State-owned Vietnam Maritime Corporation has been suffering from some initial impacts on business performance, stemming from the existing coronavirus epidemic putting the brakes on various enterprise pursuits. Nguyen Canh Tinh, acting CEO of the corporation, discussed with VIR’s Bich Thuy the solutions and future adjustments ahead in order to mitigate losses.
How is the novel coronavirus (COVID-19) outbreak affecting the seaports of Vietnam Maritime Corporation (VIMC), especially those in joint ventures with international partners?
|Nguyen Canh Tinh, acting CEO of the corporation |
The outbreak has been spreading widely since the Lunar New Year, which is the low-peak period of operations at many seaports. Therefore, the effect on business lines had remained unclear in the short term because demands for export-import activities in the period remained low.
Statistics from our business results in January showed that goods throughput at most of VIMC’s seaports fell just slightly in comparison with the same period last year.
However, the effect will become clearer if the epidemic continues spreading in the long term and makes strong impacts on the global economy as well as in Vietnam. At present, China is Vietnam’s third-largest export partner and, although Vietnamese export markets have been more diversified in recent years, thus enabling the country’s groups of commodities to enter different markets, China remains the key export market for farm produce, woodwork, mobile phones, and components.
In terms of imports, China is Vietnam’s largest market for machinery, materials for textiles and garments, footwear, plastics, chemicals, steel, phones, and components.
Let’s take Quy Nhon, one of VIMC’s seaports with numerous freight routes to China, as an example. At Quy Nhon, most freight routes carry wood chips from the central province of Binh Dinh to seaports in Southern China. Although they are far from the centre of the outbreak, the time for unloading vessels has taken longer since the Lunar New Year holiday because of lengthy checks from China.
This increase in time has caused a drop of 10-15 per cent in the volume of vessels, thus lowering goods throughput at seaports with an equivalent rate.
Earlier, Quy Nhon seaport operated every day per month, but the threshold now is around just 20 days. In January, the seaport’s goods throughput was 100,000 tonnes lower than the previously planned target.
Many enterprises have cut their business targets in anticipation of possible economic effects ahead. Does VIMC have similar moves?
In 2019 the volume of goods shipped via VIMC seaports reached over 106 million tonnes, surpassing the whole-year target by nearly 7 per cent. VIMC aims to reach the output of the shipping business at 19.4 million tonnes, and throughputs of goods via seaports to reach 108 million tonnes this year. Consolidated revenue is targeted at over VND12 trillion ($521.7 million), with pre-tax profit at over VND1 trillion ($43.5 million).
If the epidemic ends early, it will have no big impact on us. However, if it remains for too long we will have to reconsider our targets – including in the seaport business.
To mitigate the possible impacts on business targets, what are the major changes in VIMC’s corporate plans for the future?
Following the government and prime minister’s directions on COVID-19, VIMC has established a steering board for epidemic prevention to protect employees and to possibly reduce its negative impacts.
VIMC has directed relevant departments and people who are representatives of state stakeholders in subsidiaries and affiliates to build response scenarios, while checking and utilising detailed assessments of its impact on imports and exports, especially those related to the Chinese market. Moreover it will boost market promotion so as to boost exports that are not hit by traditional markets.