Businesses wait for Government’s financial support packages

Businesses have been waiting for the Government’s financial support packages amid the complicated Covid-19 pandemic, many must decline orders for the next quarter because of lack of materials.

Businesses have struggled to find domestic material supply sources to maintain production (Photo: SGGP)

Businesses have struggled to find domestic material supply sources to maintain production (Photo: SGGP)

Mr. Tran Hoai Nam, director general of Sunlight Mechanical Company said that businesses have been unable to get access to the Government’s support polices of extending payment deadlines of loans and reducing taxes and fees as local authorities are still waiting for specific instructions from ministries and agencies to implement the policy.
Mr. Nam said that 80 percent businesses in the field of manufacturing and processing depend on import materials from China. Material supply disruption since early this year has forced many to shift into other material supply markets such as South Korea, India, Japan, the EU and the US with the price 10-15 percent higher than that from China. This has caused small and medium enterprises unaffordable for maintaining production.
A survey on 1,200 businesses, conducted by the Private Economic Development Research Board under the Government’s Advisory Council for Administrative Procedure Reform, shows that nearly 74 percent businesses will be in the risk of bankruptcy if the pandemic lasts until June and businesses cannot approach support packages as revenue will not be enough to make up operation costs, workers’ wage payment and rent as well as loan interest. Of these, the ratio of businesses suffering 50 percent revenue reduction due to the pandemic will account for over 60 percent, those with 20-50 percent revenue reduction will account for 29 percent. Since early 2020, nearly 28,000 businesses have been forced to stop production, temporarily halt operation or complete dissolution procedures.
The import turnover in January reached US$18.6 billion, $500 million lower than expectation. It was estimated to reach $18.5 billion, down 0.5 percent over the previous month.
In the first two months of 2020, China was still the largest import market of Vietnam with the turnover approximating $10 billion, down 0.4 percent over the same period in 2019. The import turnover from South Korea, the EU and the US was $8 billion, $2.1 billion and $2.2 billion respectively, lower compared to the import turnover from China but still up 9 percent, 3.5 percent and 13.6 percent year on year.
Ho Chi Minh City Textile and Garment - Embroidery Association said that most of businesses under the association have not accessed the support packages from the Government so far. Some have taken the initiative in working with banks on loan payment deadline extension or loan interest rate cut to cope with the Covid-19 pandemic since early February. Many affirmed that if the pandemic is not under control in June, even businesses with strong capital will fall in difficulties.
Chairman of the association Pham Xuan Hong said that diversifying material supply sources is necessary but only those with strong capital are able to import materials from the US, the EU, South Korea and Japan. Small scaled ones have struggled to find domestic supply sources or import from Indian market. Still the sudden increase in the number of orders recently has overloaded Indian firms so this material source for Vietnam businesses is limited and unstable.
In order to help businesses solve difficulties, many businesses suggest that the Government should promptly guide authorized agencies to implement support measures especially credit packages, tax and fee reduction and exemption. Financial assistance plays an important role as businesses have been forced to buy materials with high prices to maintain orders and keep their partners. The Ministry of Industry and Trade should instruct commercial counsellors to find specific supply sources and help connect them and businesses as well as associations to assist enterprises as soon as possible.

By Ai Van – Translated by Phuong Ho

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