Vietnam’s industry is struggling because of Covid 19

The Covid 19 epidemic is becoming more and more complex and in recent days has appeared more in some countries and territories, bringing the total number of countries and territories to outbreaks to 46. Especially more than China, South Korea can be considered the third largest epidemic in the world when there are now more than 7513 cases of Covid 19 and 54 deaths. Japan also had 581 cases of Covid 19 and 10 deaths.

Covid 19 also affected Vietnam when there are currently 34 cases. Besides people, the economy is also greatly affected, all industries such as tourism, services, health, finance, … are affected. And with the lack of input materials, Vietnam’s manufacturing-processing industries are at risk of shutting down. By more than a quarter of the import value (about 32 billion USD) of electronic components; 24 billion USD of leather garment and shoe materials and about 4 billion USD of auto assembly … into Vietnam come from China, Korea and Japan.

Source: VIRAC

But until now, the components and accessories for electronics production are only enough to use until mid-March. The raw materials of cotton, fiber, yarn for textile-garment and footwear industry are enough to serve the production until early April. In the context of imported raw materials from China are very scarce and difficult because the border gates are strictly controlled, flights are stopped being exploited, the search for raw material suppliers New material for input is needed. However, finding new suppliers is not easy, because it is necessary to negotiate prices, conditions-time delivery between the two sides and hardly any supplier has a good price like China.

As a result, businesses are in a state of waiting for supply and financial difficulties such as lack of capital due to increased production costs, loans from banks, unpaid wages of workers. The production index and industry growth rate are expected to drop sharply compared to the first quarter of 2019 (12.35%). The index of industrial production only increased by 6.2%, or nearly 2%. Manufacturing and processing industry increased by 7.4%, decreased by 4% over the same period, exploited by 1.6%, electricity production and distribution decreased by 1% in the first 2 months.

In this situation, the Ministry of Industry and Trade quickly issued an urgent instruction on the implementation of measures to enhance import and export in the context of the Covid-19 epidemic. The Ministry issues instructions to Departments of Market seeking sources of imported raw materials to serve industrial production, seeking outputs for exported products; propose and introduce measures to develop supporting industries in the country, expand import markets, avoid dependence on the supply of raw materials into a market. In addition, the Ministry also proposed to invest resources from the State budget to focus on industrial development, especially supporting industries, focusing on a number of important commodities such as fabricated steel, fabric and new materials. … to overcome difficulties from the outside. Cut input costs such as electricity, water, … production costs, reduce taxes for businesses in the process of operation, there are more supportive measures to go through this difficult period.

Prior to the immediate difficulties, this is also an opportunity for Vietnam to proactively find weaknesses in the production and business stage (such as depending too much on a supply, the amount of input raw material is not large), lack of capital, quality human resources are not high, can not find outlets for products …) of businesses in the industry. From those weaknesses, we seek to overcome and improve the quality value to avoid future difficulties.

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