In recent years, Vietnam has emerged as a crucial participant in the global supply chain, leveraging its low labor costs, well-developed export infrastructure, and strategic geographic location. Under the "China Plus One" strategy, Vietnam has attracted a significant share of labor-intensive manufacturing relocations. To further enhance its competitiveness, the Vietnamese government has implemented a series of proactive measures, including tax incentives for high-tech enterprises, industrial park development, and national-level industrial development strategies.
Vietnam’s Economic and Manufacturing Performance in 2024
- Economic Resilience: Despite external challenges and the impact of Typhoon Yagi, Vietnam's GDP grew by 6.82% year-on-year in the first nine months of 2024, a notable increase from 4.4% in the same period of the previous year.
- Industrial Contribution: Industrial value-added grew by 8.34% year-on-year, with manufacturing leading the way with a 9.76% growth rate, accounting for over 79% of total industrial value-added.
- Robust Trade: Vietnam's total trade volume in the first nine months reached $578.5 billion, up 16.3% year-on-year, with a trade surplus of $20.8 billion. Manufactured goods accounted for 84.7% of exports, with export value growing by 15.2%.
Key Manufacturing Data and Trends
- PMI Index: Vietnam’s manufacturing PMI stood at 54.7 in July 2024, signaling expansion. However, it dropped to 47.3 in September due to the impact of Typhoon Yagi, indicating a short-term deterioration in manufacturing health.
- Foreign Direct Investment (FDI): Manufacturing remains the top sector for FDI, attracting 66.6% of new registered capital and 70.7% of total FDI inflows.
- Industrial Investment Index (IIP): In the first nine months of 2024, IIP grew by 8.6%, with manufacturing up 9.9%, electricity production up 11.1%, and water supply and waste management up 15.2%.
Strategies and Policy Support for Vietnam’s Manufacturing Sector
- National-Level Industrial Development Plans:
2025 Goals: Promote key sectors such as machinery, chemicals, electronics, and textiles to strengthen domestic demand and integrate into the global supply chain.
2030 Outlook: Aim for industrial sectors to contribute over 40% to GDP, with manufacturing accounting for 30%. - Investment Incentives:
Corporate Income Tax (CIT) reductions, import duty exemptions, and land lease discounts to attract foreign investment.
Industrial Park Development: - Export Processing Zones: Focused on producing goods for global markets.
Eco-Industrial Parks: Emphasize clean production and efficient resource use.
Auxiliary Industry Zones: Provide essential support for primary industries.
Challenges and Future Outlook
Despite its impressive growth, Vietnam’s manufacturing sector faces rising labor costs, inflationary pressures, and disruptions from natural disasters. The government’s focus on green manufacturing and technological innovation aims to address these challenges and ensure sustainable growth. With the global recovery in demand for electronics, textiles, and components, Vietnam is well-positioned to capitalize on new opportunities.
Conclusion
As a new engine of manufacturing in Asia, Vietnam has demonstrated exceptional performance in attracting foreign investment and driving industrial transformation. The government’s policy support, sustained manufacturing expansion, and strong trade performance solidify Vietnam’s role as a vital node in the global supply chain, paving the way for long-term growth and competitiveness.
In recent years, Vietnam has emerged as a crucial participant in the global supply chain, leveraging its low labor costs, well-developed export infrastructure, and strategic geographic location. Under the "China Plus One" strategy, Vietnam has attracted a significant share of labor-intensive manufacturing relocations. To further enhance its competitiveness, the Vietnamese government has implemented a series of proactive measures, including tax incentives for high-tech enterprises, industrial park development, and national-level industrial development strategies.
Vietnam’s Economic and Manufacturing Performance in 2024
- Economic Resilience: Despite external challenges and the impact of Typhoon Yagi, Vietnam's GDP grew by 6.82% year-on-year in the first nine months of 2024, a notable increase from 4.4% in the same period of the previous year.
- Industrial Contribution: Industrial value-added grew by 8.34% year-on-year, with manufacturing leading the way with a 9.76% growth rate, accounting for over 79% of total industrial value-added.
- Robust Trade: Vietnam's total trade volume in the first nine months reached $578.5 billion, up 16.3% year-on-year, with a trade surplus of $20.8 billion. Manufactured goods accounted for 84.7% of exports, with export value growing by 15.2%.
Key Manufacturing Data and Trends
- PMI Index: Vietnam’s manufacturing PMI stood at 54.7 in July 2024, signaling expansion. However, it dropped to 47.3 in September due to the impact of Typhoon Yagi, indicating a short-term deterioration in manufacturing health.
- Foreign Direct Investment (FDI): Manufacturing remains the top sector for FDI, attracting 66.6% of new registered capital and 70.7% of total FDI inflows.
- Industrial Investment Index (IIP): In the first nine months of 2024, IIP grew by 8.6%, with manufacturing up 9.9%, electricity production up 11.1%, and water supply and waste management up 15.2%.
Strategies and Policy Support for Vietnam’s Manufacturing Sector
- National-Level Industrial Development Plans:
2025 Goals: Promote key sectors such as machinery, chemicals, electronics, and textiles to strengthen domestic demand and integrate into the global supply chain.
2030 Outlook: Aim for industrial sectors to contribute over 40% to GDP, with manufacturing accounting for 30%. - Investment Incentives:
Corporate Income Tax (CIT) reductions, import duty exemptions, and land lease discounts to attract foreign investment.
Industrial Park Development: - Export Processing Zones: Focused on producing goods for global markets.
Eco-Industrial Parks: Emphasize clean production and efficient resource use.
Auxiliary Industry Zones: Provide essential support for primary industries.
Challenges and Future Outlook
Despite its impressive growth, Vietnam’s manufacturing sector faces rising labor costs, inflationary pressures, and disruptions from natural disasters. The government’s focus on green manufacturing and technological innovation aims to address these challenges and ensure sustainable growth. With the global recovery in demand for electronics, textiles, and components, Vietnam is well-positioned to capitalize on new opportunities.
Conclusion
As a new engine of manufacturing in Asia, Vietnam has demonstrated exceptional performance in attracting foreign investment and driving industrial transformation. The government’s policy support, sustained manufacturing expansion, and strong trade performance solidify Vietnam’s role as a vital node in the global supply chain, paving the way for long-term growth and competitiveness.
