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HCMC: Many businesses suffer from Covid-19 epidemic

10:00 | 26/02/2020

VCN –The Covid-19 epidemic has taken place for two months, which has brought difficulties for businesses in Ho Chi Minh City. Many businesses are facing risk of production stagnation because of the extension of this epidemic.

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Many businesses in Ho Chi Minh City are facing the risk of production stagnation due to a lack of raw materials. Photo: Nguyen Hue

Severe shortage of materials

In a document sent to the Management Board of Saigon High-Tech Park (SHTP) and Ho Chi Minh City Export Processing and Industrial Zones Authority (HBA) on the circulation and transport of goods between Vietnam and China, the Ho Chi Minh City High-Tech Enterprises Association (SBA Association) and its members said the fact that the Vietnam Aviation Department cancelled all issued flight permits and suspended the licensing of new flights for Vietnamese airlines and foreign airlines between Vietnam and China from 13:00 on February 1 was needed for passenger transport to control the disease. However, the SBA Association realised that its members need to transport goods (including raw materials, machinery, equipment and spare parts) between Vietnam and China to maintain production and business.

“The lack of raw materials will directly affect the business and production activities of enterprises, the fulfillment of orders scheduled for the first quarter of 2020 will be delayed and a large number of workers will be underemployed in February and March 2020,” said the SBA Association.

From the above concern, the SBA Association proposed the management board and the association make recommendations to agencies to ensure normal circulation of goods for production between Vietnam and China, stabilising production and business. This transport will comply with the requirements of the Covid-19 epidemic prevention.

Not only enterprises in SHTP but hundreds of manufacturing enterprises in export processing zones and industrial parks in Ho Chi Minh City are also facing these difficulties. The Ho Chi Minh City Export Processing and Industrial Zones Authority (HBA) has acknowledged the urgent feedback and recommendations of many businesses and the shortage of raw materials has stagnated production and even stopped production in the short-term. This situation has been a concern of thousands of EPZ-IP and high-tech park enterprises in the city.

In fact, the EPZs - IPs and high-tech parks in Ho Chi Minh City with nearly 2,000 factories are in need of raw materials for production, a large part of which originates from China and no other alternative sources. Therefore, in the document sent to the Prime Minister as well as ministries and branches dated February 10, the HBA proposed the Prime Minister, the Ministry of Planning and Investment and sectors such as the Ministry of Health and the Customs General Department to immediately take urgent measures to prevent and combat the diseases and ensure circulation of goods via road and air, especially raw materials for production.

"For the production stability of thousands of businesses and jobs for hundreds of employees, we are looking forward to the efforts of the Prime Minister, the Government and ministries", said Nguyen Van Be, Chairman of HBA Executive Board

Many industries affected

In a recent meeting with the Department of Industry and Trade of Ho Chi Minh City, representatives of many associations and industries raised a lot of difficulties that city businesses were facing. In particular, for the textile and footwear industry, the source of raw materials for production has been the biggest concern when trade between Vietnam and China stalled due to the impact of the disease.

According to representatives of Ho Chi Minh City Textile and Garment - Embroidery Association, the businesses ‘available raw materials for production can be maintained for production for a month only. If the epidemic continues, businesses will be at risk of production disruption due to lack of raw materials.

Similarly, Pham Ngoc Giao, Vice Chairman and General Secretary of the Rubber Plastics Manufactures Association also said many raw material orders from Chinese partners were delayed due to the impact of the diseases, affecting production plans of many Association’s members. At the moment, the partners confirmed they would deliver goods but it still depended on the disease situation, so businesses have faced many difficulties. Although businesses can find alternative sources of raw materials from other countries such as South Korea, Japan, and Europe, higher prices from these countries reduces their competitiveness.

“Besides, rubber and plastic are products in the global production chain, so businesses that have products in the supply chain for multinational corporations also cannot sell because many of them have to stop assembling activities (typically automobile manufacturing groups) due to their lack of parts from China. For enterprises with 100 percent export activities to the Chinese market, the risk of stopping production is very high. Difficulties of enterprises due to the epidemic impacts lead to the fact that the growth target of 15 percent set by the association for 2020 may be less than 10 percent,” said Giao.

Business and production activities have reduced and stagnated, bringing difficulties to the banking industry, said Phan Dinh Tue, Deputy General Director of Sacombank.

Not only Sacombank, most banks are facing issues in credit growth although banks' mobilisation has increased sharply.

“Contrary to the situation of the same period last year, banks have to 'scramble' room to lend, now the lending situation of enterprises is very difficult. The banks’ credit growth from the beginning of the year has been maintained but mainly thanks to January. Credit in February grew very low while this was often a time of strong credit growth. This showed the impact of the Covid-19 epidemic on economic activities was very clear,” said Tue.

By By Nguyen Hue/ Ha Thanh