Support industry tackles weakness to grasp post-pandemic opportunity

13:00 | 23/07/2020 Economy

(VEN) - Vietnamese supporting industry enterprises are implementing more effective capital use and restructuring as they reorganize to seize post Covid-19 opportunities.

support industry tackles weakness to grasp post pandemic opportunity
Supporting industry enterprises rapidly stabilize production

Capital flows slow

Unlike other Vietnamese enterprises hit by the pandemic, many supporting industry enterprises managed to sustain production thanks to their control over domestic raw materials. However, as the months wore on, the pandemic’s negative effects increased, resulting in decreased orders and/or delivery delays.

For example, after a long pause to ensure social distancing, the Pham Van Hai One Member Company Limited urgently completed its unfinished orders. However, due to the strong impact of the epidemic on non-essential sectors, the partner who ordered fish flour mill machines from the firm, failed to take delivery of the goods. Deputy director of the company Nguyen Dinh Thuy said small businesses need to quickly sell their goods in order to turn around their capital. Since his company invests about VND2 billion in each fish flour mill machine, it now has to suspend operations to preserve capital.

Like many other units operating in the supporting industry, the first-quarter turnover of the Tan Thanh Mechanical Trading Joint Stock Company decreased by about 30 percent and it forecast that the revenue reduction would be even greater if the epidemic continues.

In difficult times, capital flows are among the biggest problems of business owner. Kieu Ngoc Phuong, Deputy General Director of the Tan Thanh Mechanical Trading JSC, said that in order to solve problems relating to capital flows, her company had to negotiate with banks to extend deadlines for debt payments and cut some unnecessary operations. The company also gives its employees Saturdays off to reduce operating costs.

Consolidating, rearranging production

According to supporting industry enterprises, they are taking advantage of opportunities in these difficult times to step into global supply chains. However, to do so, they need to improve their capabilities in technological innovation and strengthen connectivity.

Le Bich Loan, Deputy Head of Management Board of the Saigon Hi-Tech Park (SHPT), said that SHPT is actively linking supporting industry enterprises with assembly enterprises to help them meet orders, especially of FDI enterprises, in the best possible way.

Meanwhile, Do Phuoc Tong, Chair of the Ho Chi Minh City Association of Mechanical and Electrical Enterprises (HAMEE), said enterprises are consolidating their teams, and reorganizing production systems to seize post-pandemic opportunities. However, they need more resources from the state to develop important basic industries such as steel, fabric and new materials to be more self-sufficient in terms of input materials, and have more support in credit, tax and land incentives.

Deputy Director of the State Bank of Vietnam’s Ho Chi Minh City Branch Nguyen Hoang Minh:

We have addressed 161 out of 186 requests for capital support for the city’s supporting industry enterprises following Circular 01/2020/TT-NHNN. The rest can directly contact HAMEE, and their requests will be collected and sent to us.

Thanh Mai