However, they need support from the State. Especially, they have high expectations for the emergency solutions to solve difficulties for Covid-19-affected enterprises that Prime Minister Nguyen Xuan Phuc mentioned at a recent meeting of the Government.
Increasing competitive pressure
Returning to some garment and textile enterprises in Ho Chi Minh City after the Covid-19 outbreak has become a pandemic, the work atmosphere at these workshops, one of the most affected industries, remains vibrant and goods are ensured in the short term.
With three workshops including around 300 workers, producing 100,000 products each month, collecting US$150,000, Phu Thanh Nam Garment Company Limited is one of the leading enterprises in District 12, specializing in processing goods to export into the US. Sharing about difficulties of the production during the pandemic, Mr. Pham Trung Duong, the company’s director, said that the garment and textile industry has been affecting seriously due to a shortage of raw materials from China.
However, as his company actively signed production contracts until April so it has not been influenced much. Besides, many of its customers have started to connect again with raw materials producers in China and are informed that the orders will be resumed by the end of April so the situation will be less tense if the pandemic is controlled well.
‘It is forecast that the unit price of new orders tends to increase so enterprises will face difficulties. Especially, domestic enterprises are under the pressure of higher taxes than their counterparts in neighboring countries, so the competitive pressure is high. Therefore, garment and textile enterprises proposed that the Government should review, reduce or give tax exemption to help enterprises to overcome the current difficulties,’ said Mr. Pham Trung Duong.
Similarly, at the Fly High Garment Company Limited in Go Vap District with 8 production lines and 250 workers, specializing in processing export fashion products, the work atmosphere was rather zealous. The company’s representative said that it uses more than 60 percent of raw materials made in Vietnam so it has not been affected much by the pandemic.
However, the company concerned that current taxes in Vietnam have been affecting negatively competitiveness of domestic enterprises compared to neighboring countries. The risks of order shifting are fairly high if enterprises are unable to offer a competitive price level in the coming orders. Therefore, enterprises hope that the State will have policies to reduce, exempt and extend tax debt to support enterprises.
Meanwhile, the representative of Garment 10 Corporation said that the company has been suffering huge impacts caused by the pandemic, especially the supply of raw materials from China. Because the company produces 120,000 suits, 1.2 million shirts, 600,000 jackets, and trousers. This production is equal to around 1,000 product codes per month. Each product code has different colors and sizes so the company needs lots of fabric codes and accessories.
Meanwhile, after the lunar New Year, workshops in China operate perfunctorily due to the pandemic, along with tight control on the import and export so the supply of raw materials becomes tenser and tenser. The company is facing the risk of a shortage of raw materials in the months to come.
Risk of crisis
According to a survey by the Private Economic Development Research Board, if the Covid-19 pandemic lasts for six months, 74 percent of enterprises will go bankrupt, mainly because revenues cannot make up for expenses, including salary payment, bank loan interest, and premises rental. Moreover, nearly 30 percent of enterprises will lose 20-50 percent of revenue; 60 percent of enterprises even will reduce more than half of revenue. Industries that are affected seriously and immediately include tourism, education, garment and textile, and footwear.
With the garment and textile and footwear industries, the biggest impact is the dependence of 61 percent and more than 57 percent respectively on raw materials imported from China. Most enterprises merely stockpiled raw materials until the beginning of March, some until early April. Even more worryingly, around 20 percent of enterprises informed that they have no solutions to cope with the pandemic. This shows the passiveness of enterprises, at the same time reflects the limited capacity of small and medium-sized enterprises. This is also an early warning indicator for possible crises that might occur after the pandemic.
Therefore, besides saving themselves, enterprises proposed the Government to have policies to help them to overcome the current difficulties. Moreover, enterprises hope that the Government will run stimulus packages, open customs clearance to import raw materials, reduce power and water prices.
Currently, the business community has high expectations on the Directive of emergency solutions to solve difficulties for Covid-19 affected enterprises that Prime Minister Nguyen Xuan Phuc put forward at a recent Government meeting. Of which, the Government’s support package will include credit and financial support measures and concentrate on the aforesaid directly-affected industries. Especially, PM emphasized that the directive will be effective immediately to help the business community as well as people.
Increasing competitive pressure
Returning to some garment and textile enterprises in Ho Chi Minh City after the Covid-19 outbreak has become a pandemic, the work atmosphere at these workshops, one of the most affected industries, remains vibrant and goods are ensured in the short term.
With three workshops including around 300 workers, producing 100,000 products each month, collecting US$150,000, Phu Thanh Nam Garment Company Limited is one of the leading enterprises in District 12, specializing in processing goods to export into the US. Sharing about difficulties of the production during the pandemic, Mr. Pham Trung Duong, the company’s director, said that the garment and textile industry has been affecting seriously due to a shortage of raw materials from China.
However, as his company actively signed production contracts until April so it has not been influenced much. Besides, many of its customers have started to connect again with raw materials producers in China and are informed that the orders will be resumed by the end of April so the situation will be less tense if the pandemic is controlled well.
‘It is forecast that the unit price of new orders tends to increase so enterprises will face difficulties. Especially, domestic enterprises are under the pressure of higher taxes than their counterparts in neighboring countries, so the competitive pressure is high. Therefore, garment and textile enterprises proposed that the Government should review, reduce or give tax exemption to help enterprises to overcome the current difficulties,’ said Mr. Pham Trung Duong.
Similarly, at the Fly High Garment Company Limited in Go Vap District with 8 production lines and 250 workers, specializing in processing export fashion products, the work atmosphere was rather zealous. The company’s representative said that it uses more than 60 percent of raw materials made in Vietnam so it has not been affected much by the pandemic.
However, the company concerned that current taxes in Vietnam have been affecting negatively competitiveness of domestic enterprises compared to neighboring countries. The risks of order shifting are fairly high if enterprises are unable to offer a competitive price level in the coming orders. Therefore, enterprises hope that the State will have policies to reduce, exempt and extend tax debt to support enterprises.
Meanwhile, the representative of Garment 10 Corporation said that the company has been suffering huge impacts caused by the pandemic, especially the supply of raw materials from China. Because the company produces 120,000 suits, 1.2 million shirts, 600,000 jackets, and trousers. This production is equal to around 1,000 product codes per month. Each product code has different colors and sizes so the company needs lots of fabric codes and accessories.
Meanwhile, after the lunar New Year, workshops in China operate perfunctorily due to the pandemic, along with tight control on the import and export so the supply of raw materials becomes tenser and tenser. The company is facing the risk of a shortage of raw materials in the months to come.
Risk of crisis
According to a survey by the Private Economic Development Research Board, if the Covid-19 pandemic lasts for six months, 74 percent of enterprises will go bankrupt, mainly because revenues cannot make up for expenses, including salary payment, bank loan interest, and premises rental. Moreover, nearly 30 percent of enterprises will lose 20-50 percent of revenue; 60 percent of enterprises even will reduce more than half of revenue. Industries that are affected seriously and immediately include tourism, education, garment and textile, and footwear.
With the garment and textile and footwear industries, the biggest impact is the dependence of 61 percent and more than 57 percent respectively on raw materials imported from China. Most enterprises merely stockpiled raw materials until the beginning of March, some until early April. Even more worryingly, around 20 percent of enterprises informed that they have no solutions to cope with the pandemic. This shows the passiveness of enterprises, at the same time reflects the limited capacity of small and medium-sized enterprises. This is also an early warning indicator for possible crises that might occur after the pandemic.
Therefore, besides saving themselves, enterprises proposed the Government to have policies to help them to overcome the current difficulties. Moreover, enterprises hope that the Government will run stimulus packages, open customs clearance to import raw materials, reduce power and water prices.
Currently, the business community has high expectations on the Directive of emergency solutions to solve difficulties for Covid-19 affected enterprises that Prime Minister Nguyen Xuan Phuc put forward at a recent Government meeting. Of which, the Government’s support package will include credit and financial support measures and concentrate on the aforesaid directly-affected industries. Especially, PM emphasized that the directive will be effective immediately to help the business community as well as people.
