In the past 2 months, 28,400 enterprises nationwide have temporarily suspended operations or suspended operations pending dissolution procedures. 55% of operating enterprises surveyed said: The Covid-19 epidemic will negatively affect business performance in 2020.
The pharmaceutical industry depends heavily on imported raw materials. Photo: CAO THANG
Worry about the business situation getting worse
Mr. Ralf Matthaes, CEO of Infocus Mekong Research, shared: “I have been in Vietnam for more than 26 years and have never seen the economic outlook so severely affected, even in the period of 2010-2011 when the real estate bubble burst. Infocus Mekong Research's survey of 242 business owners showed that 20% business owners affirmed better development prospects, the rate of businesses affirming to maintain the same growth rate as in 2019 was 25%. The majority of businesses believed that the situation would be worse, with more than 55% businesses.
The reason mentioned is that the source of imported raw materials from China has decreased, and the cost is higher than before. At Dien Quang Lamp Joint Stock Company, the raw materials are only enough to maintain production until the end of the first quarter. Due to the prolonged epidemic, this unit has prepared a backup plan, finding alternative raw materials from many other markets. However, the price of raw materials increased by 5%-10%, in some places up to 20%, which will greatly affect the cost of products as well as the production plan.
In fact, a number of industries such as crude oil and natural gas exploitation, motor vehicle manufacturing, electrical equipment manufacturing, beverages, clothing, etc. had a production index decrease of 0.9%-8.6%. Although some major industrial products did not decrease, they only had a low increase compared to the same period last year. Only a few products maintained high growth momentum, such as the production of phone components, steel bars, angle steel, and mobile phones, increasing by 25.5%-28.9%.
Over the past two months, businesses in many sectors have been able to maintain growth momentum because raw materials imported from the end of 2019 are still in stock. From March, maintaining growth momentum will be more difficult due to depleted raw materials and limited alternative raw materials. Trade activities between many countries will also be slowed down or even interrupted due to the extended lockdown to prevent the spread of the disease.
Accelerate support solutions to businesses
However, not all industries are affected equally. Tourism, hotels, retail, food and beverage businesses, manufacturing, and logistics are the industries that are currently suffering the most damage. Many entertainment venues, retail and food chains, etc. have closed and reduced their operations to reduce rental costs. Survey results by Infocus Mekong Research also show that operating efficiency has decreased by 20%-50%, depending on the economic and geographical region. Revenue has decreased by 13,48% compared to the same period in 2019.
What solutions can help the business community overcome current difficulties? The Ministry of Industry and Trade has worked with businesses to promote the search for sources of raw materials in many markets. Ministries and sectors are coordinating to quickly remove bottlenecks in freight transport, trade connection, electronic payment, specialized inspection, customs clearance procedures, etc. Credit institutions have accelerated debt extension, debt forgiveness, and reduced loan interest rates for businesses. The Government has also taken strong action by issuing 7 solutions to support businesses. It is worth mentioning a credit package of about 250,000 billion VND to support businesses affected by the epidemic to restructure debt repayment terms, consider reducing or exempting loan interest rates, maintaining debt groups, reducing fees, etc. The Government also requires relevant units not to make price increases in the first and second quarters for goods that are inputs for business production priced by the State. To share the common difficulties, many retail systems have reduced costs for renting shelves and premises for businesses, etc.
Economists believe that efforts from many sides will partly reduce the burden of difficulties for businesses. However, the most important issue now is to control the source of domestically produced raw materials. Accordingly, prioritize the source of raw materials for domestic enterprises instead of focusing on exports. For manufacturing enterprises, in addition to efforts to accelerate exports, this is also an opportunity to develop domestic market share. As long as stable production is maintained to overcome this difficult period, businesses will have strong growth momentum as soon as the epidemic is contained.
