that Vietnam still has to identify the industrial production industry, especially the processing and manufacturing industries, as the driving force for economic development in the next strategic period. It is necessary to take full advantage of opportunities from new-generation free trade agreements and the ongoing global value chain restructuring trend to strengthen the domestic industry's internal strength and enhance competitiveness. and deep participation in global value chains.

In addition, instead of abandoning the goal of becoming an industrial country, according to the Department of Industry, Vietnam should select some specific criteria on industrial or new industrial countries and criteria on competitiveness. In order to include the economic development goals of the strategy (for example, it is possible to select value-added indicators of the manufacturing and processing industry (MVA) such as MVA per capita, density. MVA in GDP ...

According to World Bank statistics, the MVA share of Vietnam's GDP has increased from 12.9% in 2010 to 16% in 2018, still not reaching the 20% threshold as in industrialized countries. . MVA per capita has increased from USD 570.7 in 2010 to USD 946.2 in 2018, nearly reaching the threshold of emerging industrial economies according to Unido criteria. With an MVA growth rate of over 8% as in the last 5 years, it is expected that within the next 5 years, Vietnam will be able to join the group of emerging industrial economies.

Along with that, the Ministry of Industry and Trade said that Vietnam should have a rational approach to Industrial Revolution 4.0, ensuring a balance, harmony, and rationality between information technology and operation technology (OT) by technology. operation is the core, the foundation for extensive application of IT as well as the new technology of Industry 4.0. "The applications of IT in the service sector (such as technology taxis, e-commerce ...) are just the tip of the iceberg, the main development trajectory of IT mainly revolves around manufacturing industries, or in other words, the technology of Industry 4.0 is only a tool, while the operating technology (OT) or manufacturing and processing industries are the core foundation ", Department of Industry emphasized.


Opportunities for the restructuring of the industry

In particular, the Department of Industry emphasized the trend of restructuring value chains and shifting investment. This will be a great opportunity for Vietnam to restructure the industry and the whole economy.

Specifically, from the end of 2018, due to the influence of US-China trade tensions, multinational corporations, especially US investors and investors with large trade transactions with the United States There has been a tendency to shift investment out of China to avoid overly punitive tax. ASEAN countries are often seen as additional options for factories in China (China +1).

When the Covid-19 pandemic began in early 2020 severely impacting and disrupting global supply chains, multinational corporations became increasingly aware of the enormous risks of relying too much on one supply. only. Not only corporations but also governments have joined in to assist their own enterprises having factories in China to move part of their production and business activities to or from third countries.

In particular, the Japanese government spent US $ 2.2 billion in the US $ 992 billion stimulus package to support Chinese businesses to withdraw from China when the Covid-19 epidemic broke the supply chain between the two countries, and encouraging the production of high value-added products to Japan and shifting the production of other goods to ASEAN.

Similarly, the National Economic Council also said the Government is considering a cost support program for US businesses if they move production lines from China; Trade Commissioner of the European Union (EU) also announced that the EU will seek to reduce trade dependence on China after the Covid-19 pandemic passed. This move by governments and corporations created a wave of partial withdrawal of production activities from China and sought alternative investment locations in neighboring countries to disperse risks.

In addition to the above objective factors, the Department of Industry said that with the Vietnam - EU free trade agreement (EVFTA) coming into force, more and more EU investors, especially large corporations. in processing, manufacturing from Germany, France, Netherlands ... more interested in the Vietnam market.

Do Nhat Hoang, Director of the Foreign Investment Department (MPI), said the ministry is preparing a plan to take advantage of the above investment shift. He said: "We have approached the business association, major investors to discuss the package, the incentive method. In parallel with the amendment of policy regulations to facilitate attracting foreign investors. In addition, the fact that Vietnam is promoting its business environment reform will certainly be an attractive force to investors. "

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