Overcoming Difficulties to Spur Development in 2021

10:27:32 AM | 1/13/2021

All goals and objectives in the 2020 Plan of the industrial and trade sector were successfully fulfilled to positively contribute to the overall economic growth of Vietnam at 2.91%.

Overcoming difficulties to complete goals

Minister of Industry and Trade Tran Tuan Anh said Vietnam earned US$281.5 billion from exports in 2020, up 6.5% year on year, becoming one of the best performers in the world amid the Covid-19 pandemic outbreak. Trade surplus was at a record high of US$19.1 billion, extending the consecutive years of surplus to five. Vietnam still maintained steady growth momentum, with the import and export value amounting at over US$500 billion for the second consecutive year.

He added that, given supply chain disruptions, the industry overcame difficulties with a growth rate of 3.36%, higher than the general economic growth. Particularly, the processing and manufacturing sector enjoyed a growth rate of 5.82%, asserting its important role as a driver of economic growth.

Despite the global Covid-19 pandemic, international integration has been not only strengthened but also advanced in many new ways, evidenced by international and regional consensus and appreciation for Vietnam’s new initiatives. Vietnam has obtained many important achievements in the negotiation, signing and enforcement of free trade agreements (FTAs), especially CPTPP, EVFTA, RCEP and UKVFTA.

Minister Tuan Anh added that trade promotion has been strongly reformed and promptly adapted to Covid-19 pandemic impacts to effectively and actively support localities and businesses in the country to tap the global market to foster the selling of goods for businesses and farmers. Supply and demand stability, commodity prices, market security and market order have been strengthened, especially amid complicated developments of the Covid-19 pandemic and natural disasters in many localities in the country.

Besides, the Ministry of Industry and Trade has consistently advanced institutional construction and e-government construction.

Challenges in 2021

Prime Minister Nguyen Xuan Phuc pointed out economic challenges in 2021. Accordingly, the Fourth Industrial Revolution is both a challenge and a very good opportunity for Vietnam to deal with major problems in the country's economic development, including industry, trade, and services. Moreover, protectionism is coming back quite clearly. Obviously, the Covid-19 pandemic has been changing rapidly the structure of global supply chains and rearranging global production centers, and international investment and trade flows. These necessitate the industry and trade sector to make policy responses not only in the short term but also for long-term strategic review.

Prime Minister Nguyen Xuan Phuc noted that, in addition to economic opening and liberalization, Vietnam has become one of 10 countries with the largest openness in the world (the share of imports and exports to GDP in 2019 reached 197.4%), resulting in growing foreign dependence, not only on import and export markets, especially some majors like the United States, China, the European Union (EU), Japan and South Korea, but also on technology and input materials for manufacturing development (the share of imported materials to the total value of imported goods accounts for approximately 90%). Major export-driving industries can join only low-value stages. The response to increasing environmental problems, climate change, and environmental incidents in industrial production is a big challenge to industrial and trade development and economic autonomy.

Before the above challenges, the Prime Minister requested the Ministry of Industry and Trade to clearly define specific tasks and solutions to include in the Action Program to implement the Government’s Resolution 01, Resolution 02 and directives in a consistent and firm manner right from the beginning of the year and build a growth scenario.

What the Ministry of Industry and Trade needs to focus in 2021 is accelerating sectoral restructuring, powered by digital transformation, especially in manufacturing and processing sector, to create breakthroughs and new motivation for growth in the next stage; focusing on solutions to ensure the balance of electricity supply and demand in 2021 and 2021-2025; stepping up the development of renewable energy sources to supplement electricity sources in line with the Government's current renewable energy incentive mechanisms and policies.

To date, Vietnam has signed 15 FTAs and negotiated two others. To take full advantage of FTA benefits, it needs to focus on raising awareness of these FTAs and of international integration in the entire political system, localities, associations, business community and the whole society. It needs to effectively carry out action plans to effectively enforce FTAs, and WTO and ASEAN commitments.

The Ministry of Industry and Trade also needs to foster trade promotion and expand markets for Vietnamese exports; remove barriers to enter new markets; and diversify and limit market dependence, Prime Minister Nguyen Xuan Phuc directed.

By Huong Ly, Vietnam Business Forum