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How much has Covid-19 pandemic affected businesses in Vietnam?

How much has Covid-19 pandemic affected businesses in Vietnam?

Saturday 12, 12 2020
According to the World Bank's second survey on the impact of the Covid-19 pandemic on businesses in Vietnam, there have been signs of recovery.

Most businesses have reoperated


According to the survey, between September and October, 13% more businesses were fully operational again. Businesses of different sizes and sectors have all reoperated at the same pace. 

Although most businesses have been back into operation, many are still operating below capacity. About a quarter of businesses still have to cut working hours. On average, the number of operation hours of enterprises was 6.7% lower than the same period last year.

About two thirds of businesses experienced a decrease in sales between September and October. Though the situation has improved since June, sales were still 36% lower than the same period. Retailers, wholesalers and large and medium-sized enterprises have all witnessed faster recovery.
Most businesses have reoperated
A decrease in demand is the main cause for the current situation. Demand decreased mainly due to a decrease in new orders. In addition, businesses still suffer from late payments and order cancellations, but the main reason is still a decrease in new orders.

Production costs also vary. While 19% of surveyed companies witnessed an increase of 14% in production cost, 20% recorded a 13% decrease.

Approximately 40% of businesses have faced difficulties due to a short fall in supply, and 10% have to cancel sales contracts due to lack of inputs. In addition, businesses also face problems with logistics. However, large firms have to deal with fewer problems in supply chain.

Many businesses have received government support 


The survey also showed that the liquidity situation has improved, but many businesses are still at risk of having outstanding debts. About half of businesses have enough liquidity for 3 months, and about 60% have enough liquidity for 6 months. For other service providers (not those in wholesale and retail sector), liquidity is the most serious problem.
Many businesses have received government support
Access to financial package is a "tragic" problem in Vietnam, which becomes more serious when businesses are facing liquidity problems at the same time. Over 60% of enterprises surveyed said that they had difficulty in accessing financial resources. Key problems include high interest rates, debt repayment risk, and lack of collateral.

Also, the survey indicated that large enterprises do not have difficulty in accessing finance, but small and medium enterprises have difficulty in collateral. Interest rate and debt repayment risk are common problems that all businesses face. Businesses that suffered from losses in revenue are more likely to have difficulty accessing credit.

Because the Covid-19 pandemic is still complicated and the world trade is still risky, many enterprises are not able to forecast their business situation in the coming time. Most businesses believe that sales and jobs will decrease in the next 6 months. On average, businesses expect sales to drop 11-51% and jobs to drop 7-61% over the next 6 months. Midsize firms gave more negative predictions than others for both sales (5%) and employment (11%).
Covid 19
Although sales have been more positive since June, businesses still have a pessimistic sentiment on the outlook for the next 6 months. Businesses have lowered their previous forecasts due to a drop in real sales in the 3 most recent months.

The proportion of enterprises receiving support from the Government has increased sharply (by 10%) since June. The main form of support that businesses receive is extending the deadline for paying taxes and other payments. These support policies are more available to large firms and manufacturing firms than those operating in the agricultural sector.

The two main obstacles to accessing government assistance are the low level of awareness about this support program and the cumbersome procedures. However, since June, enterprises' awareness level has improved.

Source: thoibaotaichinhvietnam

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