Page 43 - Ebook HTKH 2024

Some industries, such as textiles and garments, leather and footwear, steel, and
electronics, have low value-added in the value chain and rely heavily on imported raw

materials, intermediate products, and production machinery, despite substantial state
support through tax incentives.
Supporting industries have not fully developed and only meet about 10% of
domestic demand; most products are simple components and parts with low value in the
product value structure.
Investment in the industrial sector is insufficient, with most funds directed toward
sectors with short payback periods, such as consumer goods manufacturing and food
processing. Investment in high-tech industries remains limited.

Industrial development is not closely linked with the development of other
economic sectors, affecting the ability to fully leverage economic advantages. Domestic
machinery manufacturing is weak, with low production capacity, high costs, and
insufficient scale relative to agriculture.
Overall, the industrial sector continues to grow at a high rate. The structure of
industrial sectors has seen positive changes: industrial products are increasingly diverse

and improved in quality, which has gradually enhanced competitiveness, ensured supply
and demand balance, maintained domestic market stability, and expanded export
markets. The structure of industrial sectors is becoming more substantive with positive
trends. The proportion of manufacturing and processing industries in GDP has steadily
increased over the years, while the proportion of mining industries in GDP has
decreased. Industry has become a leading export sector in the country's total
merchandise export turnover. Vietnam has developed several key industrial sectors,

creating a solid foundation for long-term growth and promoting overall economic
development.
4. Dependence on imported materials and green growth in Vietnam’s industry
The excessive reliance on imported raw materials has been reducing the
competitiveness of industrial production in Vietnam, with limited value addition.
Enhancing the development of sectors that produce input materials for other industries
is a key focus for the next stage of industrial development, aiming to improve self-
sufficiency and competitiveness across the industry.

Increasing the localization rate is a strategy pursued by many industrial enterprises
in Vietnam to reduce production costs, mitigate risks, ensure raw material availability,
and avoid complete dependence on import markets. Domestic industries are primarily
focused on exports and depend on the global market due to domestic production
exceeding local demand, particularly in sectors such as textiles and garments, leather
and footwear, electronics, food processing, and construction steel.
The manufacturing and processing industry can no longer sustain its role as the
main driver of growth as it did in previous years. The industrial production index for the

manufacturing and processing sector in 2023 increased by only 3.08%, the lowest

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