Fresh push ahead for nation’s ever-improving enterprises

December 07, 2021 | 09:00
Despite massive difficulties remaining due to the health crisis causing major disruptions in supply chains, domestic industrial production has continued bouncing back, promising a brighter picture for economic growth.
Fresh push ahead for nation’s ever-improving enterprises
Local enterprises are expecting a similar or better performance from the fourth quarter, Photo: Le Toan

Since early October, 28-year-old Do Hong Minh and another 1,300 workers at Japanese-invested FCC Vietnam Co., Ltd. at Hanoi’s Thang Long Industrial Park have been working at full speed, with plenty of overtime involved.

“We have three days working overtime voluntarily, with a total of 12 hours a day. We have more money to cover our living expenses,” Minh told VIR. In early November, FCC Vietnam imported two modern lathes in a plan to expand production. It is expected that the company will import another six lathes next year.

“Our company is recruiting more employees. Currently, it is suffering from a lack of workers, while it has landed many export orders from some partners in the US,” Minh said.

FCC Vietnam has three big workshops producing vehicle clutches, and other spare parts of the automotive industry to supply for Yamaha, Suzuki, and Honda. The products are also exported to the US.

Previously, the pandemic had forced FCC Vietnam to reduce production costs, with over 200 workers facing a layoff with 70 per cent of monthly salary. Now, all workers are back on the job with a rise in income.

Takeo Nakajima, chief representative of the Japan External Trade Organization in Hanoi, cited its data from last year showing that 47 per cent of Japanese companies in Vietnam intended to expand their business while only 6 per cent said they would shrink or close operations.

“We are pouring more resources into digital transformation initiatives in Vietnam and Asia, and we are running a series of webinars and seminars to connect Vietnamese startups with Japanese companies,” Nakajima said. “Vietnam’s human resources are a good match with Japanese technology, especially in mobility, e-commerce, factory automation, and business process outsourcing.”

According to the General Statistics Office (GSO), Japanese businesses have greatly contributed to domestic industrial production, which is gradually improving. “Business and production activities, of manufacturing and processing firms in particular, so far this year have shown positive signals,” said GSO general director Nguyen Thi Huong.

Fresh push ahead for nation’s ever-improving enterprises

Bouncing back

The GSO last week reported that the Vietnamese economy continues its recovery trend and is beginning to bounce back.

“Vietnam’s index for industrial production (IIP) in November continues to flourish as all localities nationwide implement the government’s Resolution No.128/NQ-CP dated October 11 on safe adaptation to the pandemic,” Huong said.

The resolution stipulates four levels of risk and specifies response measures applicable to the corresponding activities of organisations, public agencies, and businesses. Production and business establishments, enterprises, cooperatives, household businesses, traffic works, construction, and business and service establishments are all allowed to operate at all four levels, but owners must have plans and take responsibility for pandemic prevention and control.

The IIP for November increased 5.5 per cent on-month and 5.6 per cent on-year. The IIP for the first 11 months of the year climbed 3.6 per cent on-year, higher than the 3 per cent ascension in the same period last year. In which, the manufacturing and processing industry, which creates 80 per cent of industrial growth, increased 4.8 per cent on-year, higher than the 4.4 per cent climb in the corresponding period last year.

According to a recent GSO survey on 6,500 manufacturing and processing firms’ sentiment on production and economic outlook, up to 73.7 per cent of enterprises said their business and production situation in Q4 will be far better than and as stable as in Q3. Enterprises also forecasted that their new export orders in Q4 will also be far more than in Q3, with 77.6 per cent of businesses projecting their new export orders will both increase and be kept as in Q3.

In addition, up to 84.3 per cent of respondents estimated that in Q4, their employees will both increase and be kept as in Q3.

Minh from FCC Vietnam also told VIR that he felt optimistic about his work, and believed in the economy’s prospects. “Our company is expanding its workshops, meaning we will have more work to do,” Minh said. “My sister is also working for a foreign company in Hanoi producing garments. She is working at full speed, with an income now being VND1.5 million ($65) higher than earlier this year.”

According to the GSO’s survey, 75.8 per cent of respondents in the garment sector said their production will rise or stay the same as in Q3, with about 75 per cent also believing the same for export orders.

In a specific case, Nguyen Viet Thang, a representative from Garment Materials Production JSC in Hanoi, told VIR that his company is recruiting several hundred new workers, each of who can take care of three automatic production chains.

“The company’s 11-month revenue and profit increased 10 and about 8 per cent on-year, respectively. It is expected that the rates may be 11 and 10 per cent, respectively, for the whole year,” Thang said. “Our customers are from Vietnam, Indonesia, India, Malaysia, and Pakistan.”

The GSO reported that in the first 10 months of 2021, Vietnam’s total garment and textile export turnover hit $32 billion, up 10.8 per cent on-year. Also according to the GSO, the economy witnessed a rise in the number of newly-established businesses, which sat at over 11,900 in November registered with $6.5 billion and employing 76,600 new labourers. This represents an on-year rise of 44.6 per cent in the number of enterprises, 38 per cent in capital, and 30.2 per cent in the number of labourers.

However, in the first 11 months of this year, the number of newly-established enterprises hit 105,600 registered at $63.22 billion, employing just over 784,000 labourers. This demonstrates an on-year decrease of 15 per cent in the number of firms, 22.6 per cent in capital, and 19.2 per cent in labourers.

Needing more support

In Resolution No.42/2021/QH15 signed on November 27 in the second session of the 15th National Assembly, Chairman of the legislature Vuong Dinh Hue stated that enterprises in general, though beginning to recover, remain in difficulties.

“The state has enacted many solutions to help enterprises and people out of difficulties. It is necessary to review the effectiveness of all such policies in a comprehensive manner, while also proposing new solutions to continue supporting those affected by the pandemic,” he stressed. The Ministry of Planning and Investment last week submitted the country’s hallmark programme on economic recovery and development to the government for consideration.

It is estimated that the programme will cost at least VND800 trillion ($34.78 billion). The programme will be scrutinised by the government before being considered and adopted by the National Assembly in December. The programme’s resources, running from 2022 to 2023, will be mobilised from saved recurrent spending, government bond issuance, non-budget state-owned financial funds, and foreign exchange reserves funds, as well as loans from financial institutions.

The programme will cover four components: the opening of the economy closely linked with fighting against COVID-19; providing social security and employment ($1.44 billion); recovery of enterprises, cooperatives, and business households ($16.08 billion); and infrastructure development ($9.56 billion).

A representative from Japan’s Japanese-backed Walcom Industry located near FCC Vietnam said that the business community is eager for bigger support from the state, which is one of the most important drivers of enterprises.

“Besides this programme, more administrative procedures must be simplified and removed. Currently, businesses still have to submit both paper documents physically to authorised agencies, though the documents are also sent to them online,” the representative said.

In Vietnam, the total amount of tax and state budget revenue that has been extended, exempted and reduced in 2020 reached $5.6 billion. In 2021, besides some policies issued in 2020, more support policies on taxes and fees have been introduced at an estimated scale of about $6.08 billion.

By Khoi Nguyen

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional