|SMEs companies are badly impacted by the COVID-19 pandemic |
Thao and her husband, owners of a small restaurant in Ho Chi Minh’s District 8 with eight employees shared, “It has been more than two months since we had to close the restaurant. Our entire family works for this business and there are eight employees, but now I have no income and I have to pay rent, food, and my employees’ wages, which is really difficult."
Thao and her husband moved to Ho Chi Minh City to start the small restaurant, dreaming about a stable life. Ever since the business closed due to the lockdown restriction, costs and concerns have been racking up with each day.
"We understand that everyone is struggling, so even though we are taking a break, we continue to help our employees with VND1.5 million ($65) a month so they can continue working with us when the pandemic is over. There is an employee who is staying with us. He is stuck here since his hometown is too far away,” she said.
In the same boat, Luan, a businessman in District 7, has had to shut down his restaurant. Before the restrictions, his restaurant's was operating stably with up to 19 employees from rural towns who came to Ho Chi Minh City for work. Luan now has to use his savings to get by. “Every month, I pay 75 per cent of the rent, I still need to eat but I have no earnings. I don’t have a lot of money and so I cannot help my employees. I can only allow them to stay here, saving whatever cost I can," Luan shared.
Thao and Luan are among many local companies in Ho Chi Minh City who are badly impacted by the COVID-19 pandemic. Nobody anticipated the lockdown to stretch on this long and hardly anybody was prepared for added troubles from rapidly changing restrictions, economic uncertainty, and rising COVID-19 cases.
"We desperately need support from charities or the government, but everyone is struggling at the moment, so we can't ask for anything," they added.
Along the streets, advertisements for sublease and transfer are pasted on close-fitting iron doors. Behind closed doors, concerns rise among owners and devoted consumers alike. Will they still be able to pull through and reopen once the epidemic is over? Small businesses are in dire need of help from the community.
Small scale, large risk
|Many MSMEs have suffered huge revenue losses while others have shut down due to pandemic |
Micro-, small-, and medium-sized enterprises (MSMEs) constitute the backbone of the global economy, accounting for two-thirds of employment globally and between 80 per cent of employment in low-income countries.
At the same time, they are disproportionately affected by pandemic-related shocks. They are overrepresented in non-essential services sectors hardest hit by confinement measures. Many MSMEs have suffered huge revenue losses while others have shut down.
According to the Ministry of Planning and Investment, 85,500 businesses have shut down in Vietnam so far this year due to the pandemic, an increase of 24.2 per cent on-year. 43,200 of these enterprises suspended operations temporarily. 24,000 were in Ho Chi Minh City, accounting for 28.1 per cent of total closures in the city.
Compared to the bigger conglomerates and restaurant chains, small, independent businesses are undoubtedly at higher risk of losses and failure. Often, these businesses do not have a large war chest of savings to depend on, especially in times like these.
While the situation is expected to be improving, small companies must face the immediate difficulty of several expenditures such as renting premises, retaining staff, and even other everyday expenses with no input income.
|Along the streets, advertisements for sublease or transfer on storefronts |
In related news, late last week a number of SMEs in Ho Chi Minh City, the largest coronavirus hotspot in Vietnam, have called for immediate assistance from the government to cushion the impact of the pandemic.
Most notably, businesses wished to stop paying social insurance for employees for a period of at least six months until the pandemic is fully brought under control. Additionally, they called for the deployment of a loan scheme with a preferential interest rate package of at least 4 per cent , while also deferring taxes, debts, and land rent for them.
Leave no one behind
Besides support from governments, groups are offering different types of assistance to small businesses, while also highlighting the need for wider support.
As Vietnam's leading brewery, SABECO has endeavoured to share the burden of SMEs through the Collecting Million Stars programme while inspiring people to stay positive. The programme also drove engagement and loyalty from small business customers and consumers who will not who helped them during the difficult time.
Under Collecting Million Stars, for every public post on social media that features a creative star image, accompanied with the hashtags #GopTrieuNgoiSao #DiLenCungNhau as well as tagging Bia Saigon Fanpage, SABECO and its Bia Saigon will donate VND10,000 (43 US cents). The company will contribute for the first 300,000 valid posts.
All donations collected will go to hundreds of the most affected small food and beverage (F&B) businesses in-need in Ho Chi Minh City where each outlet will receive support worth VND 5 million ($220) in cash.
The dream of the pandemic ending and normalcy returning would bring joy to many people, especially workers, the homeless, and restaurant owners. "I'm not sure if customers will visit our restaurant when we reopen. Fewer customers would be a challenge," Luan said, while remaining hopeful they can reopen soon.
This is the time, more than ever, when individuals and small businesses and hundreds of thousands of small businesses need the community’s help and support, not only to provide strength during this tough time but also to secure the lives of so many workers who rely on businesses to remain in this big city.