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Vietnamese textile enterprises suffer when EU controls import

Vietnamese textile enterprises suffer when EU controls import

Monday 31, 08 2020
Vietnamese enterprises are concerned that EU epidemic control measures will affect export turnover.

Risk of bankruptcy

On March 17, leaders of all EU members agreed with the proposal of the European Commission (EC) to approve a joint plan to close the border of EU territory to prevent the epidemic from spreading. The EU's current regulations on disease control may not have a direct impact on goods import and export activities between Vietnam and the EU.

However, from some economic aspects, epidemic control measures will in fact affect export, transportation, customs clearance, storage, unloading, goods consumption, causing disruption or delaying economic - trade - service flows. In addition, the trade activities between the EU and its partners including Vietnam will also be partly affected by the need to purchase non-essential goods such as textiles, footwear, furniture, and telephones will decrease.

The new move from the EU has made textile enterprises worried because it directly affects the production and business plans of enterprises and the life of workers. Moreover, in the context of the outbreak of the Covid-19 epidemic spreading globally, the import of raw materials for production of this industry have been facing many difficulties. Mr. Nguyen Dinh Lap, Deputy General Director of Truong Phuc Hung Yen Co., Ltd. (An Thi, Hung Yen) said that this move of the EU will greatly affect Vietnam's textile enterprises.

Currently, there are many customers canceling orders that have been placed before. Many orders which are in the production process are even forced to stop. This move from the partners is so sudden that businesses do not know how to respond, which will likely lead to a shortage of jobs and many workers will lose their jobs temporarily. “The complicated revolution of the Covid-19 epidemic has made businesses to face difficulty in orders and raw materials.

Businesses have to wait till the end of the epidemic and there is really no effective solution in the near future. If other markets also do not continue to import, difficulties will pile up and businesses will have to stop operating or even go bankrupt.

In this context, although our company does not have many orders and many workers have to take time off, we still support workers with up to 70% of the salary to ensure their living. Through this, we – textile businesses - also want and recommend the Government to take measures to support, for example, stopping interest collection of banks and reducing all taxes and fees in 2020” said Mr. Lap. How to ensure the life of workers? So far, to withstand the impact of the epidemic has been a great effort of many businesses, especially when the operation of this industry is highly dependent on imported raw materials as well as import markets.

Therefore, when there is any fluctuation from the markets, it will be greatly impacted. This is understandable because when the production of tens of thousands of enterprises is delayed, it will affect millions of domestic workers.

Mr. Than Duc Viet, General Director of Garment 10 Corporation - Joint Stock Company, acknowledged that the new move of the EU would actually create double difficulties for businesses because this market accounts for 30-40% of the textile export turnover. In February, Garment 10 managed to import raw materials to ensure continuous production. Currently, when raw materials are sufficient, this business has to face EU restrictions on imports, greatly affecting their export into this market.

“If the suspension of import of textiles occurs in all markets, the losses for businesses will be huge. At this time, in addition to reducing interest rates, taxes, and rescheduling debts, the government should support wages for employees in labor-intensive industries such as the garment and footwear industry like the US and Germany government which provide support and benefits for unemployed people and workers” Mr. Viet proposed.

Vietnamese textile enterprises suffer when EU controls import

Giving an opinion on this, Mr. Truong Van Cam, Vice President and General Secretary of Vietnam Textile and Apparel Association (Vitas) affirmed that at present, some enterprises have not provided specific statistics on the number of production lines but there have been many partners cutting orders up to millions of products. According to Mr. Cam, over the past time, textile enterprises have encountered many difficulties in terms of raw materials.

Now when this problem has been solved, they are facing difficulties caused by import markets. Although this situation may only take place in a short time, it will cause great difficulties for textile enterprises. “The Textile and Apparel Association proposed to the Government and ministries to take actions to support enterprises in the textile and garment industry that employ many laborers.

According, the Ministry of Labour - Invalids and Social Affairs has proposed to the Government to allow enterprises to stop paying social insurance, or use part of the insurance fund enterprises have paid to pay for workers. In addition, in order to help textile enterprises to stand firm, the Government needs to provide them with a support package to prevent long-term adverse situations when businesses cannot generate revenue” said Mr. Cam.

​>> Vietnam’s macroeconomics overview 2020

Source: thesaigontimes

Textile Industry

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