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Businesses struggle with increased costs, impact from Covid-19

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According to the Vietnam Association of Beer, Wine and Beverage (VBA), more than 85 percent of drink manufacturers have had difficulties in product distribution.

Businesses struggle with increased costs, impact from Covid-19

Their inventories are surging, the revenue is decreasing, and hundreds of thousand of workers have been affected.

Drink consumption has dropped dramatically. The large distribution channel of drink manufacturers has shrunk by two thirds.

The difficulty in goods circulation is one reason behind the supply chain disruption. Many enterprises have had to cut production capacity, the workforce, or stop production.

The production cost associated with the ‘three on-site’ principle is increasing, as well as expenses on pandemic prevention, while enterprises cannot collect debts.

Analysts say that increases in input material prices, inventories and debts are the “three increases” that have sunk businesses.

Having been closed for a long time, restaurants, eateries and tourism sites have become exhausted. Lacking capital and workers, they face difficulties resuming business. This will also have an adverse impact on the beverage industry.

A recent survey by Vietnam Association of Seafood Exporters and Producers (VASEP) found that as of the end of August 2021, only 30-40 percent of seafood companies in southern provinces could operate under the ‘three on-site’ mode and the enterprises only mobilized 30-50 percent of total workers, while the others took unpaid leave.

It’s estimated that the general capacity of the whole region has dropped by 60-70 percent.

According to VASEP, only 30-40 percent of enterprises are capable of recovering production soon after social distancing ends. Production will be seriously affected because of supply chain disruptions or difficulties in transportation.

For mechanical engineering enterprises, Dao Phan Long, Chair of the Vietnam Association of Mechanical Industry (VAMI), said because of social distancing, production of its member enterprises has been stagnant, especially in the south.

Because of strict regulations on goods transport, materials cannot be brought to factories, while finished products remain unsold. Many vendors in supply chains have to stop operation temporarily. There are not enough jobs for workers. Production is running at a moderate level with high cost and low efficiency.

The General Statistics Office (GSO) reported that 70,200 businesses halted their operation for a definite time in H1, stopped operation while following procedures for dissolution, and completed procedures for dissolution.

What worries enterprises the most is that they don’t know how long social distancing will last. If some localities have reopened but others have not, their production cannot fully recover.

Rescuing businesses

Economist Le Dang Doanh said the output products of one industry could be the input materials of another industry. Since some enterprises have had to stop production, many other enterprises will suffer.

He warned about only paying attention to essential goods supply chains and neglecting other industries. This will cause serious consequences to the economy.

The policies on resuming production need to be designed in a way to ensure harmonious operation, with no discrimination among business fields.

Doanh quoted the Minister of Transport (MOT) as saying that all goods must be considered essential goods, except prohibited goods. All industries and business fields need to operate at the same time to create a harmonious economy.

In order to heal disrupted supply chains, economists say the Government needs to ensure uninterrupted goods and material transport. The regulations on essential goods should be removed and a list of goods and services that cannot be circulated should be released.

It’s also necessary to speed up vaccinations for workers, especially in industrial zones (IZs) and enterprises in supply chains; and allow enterprises to use workers who can meet requirements to participate in production lines.

Local authorities should be required to prepare flexible scenarios to cope with Covid-19 outbreaks, because recovering the economy is an urgent matter. Enterprises are located in different areas but they have close relations and benefits. Reopening in only some localities won’t help solve the current problems.

Prime Minister Pham Minh Chinh on September 9 signed Resolution 105 on supporting enterprises, cooperatives and business households, with a focus on restoring and developing production and business activities while ensuring compliance with regulations on pandemic prevention and control.

The resolution says that enterprises need help to settle the bottlenecks that hinder production and business; and the number of enterprises that have to stop operation temporarily or be dissolved should be minimized. 

Tran Thuy

Source: https://vietnamnet.vn/en/feature/businesses-struggle-with-increased-costs-impact-from-covid-19-775767.html

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Vietnam trade to climb to new peak

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Vietnam trade to climb to new peak

A container ship is seen at Tan Cang Cai Mep Terminal in the southern province of Ba Ria-Vung Tau. Photo by VnExpress/Dang Khoa


Vietnam’s trade could reach a record high of $600 billion in 2021, the Ministry of Industry and Trade has said.

This would be 10 percent higher than last year as against a government target of 4-5 percent, it said.

It had reached $510 billion as of Oct. 15 with a marginal deficit.

Vietnam, which has been recording a trade surplus for years, has been suffering a deficit this year as social distancing and travel restrictions imposed to curb the spread of Covid-19 hurt exports.

So the final value would be dependent on curbing Covid-19 and recovering manufacturing and exports, the ministry said.

If there are no more major outbreaks in the remaining months and southern-based companies regain their growth momentum, the deficit could be wiped out and there could even be a surplus, it added.

Several large FDI plans announced recently seem to substantiate the ministry’s forecast.

South Korean electronics giant LG Display in August announced an additional investment of $1.4 billion in its manufacturing facility in Hai Phong this year.

Source: https://e.vnexpress.net/news/business/economy/vietnam-trade-to-climb-to-new-peak-4375836.html

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HDBank affirms position among top 5 prestigious banks in Việt Nam

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With its outstanding business results and accompanying the economy in overcoming the pandemic, HDBank affirms position among top five prestigious banks in Việt Nam. — Photo courtesy of the bank

HCM CITY — HDBank has once again been honoured as one of the most prestigious private institutions in the country by Vietnam Report, affirming its position as among the most dynamic banks in terms of growth.

The award was presented at the Vietnam Top 50 Public Companies (VIX50) in 2021 ceremony organised by Vietnam Report on October 21 in Hà Nội.

Techcombank, ACB, VPBank, and TPBank also won awards.

The awards were based on three criteria: financial capacity as shown in the latest year’s financial statements; communications prestige assessed by media coding method; and surveys of relevant stakeholders done in June 2021.

HDBank did well in all three criteria.

Its positive business results in the first six months of 2021 was a bright spot.

Overcoming the adverse impacts of the COVID-19 outbreak, HDBank achieved 82 per cent of its full-year profit target in the first nine months.

Its total assets as of September 30 were worth over VNĐ346 trillion (US$15.2 billion), up 26.7 per cent from a year earlier.

Return on equity (ROE) was 24 per cent compared to 21.1 per cent in September 2020. The capital adequacy ratio (CAR) and liquidity were maintained at high levels, with CAR (according to Basel II) at 13 per cent, far above the minimum requirement of 8 per cent.

The bank’s total operating income in the first three quarters topped VNĐ12.1 trillion ($532.3 million), 23.6 per cent up from the same period last year. Operating costs continued to be optimised with the cost to income ratio reduced to 39 per cent from 43.8 per cent a year earlier.

Its standalone and consolidated non-performing loan ratios were below 1 per cent and 1.4 per cent, both lower than in a year earlier.

Services continued to be its bright spot in the first nine months, as net income rose 88.6 per cent year-on-year.

Notably, net income from services for the parent bank more than tripled from the same period last year thanks to growth in the bancassurance and payments services segments.

This helped HDBank develop in a more comprehensive way, no longer depending on credit while minimising risks and improving the revenue structure in a sustainable manner.

In the first nine months of the year, HDBank actively undertook digital transformation to promptly meet the transaction needs of customers in the context of the pandemic.

To help prop up the economy, since the pandemic outbreak HDBank has earmarked over VNĐ42 trillion to support individual and corporate customers.

Besides preferential interest rates, the bank has also offered support in terms of waiver and reduction of various fees.

In August, it won the Best Bank and Best Digital Transformation Bank in Vietnam in 2021 awards at the Global Brand Award. —

Source: https://vietnamnews.vn/economy/1064713/hdbank-affirms-position-among-top-5-prestigious-banks-in-viet-nam.html

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Covid-19 pandemic and the goal of 1.3-1.5 million enterprises by 2025

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The target of having 1.3-1.5 million enterprises by 2025 may be difficult to achieve as many obstacles and the Covid-19 pandemic have affected business seriously. A strong recovery and reform program is needed to encourage Vietnamese businesses.

Một trận 'đạn pháo' và giấc mơ 1,3-1,5 triệu DN vào năm 2025

In early 2021, the Government assigned the Ministry of Planning and Investment to develop a resolution on enterprise development for the period of 2021-2025, with a vision to 2030, which targets 1.3-1.5 million enterprises by 2025.

According to the Vietnam General Statistics Office, by the end of 2020, the country had about active 810,000 enterprises. To achieve the target, Vietnam must have 100,000-150,000 new businesses coming into operation annually.

This year, due to the heavy influence of the Covid pandemic, a large number of enterprises has withdrawn from the market. It is estimated that by the end of 2021, the number of active businesses will be lower than that of 2020. The question is the target will be fulfilled?

Unified anti-pandemic policy needed

Entrepreneurs complain that with the policy “each locality is a fortress to prevent the epidemic”, many provinces have prioritized the fight against the epidemic with the desire to achieve “zero Covid-19” and this has affected business and production operations.

In many localities, hundreds of pandemic checkpoints have been set up at entrances and highways, which have hindered circulation of goods. The Vietnam Association of Logistics Service Providers lamented that as provinces apply different epidemic prevention measures, goods transport has been seriously affected, doubling the burden on businesses that have had to struggle to survive in the pandemic.

The characteristic of production and business activities is chain connections, regardless of administrative boundaries. Therefore, when local governments apply different policies and regulations on social distancing and goods transport and some provinces even close their doors to ensure “zero Covid”, input materials cannot reach factories and goods are kept in stock. This is seen as the fastest way to push enterprises to the risk of bankruptcy.

Recent statistics from the General Statistics Office show that in January-September 2021, up to 90,300 enterprises withdrew from the market, up 15.3% over the same period of last year.

On average, 10,000 enterprises were leaving the market each month. In fact, the number may be higher because when provinces implemented strict social distancing, many businesses could not complete closure procedures.

This situation has never happened in the past 10 years. Experts estimate that from now until the end of 2021, the number of businesses that will stop operating or be dissolve will be around 120,000.

Prolonged lockdowns have hit the economy hard. However, when switching to “living with Covid-19”, there are still many obstacles. In some provinces, the risk of “sub-license” rises again, making it difficult for businesses to resume operations.

Ly Kim Chi, Chairwoman of the HCM City Food and Foodstuff Association, said that businesses are already exhausted. If local governments issue more sub-licenses and regulations that cause difficulties for business operations, enterprises will “collapse” completely.

Another challenge for business and production recovery is labor shortages, as tens of thousands of migrant workers have left cities to return to their hometowns to avoid the pandemic.

Stronger reform

Một trận 'đạn pháo' và giấc mơ 1,3-1,5 triệu DN vào năm 2025

Nguyen Dinh Cung, former director of the Central Institute for Economic Management, said that in 2017 the Institute had proposed that the Government remove three quarters of the existing 4,000 business conditions. However, in official documents issued later, the Government only asked to reduce and simplify 50% of these. In 2018, ministries and branches began reducing and simplifying business conditions under the Government’s direction.

“But I don’t think that it really works because we recommended removing and abolishing, not simplifying business conditions,” Mr. Cung said. Therefore, there has been no substantive impact on the business environment, and no positive effect on enterprises. Half-hearted reform has led to the risk that business conditions are recovering.

The Vietnam Chamber of Commerce and Industry (VCCI) commented that the recent reform and reduction of business conditions and support for enterprises to enter the market has not been substantial. Ministries and state agencies claimed to have cut business conditions by up to 60%, but it is on paper only. In reality it’s only about 30-40%. The market entry procedures are still complicated and overlapping.

In 2016, the Government issued Resolution 35/NQ-CP on supporting and developing enterprises, which set a target of having 1 million enterprises operating by the end of 2020, but it failed. According to experts, the main reason is that the business environment still has many barriers for enterprises to enter the market.

Therefore, in the period of 2021-2025, if there are no drastic reforms in the business environment and to changes in behavior detrimental to production and business activities, the dream of having 1.3-1.5 million enterprises by 2025 will be unreachable.

Facing difficulties caused by the Covid-19 pandemic, businesses need a strategy to restore safe production and business activities in the new anti-epidemic state. It is important for Vietnam to take action now, to maintain its competitiveness on regionally and globally, and not to fall behind in the economic recovery process.

Economic experts said that it is necessary to take action immediately and have a comprehensive economic promotion program. Otherwise, recovery will be slow and painful.

Tran Thuy

Source: https://vietnamnet.vn/en/feature/covid-19-pandemic-and-the-goal-of-1-3-1-5-million-enterprises-by-2025-783501.html

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