Manufacturing curtailed under fourth pandemic wave

Saigon Investment
(Saigon Investment) - The fourth wave of the Covid-19 pandemic has once again brought Ho Chi Minh City to a near standstill with social distancing measures back in place, and many businesses having to curtail their manufacturing activities due to further spread of infection among their workers. 

Illustrative photo.

Illustrative photo.

Stressful conditions

The Duy Khanh Mechanical Company moved fast to implement solutions such as phasing out officers and employees at their offices and factories, restricting travel, cancelling internal meetings, and establishing a Steering Committee for Covid-19 prevention and control in their premises. Mr. Do Phuoc Tong, Chairman of Board of Directors, said that social distancing reduces labor productivity but it is an essential safety measure, because in case there is a virus infection, then it becomes very difficult to contain the situation and the consequences are fatal.

Mr. Pham Xuan Hong, Chairman of Board of Directors of Sai Gon 3 Garment Joint Stock Company, and Chairman of the Ho Chi Minh City Textile and Garment Association, said that textiles and garments have been severely affected due to lack of raw material, as well as bottlenecks in the import markets. Most businesses have placed orders until the end of the third quarter or end of the year, but now the pandemic has broken out across many provinces and cities. If businesses become victims of any infected cases and as a result have to suspend production, they may very well be required to compensate their customers for lack of meeting their commitment.

Similarly, Mr. Nguyen Chi Trung, Chairman of Board of Directors of the Gia Dinh Group Joint Stock Company, said that leather and footwear manufacturers and exporters are currently facing many difficulties. The leather and footwear industry has been expecting a good season with many orders, and with a fixed delivery time. However, the sudden outbreak again of the pandemic has complicated many working situations, such as social distancing has become mandatory, so it is likely that the delivery schedule will also be delayed. Businesses are all in a tight spot while having to comply with strict pandemic rules and regulations, but these measures are also necessary to avoid a large scale spread of infection within the work space.

During the last few weeks, so many businesses in Ho Chi Minh City are now working under great stress and continued anxiety. At a recent meeting with Ho Chi Minh City leaders, a representative of Saigon Coop said that the biggest difficulty at this time is the risk of contact with F customers coming to shop, which could lead to supermarkets and convenience stores having to temporarily stop operating. It did so happen that Saigon Coop had to suspend operations in six stores, which sent ripples across the entire chain network of stores.

A serious loss and reduction in customer demand has also blocked the output of many products and services since the sudden outbreak of the virus for the fourth time. Ms. Nguyen Ngoc Huong, Director of Viet Nature Company, that specializes in freeze-dried vegetable powder, said that the pandemic has caused the company sales to decline by more than 50% because their product is still quite new. Exports to Europe are also facing many difficulties. If output slows, production too slows. This is evident in the area of clean vegetables from Thien Nhien Viet, which are becoming difficult to handle.

Hope for vaccination

The stress and anxiety created by the fourth wave of the pandemic is something businesses have to continue to face and resolve on a day to day basis. This is why many businesses, especially those that employ a lot of workers, expressed their desire to have access to vaccines at the soonest. Mr. Do Phuoc Tong said that only when people are fully vaccinated will there be less anxiety in production units in businesses, and workers and managers will begin to feel much more secure. Mr. Pham Xuan Hong said that textile enterprises are looking forward to early access to the vaccine. The positive news is that the Government has allowed Ho Chi Minh City businesses to access, buy, import, and use the Covid-19 vaccine from their own source.

According to the Ho Chi Minh City Union of Business Association (HUBA), the results of an online survey of 100 businesses during the current fourth wave of the pandemic, shows upto 84% of SMEs are facing constant difficulties. Of these, 40% are facing shortage of business capital, 80% have had to reduce their operations, and 52% have to cut down on the number of labor. The most seriously concerning issue today is how to access loans and support policies to keep businesses afloat.

From earlier experience of support packages, enterprises are still wary and there is a very low acceptance rate for support packages due to complicated procedures for accessing loans or support from the Government. For example, the tourism industry was the first to be seriously affected when the pandemic broke out, but the number of businesses taking benefit from support is very modest. According to the Department of Tourism in Ho Chi Minh City, in 2020 only ten out of fifty travel businesses and accommodation enterprises used the support to reduce their loan interest rates.

Recently, the Department of Tourism of Ho Chi Minh City has proposed many solutions to the People's Committee of Ho Chi Minh City to support tourism businesses affected by the Covid-19 pandemic. In this proposal, the focus is on financial support for tourism enterprises to maintain their operating status and continue to retain employees. The Department has proposed that the People's Committee must consider submitting to the City Council the approval of a policy of using capital from the city budget. This capital has been entrusted to the Bank for Social Policies to support credit in the form of unsecured loan, where no collateral is required, at a zero percent interest rate for all tourism businesses in trouble.

Mr. Phan Dinh Hue, Director of Vietcircle Tourism Company, said that this is a very good idea. For a long time in the past, to access loans without a collateral was a very complicated procedure. There was a simpler solution in lending the business back its own deposit, but this solution did not receive an appropriate response, even though it was put forward by many businesses and associations repeatedly. According to Mr. Hue, it is necessary to hold a comprehensive investigation into how difficult it is for businesses in current times, classify new businesses or those operating for a long time, and then offer appropriate support.

This method may be much more effective. In a meeting with businesses sometime back, Ho Chi Minh City leaders said that they would propose considering a reduction in VAT from 10% to 5%, towards which many businesses seemed very excited. However, for such proposals to take shape takes a lot of time for approval.

Thanh Dung

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