How to reduce pressure to import raw materials for industrial production?

Production depends heavily on imported materials, so Vietnamese industrial products currently lack competition, and added value is not high. Photo: N.Thanh

Importing 94% means of production

The latest information from the Ministry of Industry and Trade shows that, in the first eight months of 2022, the import turnover of goods is estimated at US$246.84 billion, up 13.6% over the same period last year (in the same period last year, it increased by 34.4%).

Notably, in terms of the structure of imported goods, means of production accounted for 94%, up 0.1 percentage point over the same period last year (in which machinery, equipment, tools and spare parts accounted for 44.3%, the group of raw materials, fuel and materials accounted for 49.7%); consumer goods accounted for 6%, down 0.1 percentage point. China is still Vietnam's largest import market with an estimated turnover of US$81.8 billion, up 12.8% over the same period last year.

Referring to the dependence on imported raw materials in industrial production, Mr. Pham Tuan Anh, Deputy Director of the Department of Industry (Ministry of Industry and Trade) assessed that industry was a key export sector with steady growth over the years, but there were still many limitations, the internal strength of enterprises was very weak.

“Vietnam currently has no enterprises or industrial products with Vietnamese brands that are big enough and strong enough. Production depends on imported materials, so industrial products lack competition, and added value is not high,” emphasized Mr. Pham Tuan Anh.

From the perspective of enterprises, Mr. Dinh Quoc Thai, General Secretary of the Vietnam Steel Association, said that Vietnam's steel industry had grown from being a small backward industry to mastering science and technology, with a total capacity of 25 million tons of crude steel/year. From an economy that depended on imported steel, up to now, Vietnam rose to be an exporter of tens of billions of dollars. Specifically, in 2021, Vietnam exported more than 14 million tons of steel of all kinds, a turnover of about US$12.7 billion to more than 30 countries and territories.

However, the steel industry now also had to import mostly raw materials such as iron ore and scrap steel as raw materials and some spare parts to replace in the production process. “In the future, the first thing is to balance supply and demand, proactively supply input sources,” said Mr. Thai.

Similarly, Mr. Nguyen Huu Tu, a member of the Board of Directors, Vietnam Chemical Group, shared that chemicals were the foundation industry, acting as input materials for many important industries of the country. The chemical sector had sub-sectors from fertilizers, basic chemicals, industrial gases, rubber production, petrochemicals, consumer goods production, and electrochemistry. Vietnam produced basic products. such as caustic soda, all kinds of H2SO4, HCl, H3PO4, other chemicals meet the input. However, Vietnam still had not self-controlled some materials and had to import them.

Promoting the development of the materials industry

In the future, in order to contribute to improving the proactiveness of steel supply for the processing and manufacturing industries, the Vietnam Steel Association proposes to the Ministry of Industry and Trade to quickly develop a strategy for Vietnam's steel industry to 2030 with a vision to 2050, including specific policies to ensure the fast and sustainable development of Vietnam's steel industry in line with the National Strategy on Climate Change and the National Development Goals.

In addition, the State continues to promote policies to develop supporting industries, including a priority mechanism to develop processing and manufacturing facilities for details, components and spare parts using domestic steel as raw materials for other industries and other fields of the national economy that use steel as a material.

“The State also needs to continue promoting protective policies for the domestic steel industry to ensure that Vietnam’s steel industry develops quickly and strongly in a green direction, in line with the trend of global integration,” said Dinh. Quoc Thai.

Mr. Pham Tuan Anh analyzed that in the future, the world economy would follow the trend of taking advantage of the achievements of the Fourth Industrial Revolution.

Digital transformation would take place in many fields and sectors, along with supply chains as well as international economic integration activities would have adjustments, ensuring sustainability, avoiding external impacts such as the case of the recent Covid-19 pandemic, which disrupted the supply and lost the source of goods.

Therefore, in industrial development, Vietnam must develop autonomously in the country. When choosing sectors and sub-sectors for industrial development, it must be based on the strong and developing industries, and also on other criteria.

For example, among the foundation industries that are prioritized for development, there must be enterprises with the potential to build into strong economic corporations to lead industries and support industries to develop accordingly.

“In parallel with the development of the foundation industry, Vietnam must also develop sectors that produce input materials for other industries such as supporting industries, mechanical engineering, chemicals and materials industry. Those are issues that need attention in industrial development,” said Mr. Pham Tuan Anh.

To develop Vietnam's industry, the Ministry of Industry and Trade will propose the Government build large-scale industrial clusters and zones to attract investment as well as build industrial production chains. In addition to supporting policies for large corporations, the Ministry of Industry and Trade will also propose policies to support small and medium-sized enterprises in the industrial sector.

This is to overcome the inherent weaknesses of this group of enterprises through capital support, human resource training support, and technology transfer support. The goal is to form a complete industrial ecosystem in the future.