In the first two months of 2023, Da Nang’s index of industrial production (IIP) saw an 8.7% decrease against the same period last year owing to declining consumer demand, high input material prices and unfavourable export market. Therefore, local government departments and agencies are taking effective solutions to support industrial production.

Da Nang's departments and agencies are taking effective solutions to support industrial production. IN THE PHOTO: Production activities are observed at the Da Nang Forest Products Export JSC. Photo: M.Q

Decreased consumption, increased inventory

According to a report released by the Da Nang Statistics Bureau, in the first two months of 2023, the city’s IIP dropped by 8.7% compared to the same period last year.

Of which, 7 out of the 22 processing and manufacturing industries that witnessed an increase in IIP included manufacturing other means of transport (128.52%), and beverage production (63.99%). However, 15 out of the 22 sub-sectors saw a significant decrease in IIP. For example, the production of other non-metallic mineral products went down by 36.73%, the production of chemicals and chemical products 35.85%, and textile 21.51%.

Besides the IIP, the consumption index of the entire processing and manufacturing industry in the first two months of 2023 declined by 15.2% and the labor utilisation index decreased by 2.8% over the same period last year. This led many businesses to cut labor, adjust working hours, and suspend production lines to maintain operating machinery.

Mr. Le Hoang Khanh Nhut, General Director of the Da Nang Rubber JSC (DRC), explained that the decline in the production index was due to decreased seasonal factors and demand.

As for DRC, the company's January net revenue was VND301 billion, down by 23% compared to the same period last year, and its before-tax profit witnessed a 14% decrease to reach VND70 billion. Meanwhile, the company sets a target of earning VND1,100 billion in net revenue in the first quarter of 2023.

Mr. Nhut, however, said that the market is showing signs of recovery in February and March. Specifically, the number of the company’s orders of bias tires have gradually increased in such markets as Myanmar, Egypt, and the Middle East since February. The company’s export revenue in February reached US$12 million, up 11.4% against January 2023 with US$10.5 million.

Additionally, some industries recorded positive signals. In particular, the IIP of sub-sector of wood processing and the production of products from wood, bamboo and cork (except for beds, cabinets, tables, and chairs), and the production of products from straw and plaiting materials saw a 63.28% increase.

Mr. Huynh Trinh, Director of the Forest Products Export JSC, said that despite many difficulties, the wood production industry showed signs of improvement compared to the fourth quarter of 2022. Currently, the previous source of inventory has basically been released, so importers are starting to their import activities again. Along with that, the reduction of freight charges in the world is also a driving force to promote wooden furniture exports.

Support solutions strengthened for boosting industrial production

Mr Tran Van Vu, the Director of the Municipal Statistics Department, suggested the city take solutions to develop human resources and issue more preferential policies in attracting investment to industries, especially processing and manufacturing industry, thereby helping enterprises gradually iron out their difficulties involved in the stage of product consumption.

He also proposed local departments and agencies to strengthen trade promotion activities, seek and expand export markets, implement tax and fee support policies, and stimulate domestic consumption, aiming at increasing competitiveness with regional, domestic and foreign enterprises.

Mr. Tran Van Ty, Deputy Head of the Authority of Da Nang Hi-Tech Park and Industrial Parks, said that the unit is making every effort to soon put into operation new industrial parks.

Specifically, the Authority has worked with interested investors to complete the preliminary assessment of capacity and experience of investors in building and operating the Hoa Cam Industrial Park infrastructure at phase 2, then submitting it to the municipal People's Committee for approval.

With regard to the Hoa Nhon Industrial Park, the Authority has requested the municipal Department of Construction and the Institute of Construction Planning to support and make an implementation plan and estimate the budget for adjusting the boundary of the Hoa Nhon Industrial Park under the direction of the municipal People's Committee.

Moreover, the Authority has asked the Management Board of Hi-tech and IP Infrastructure Development Projects to report the project implementation from the time of investment preparation until the end of the project in order to have a basis to continue to advise the municipal People's Committee in the management and exploitation of the auxiliary area.

Currently, the city’s Department of Industry and Trade is carrying out the supporting industry development programme in the city in 2023 at the first phase and in 2024.

Along with that, the department continues to implement the municipal People’s Council-issued Resolution No. 324/2020/NQ-HDND dated December 9, 2020 regarding industrial promotion policy and the production of tourism souvenirs in Da Nang. The purpose is to help local tourism businesses build and promote product brands, as well as apply management systems to meet the requirements of global production chains in corporate governance and production management.

All aforementioned solutions are expected to create favourable conditions for local businesses to continue to overcome difficulties, boost their productivity, and significantly contribute to driving the city's economic growth in 2023 and the years ahead.

Reporting by M.QUE - Translating by M.DUNG