Concerted efforts to reduce manufacturing inventory

(VEN) - According to the Ministry of Industry and Trade (MoIT), the processing and manufacturing industries underwent positive changes in the first quarter of 2024. However, measures to stimulate consumption are necessary to release inventory.
Data from the General Statistics Office of Vietnam show that the inventory index for the entire processing and manufacturing sector as of March 31, 2024 increased by 9.8 percent compared to the end of February and by 14.1 percent year-on-year, against the 19.8 percent increase of the same time in 2023. The inventory-to-sales ratio for the entire processing and manufacturing sector in the first quarter of 2024 was 68.7 percent, against 81.1 percent in the first quarter of 2023.

A MoIT report indicates that the slow improvement in industrial production capacity, particularly in industries of strategic importance, has lead to continued imports of machinery, equipment, spare parts and materials for domestic industrial production. “The cooperation among enterprises in the same industry and between industries is still limited. The linkage between FDI companies and domestic enterprises is loose, failing to promote the development of management skills, technology transfer, and the formation of supply chains, materials, and industry clusters. Domestic enterprises have yet to participate strongly in global production and supply chains,” the report states.

In the first quarter of 2024, the sales index of the processing and manufacturing sector increased by 8.2 percent year-on-year - photo: Minh Long
In the first quarter of 2024, the sales index of the processing and manufacturing sector increased by 8.2 percent year-on-year - photo: Minh Long

It is forecast that the recovery of industrial production still faces challenges in 2024, and positive measures are required to support production and stimulate consumption in order to release inventory.

In this context, the MoIT will focus on implementing business support policies that have been approved by the Government in order to help them overcome difficulties in production and trade. This is particularly important in key export sectors, such as textiles and garments, leather and footwear, as well as foundational industries such as automobiles, engineering, and steel. New industrial production projects will be put into operation to serve both exports and domestic consumption, thereby increasing production capacity and the supply of products for export.

Pham Tuan Anh, Deputy Director of the MoIT’s Industry Agency, emphasized the importance of enhancing the connectivity and promoting the consumption of products among associations and industries. It is crucial for businesses to restructure and reduce production costs in order to enhance the competitiveness of their products, thereby improving efficiency and adapting flexibly to the new situation. Businesses should keep a close watch on the global situations, especially the situations in major, traditional export markets in order to propose timely solutions to overcome difficulties to the Government and relevant state agencies.

Local authorities need to urgently implement policies and measures to provide financial support for industrial businesses, creating favorable conditions for them to maintain stable production and trade. It is important to devise and effectively implement industrial and supporting industry development programs, with a focus on enhancing the capacity of small- and medium-sized enterprises.

Businesses and associations should make the most of opportunities from new-generation free trade agreements to seek new orders and customers. They should cooperate with other businesses in the industry, associations, and state agencies to explore and expand into new export markets alongside traditional ones, thereby reducing inventory pressure.

To promote industrial development in the coming period, the MoIT affirmed that further restructuring efforts are needed to expand the processing and manufacturing industries and reduce outsourcing and assembly. It is necessary to gradually address difficulties faced by businesses to enhance their competitiveness and establish technical barriers for imported products to support domestic products, thus increasing the localization rate.

Lan Anh

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