Industrial development opportunities from 'climate finance'

Stabilize supply chains and reduce production costs

According to a report by the Institute for Strategic Research and Industry and Trade Policy in November, the recent reduction in trade tensions between the US and China has created a positive signal for Vietnamese industrial enterprises.

The US has halved the 20% tariff on some industrial goods imported from China, while China has temporarily suspended the imposition of a 24% tariff on US goods. These moves reduce the risk of tariff retaliation and help reduce volatility in the market for industrial raw materials and components, creating favorable conditions for Vietnamese enterprises in production planning and order forecasting.

*Vietnam has the opportunity to access "climate finance" funds after the COP30 conference takes place. Illustrative photo*

In addition, China's removal of tariffs on many industrial and agricultural products from the US is likely to help reduce input material prices on the world market, from steel, chemicals, plastics to animal feed.

This directly reduces production costs for the mechanical, food processing, plastics - chemical and construction materials industries in Vietnam. Controlling raw material costs not only increases profit margins but also helps businesses be more proactive in expanding production and participating in the global supply chain.

Another source of opportunity comes from the COP30 conference, when Vietnam has the opportunity to access "climate finance" funds with a target of 1,300 billion USD/year to promote energy transition. Vietnam is implementing the adjusted Power Plan VIII by 2025, aiming to develop renewable energy.

Concessional finance or non-refundable aid can help heavy industrial enterprises such as steel, cement, and textiles innovate technology, improve equipment to save energy and reduce emissions. This is an important opportunity to improve production efficiency, increase competitiveness and move towards sustainable production.

In the agricultural and industrial sectors, the US-Brazil tariff shock opens up opportunities for the Vietnamese coffee industry. Vietnam, as the world’s second-largest coffee producer, is likely to fill the market gap left by Brazil.

This is the time for Vietnamese enterprises to introduce high-quality Robusta and Arabica products into new blends, thereby capturing market share and creating new consumption habits. The instability of supply from Brazil and tensions in Colombia also help coffee prices remain high, maximizing profits for production and processing enterprises.

The textile industry also has great opportunities from the labor and social upheavals in Bangladesh. The crisis in this country is causing global brands to look for alternative production locations. Vietnam, with its stable political environment and production capacity proven by the October PMI index of 54.5 points, has emerged as an ideal destination. Enterprises can switch from the outsourcing model to FOB/ODM orders, self-supply raw materials, improve control over the supply chain and expand long-term market share.

Opportunities for supporting industries

The disruption in the North American supply chain presents opportunities for Vietnam’s supporting industries. Global auto giants and their Tier 1 suppliers in Mexico and Canada are facing significant cost pressures. To stay competitive, they are sourcing components from outside the USMCA bloc at reasonable prices.

As a member of CPTPP and RCEP, Vietnam, with competitive production costs, has emerged as an ideal "transit point for replacement parts", opening up opportunities for businesses producing components, electronics and mechanics to participate in the global supply chain.

The EU’s tightening climate policy is both a challenge and an opportunity for Vietnamese industry. The EU aims to reduce greenhouse gas emissions by at least 90% by 2040 compared to 1990, expanding carbon pricing mechanisms and technical barriers related to emissions. Fossil fuel-intensive industries such as steel, cement, chemicals, fertilizers, coal-fired power, textiles and dyeing will have to invest in emission reduction equipment, measurement, reporting and purchase carbon credits if they want to export to the EU.

However, the EU’s permission to use carbon credits outside the bloc for about 5% of the target opens up a new market for high-quality carbon credits from Vietnam. If a domestic carbon market and a complete MRV system can be built, businesses can sell emission-reducing products, not just physical goods, contributing to the development of green and sustainable industry.

The forecast of lower oil prices also benefits Vietnam’s industrial sector. Fuel costs for transportation, logistics, chemicals, plastics, fertilizers and construction materials are contained, helping processing and manufacturing enterprises improve profit margins. At the same time, inflationary pressures are reduced, supporting monetary policy to stabilize interest rates, thereby reducing capital investment costs for industrial production sectors.

The EU’s trade policy of abolishing duty exemption for low-value orders from platforms such as Shein, Temu, etc. is opening up a trend of high-quality production instead of competing with super-low prices. If Vietnamese enterprises focus on mid-range or high-end products that meet EU standards, they will easily participate in mainstream distribution channels, increasing product value and long-term competitiveness.

Current global economic developments and international policies open up many positive opportunities for Vietnam’s industry: from stabilizing the supply chain, reducing production costs, developing renewable energy, participating in the global supply chain, to building green and sustainable industry. Enterprises proactively improving technology, managing raw materials and moving towards clean production will help to maximize opportunities, while enhancing competitiveness in the context of global economic fluctuations.

Source: https://congthuong.vn/co-hoi-phat-trien-cong-nghiep-tu-tai-chinh-khi-hau-432728.html