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Industry: The World’s Biggest Real Economy


Not only is there no wealth without industry, but the industry is also the largest real economic sector. With an eye toward 2025, Vietnam will be a developing country with modern industry, surpassing the low-middle income level, and will have modern industry as well as a high middle income by 2030…

The industry’s positive outcomes are recognized from a variety of perspectives. First and foremost, expressed in the rate of industrial production growth (IIP).

Before the Covid-19 pandemic, industrial production had a rather high growth rate, with double-digit growth in some years. Only after a pandemic occurred (2020) and an outbreak (2021), especially in areas with a large industrial proportion of the country, did the IIP increase low. However, Vietnam is still in the group of a few countries and territories with positive IIP growth.


In 2022, after shifting the pandemic prevention and control strategy, IIP growth showed signs of recovery with an increased rate close to pre-pandemic (chart 1).

IIP 2022 growth is achieved across many industries. Specifically, the processing and manufacturing industry – one of the most important criteria of industrialized countries, grew by 8% – the highest rate among fields.

Some specific industries in the processing and manufacturing sector increased even more, such as beverage production increased by 32.3%, garment production increased by 14.8%, and leather and related products production increased by 15. .6%, production of drugs, pharmaceutical chemicals, and medicinal materials increased by 19.2%, wood processing, production of wood, bamboo, and cork products increased by 17.2%, machinery production increased by 19.1%…

The two sectors of electricity production, distribution, and water supply also had relatively high growth rates (7% and 6.4%), double that of the previous year.

In general, the processing and manufacturing industry has the highest growth rate, contributing to the overall growth rate of the whole industry and the whole economy. The remaining industries grew quite well.

Compared to the end of last year, more people were working in industrial firms this year (chart 2).

The increase in the number of employees working is one of the factors contributing to industrial growth, increasing income, increasing final consumption, and contributing to overall economic growth.

Công nghiệp: Ngành kinh tế thực lớn nhất - Ảnh 1

Among the four basic industries, the processing and manufacturing industry accounts for the largest proportion of GDP (24.7%); followed by electricity generation and distribution (3.99%); mining industry (2.82%), and finally water supply (0.49%). This proportion of industries tends to increase over the years. For example, if the share in GDP of the processing and manufacturing industry in 2015 was 20.96%, by 2020 it has increased to 23.95%; in 2021 be 24.82%; in 2022 24.76%; and it is expected to increase to 26.4% in 2023.

It is expected that in 2023, the proportion of the processing and manufacturing industry in GDP will continue to increase in recent years and will reach the highest level ever. The increasing “speed” of the share in GDP is also higher than in previous periods (if from 2015 to 2022, the average annual increase is only 0.67 percentage points, of which only 0.16 percentage points in 2020, now it can increase by 0.8-0.9 percentage points). That demonstrates the willpower to achieve the objective of having a modern industry by 2025, avoiding being missed once more like in 2020.

This determination stems from many factors. When the country got rid of the socio-economic crisis and agriculture had a “bowl to eat, a bowl to eat”, the transition to the period of industrialization and modernization was inevitable. “No industry, no wealthy” does not completely talk about the industry in general, but mainly about the processing and manufacturing industry (countries that mainly rely on mining are not called industrial countries),

Therefore, the proportion of the processing and manufacturing industry is considered the criterion of industrialized countries.

Industry in general, and the processing and manufacturing industries in particular, play a role in various aspects, including consuming products for agriculture and providing machinery for agricultural modernization.

The foreign-invested sector accounts for a large proportion (about 50%) of industrial production value and accounts for about three-quarters of the country’s total export turnover. FDI also tends to focus on processing and manufacturing industries.

The objective of foreign investors is to take advantage of a large number of workers and low labor costs; advantages are in the process of opening up for integration, participating in free trade agreements (FTAs), and taking advantage of incentives to export.

Processed industrial products account for a high proportion of total export turnover; in which there are technical and high-tech products (such as phones and components) present in many large markets and accounting for 16.1% of the total export turnover of the country.

Structure of the processing and manufacturing industry according to the industrial level in terms of several key indicators (number of enterprises, number of employees, capital sources, the value of fixed assets and long-term financial investment, net revenue), profit before tax) in 2020 as follows (chart 3).

Although high qualifications only account for a low proportion of the number of enterprises, the number of employees, the value of fixed assets, and long-term financial investment, they account for a higher proportion in terms of capital, net revenue, and profit before tax; highest in terms of net revenue and profit before tax.

Source: VnEconomy

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