Resolving production cost pressures on businesses

In the first months of the year, enterprise production and business activities, as well as the overall economy, continued to grow, demonstrating Vietnam’s strong adaptability amid global fluctuations. However, cost pressures are increasingly weighing on businesses as input prices continue to rise.

To ensure the “health” of domestic production and achieve economic growth targets, alongside efforts from the business community, the State's flexible macroeconomic policy management during this period is playing an especially important role.

Rising production input costs

Recent geopolitical developments worldwide have affected Vietnam’s production activities, particularly the conflict in the Middle East. Many businesses have reported that transportation costs have increased by 5-20%. Shortages of input supplies have made it difficult for enterprises to maintain production schedules. As a result, although orders remain stable, shrinking profit margins have made many businesses more cautious in production activities.

Production at Dong Tien Joint Stock Company in Amata Industrial Park.

According to Phan Anh Tuan, Director of ICD Tan Cang - Long Binh Joint Stock Company, current international developments are having an immediate impact on business production and operations. For enterprises with large reserves of raw materials and inventory, the impacts may come more slowly.

According to a survey by Dong Nai Statistics Office, among the main factors affecting production and business activities, 44.9% of enterprises said weak domestic market demand was the biggest factor affecting operations; 41.5% cited weak international demand, while 40.2% pointed to strong competition from domestic goods; and 22.8% said strong competition from imported goods was a major challenge. Other factors included shortages of raw materials and fuel, difficulties in recruiting workers, financial difficulties, and State legal policies.

Similarly, the Vietnam Manufacturing Purchasing Managers’ Index (PMI) report recently released by S&P Global showed that Vietnam’s manufacturing PMI fell to 50.5 points in April 2026, with new orders continuing to decline, while input costs and output prices increased at the fastest pace since April 2011. A positive sign was that production output maintained growth momentum, reflecting the implementation of existing projects and the resilience of underlying demand.

Responding to challenges

Businesses said the sharp rise in fuel prices in April pushed input costs up at the fastest rate in 15 years. In this context, enterprises consider proactively stockpiling raw materials for production a top priority. This reality also explains why Vietnam’s imports increased sharply and why the country recorded a trade deficit in the first months of 2026.

Production at a packaging enterprise in Long Binh Ward. Photo: Vuong The

When assessing the trade balance in the first quarter of 2026, the National Statistics Office stated that the current trade deficit is not necessarily abnormal or alarming, but rather short-term in nature and associated with production cycles and global price fluctuations. Rising import demand mainly stems from businesses increasing purchases of machinery and production materials, while proactively stockpiling goods to mitigate risks from supply chain disruptions and energy price volatility.

For businesses, this period requires maximum flexibility in production and business operations, especially in negotiations and in transparent cooperation with partners and customers to avoid risks.

“We maintain regular communication with our partners and apply a fluctuation threshold of around 10%. If prices rise or fall within 10%, we agree with partners to adjust product and service supply prices accordingly, thereby limiting risks”, shared Phan Dinh Canh, Director of Hoa Canh Manufacturing - Trading - Service Co., Ltd. in Phuoc Thai Commune.

Experts said cost pressures do not stem from a single factor, but from a combination of causes, including high bank deposit rates, rising regulatory compliance costs for household businesses, geopolitical instability, and disruptions to global supply chains, all of which have driven up production input costs across the board.

From the State’s perspective, proactively implementing solutions to manage and stabilize the market is extremely important, especially for essential goods. At a meeting of the Government’s Steering Committee for Price Management on April 23, Deputy Prime Minister Nguyen Van Thang stated that international fluctuations are putting significant pressure on domestic prices.

Therefore, the Government has requested ministries and sectors to carefully assess factors that are undergoing significant fluctuations, such as fuel and construction material prices. They must analyze supply and demand developments and the prices of essential goods to ensure close oversight and prevent profiteering from policy measures, especially in sectors directly affected by fuel costs, such as transportation, logistics, construction materials, and food products.

In the short term, ensure balanced supply and demand, especially for essential goods such as petroleum, electricity, grain, food, and production inputs; and regulate the supply of goods serving domestic demand across regions and localities, as well as export demand, to stabilize market prices.

By Vuong The - Translated by Diec Quyen, Minho