Production aids business confidence

Production aids business confidence, Illustrative image (Source: VNA)

Nguyen Van Be, chairman of the Business Association at the Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) said that as of early November, 95 per cent of all enterprises in export processing zones and industrial zones of the city have resumed operations, and about 75 per cent of all employees are back at work. “Most of them have sped up production lines to accomplish old orders, while some others are ready for new orders coming up,” said Be.

In the textile and garment sector, most businesses are busy with orders. Pham Xuan Hong, chairman of Saigon 3 Garment JSC, said that they are trying hard to resume production.

“The transportation of raw materials from other countries faces some obstacles, but businesses are coordinating with their suppliers to overcome step by step. The price of raw materials is also going up slightly, impacting on production costs, but it is not a big problem,” Hong said, adding that they are paying all attention to maintaining the labour force and operations of factories to serve their orders in time.

Meanwhile, Phan Van Viet, chairman of Viet Thang Jean Co., Ltd. (VitaJean), said that the company has renewed operation since the beginning of October with nearly 600 workers. The company is making efforts to produce 1.2 million apparel items to export to Europe. VitaJean’s items have been stocked on shelves across Europe to serve customers for Christmas and New Year. The company has received new orders until June 2022.

Likewise, Nam Hoa Corporation, a wooden toy and children’s furniture manufacturer in Binh Chanh district, has organised three shifts per day to export its products to Europe and the United States. Many partners have requested more products for the year-end season but the company has not yet received new orders due to a backlog of work.

To meet the increasing demand, these companies are considering upgrading machines to partially solve the problem of labour shortages. For example, Tran Thanh Son, manager at Song Ngoc Garment Co., Ltd, said his company decided to invest in an additional production line to help meet US orders after nearly four months of suspended production. “We have orders from the US until April next year,” he said.

Associations in furniture, handicrafts, plastics, and more are also optimistic about market development after Ho Chi Minh City and other localities loosened restrictions, with numerous enterprises signing high-value orders and urgently increasing work shifts to keep up with deadlines.

Andrew Harker, economics director at IHS Markit said, “The improving pandemic situation and subsequent loosening restrictions helped Vietnamese manufacturers get back to business in October and ramp up production. They are now much more confident in the outlook than they have been in recent months.”

However, Harker noted that problems with transportation and supply chains haven not disappeared, making the sourcing and distribution of products challenging. “A number of businesses are still waiting for workers to return, meaning labour shortages were experienced in October. Hopefully these challenges will start to ease as the sector continues to return to normal over the months to come,” he said.

The social distancing issues between July and September hammered export turnovers. In September, the export value continued to reduce to $27.03 billion, down 0.7 per cent on-month. However, the estimated export turnover for October was $27.3 billion, up 1 per cent on-month.

“Walking around the factories, we have realised that the city’s decision to live with the pandemic has proven effective,” said Be from the Business Association at the HEPZA. “However, in order for companies to speed up, invest in technology, and recruit high-quality employees to receive more orders and export more goods, they need the government’s financial support and simplification of procedures for them to access the funding.”

Ho Chi Minh City Department of Industry and Trade said it would offer a credit support package worth VND70 trillion ($3.04 billion) this year to help businesses access preferential loans and resume production, while the State Bank of Vietnam’s Ho Chi Minh City Branch said banks would provide credit to businesses at supportive interest rates this quarter.