With an open economy like Vietnam’s, exports are an important driver for economic growth, so it is necessary to promote solutions to overcome difficulties.

Without early solutions to help businesses return to production soon, firms in many
key export industries will face the risk of international customers stopping or canceling
orders to move to another country. Photo: Nguyen Thanh

Loads of orders

Despite being heavily affected by the Covid-19 pandemic, Vietnam's key export industries like textiles, footwear, electronics, etc. have had the opportunity to receive many new international orders thanks to shifting production chains, value chains and changes in consumer demand of major markets.

According to the Department of Industry (Ministry of Industry and Trade), for the garment industry, after a period of pent-up due to reduced consumption, by the end of 2020 and the beginning of 2021, the increased purchasing power will help textile firms have more orders. Shopping demand of consumers in major markets such as the US, EU, Japan and South Korea for clothes and shoes increased sharply when the economy recovered due to the gradual lifting of lockdowns. In addition, political instability in some countries and territories has affected textile production capacity, causing buyers to shift to Vietnam. As a result, domestic firms have more opportunities to receive large export orders. Currently, many textile and garment firms have had export orders until the third quarter of 2021.

For the electronics industry, a representative of the Department of Industry (Ministry of Industry and Trade) said the impact of the Covid-19 pandemic and regulations on social distancing in many countries made demand for using related communication media, means of online and online work of consumers in many countries increased sharply; along with that is the shift of value chains of major electronics firms in the world. Domestic electronic firms have access to many new orders.

Similarly, in the wood processing and export industry, the Vietnam Wood and Forest Products Association (Viforest) informed from now until the end of the year, wood firms are quite busy because export orders have been signed. Nguyen Chanh Phuong, Vice Chairman of Ho Chi Minh City Handicraft and Woodworking Association (Hawa) said: "Vietnam's main markets such as the US and EU are recovering, consumer demand is increasing."

High risk of customers stopping or canceling orders

Although in the coming time, firms of textiles, footwear, electronics, wood... may have more new export orders, but the Industry Department said if not soon there are solutions to help firms overcome the broken situation. In the domestic supply chain, returning to production soon, firms will face the risk of international customers stopping or canceling orders to move to another country. Until the pandemic is under control, it will be tough for businesses to resume lost relationships.

When speaking to Customs News, Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association, could not hide his worry. He said that in the first half of this year, textile and garment exports reached nearly US$19 billion. With the surrounding difficulties, this year's export is expected to be only about US$32-33 billion. Meanwhile, the initial export target set for 2021 is US$39-39.5 billion. If the pandemic continues to be complicated, I don't know what will happen. “In the long term, if by the end of 2021, textile and garment exports will only reach about US$32-33 billion, Vietnam's textile and garment will no longer be able to keep customers in Vietnam. Brands continue to see that the Vietnamese market is not stable, they will move," said Giang.

Similarly, in the wood industry, according to Viforest, out of 265 wood processing firms in the southern key region (including HCM City, Dong Nai, Binh Duong, Tay Ninh), only 141 firms maintain operations with The number of workers currently employed is about 30,700 workers out of a total of 119,300 employees before implementing social distancing, that is, three-quarters of the number of workers in these firms had to quit.

Nguyen Chanh Phuong added the peak export of the wood industry starts from the beginning of August to the beginning of November every year, but this year the possibility is high that in the remaining months, it is very difficult to complete export orders. If the customer does not supply enough products per the pre-signed order, the customer will have other alternatives.

The products of processing and manufacturing industries account for more than 85% of the country's export turnover. According to the Department of Industry, the interruption of participation in the global value chain will increase the trade deficit, affecting Vietnam's international trade balance. "Therefore, urgent solutions are needed soon to maintain the domestic production chain, especially in the current key export industries," said a representative of the Department of Industry.

Speaking at the first meeting of the Government of the 15th term recently, Minister of Industry and Trade Nguyen Hong Dien stated that the last five months of the year are forecast to continue to face difficulties. Achieving the target set by the National Assembly and the Government in 2021 is industrial development to increase by 8-9% (7 months by 7.9%); export growth of 4-5% (seven months increase of 25.5%) is a big challenge.

The Ministry of Industry and Trade determines solutions in the remaining months must take into account the scenario of "living together" with the pandemic. Industry will focus on removing difficulties for production and business, especially large manufacturing firms in industrial parks to maintain supply chains and production chains.

For the northern and central regions, the Ministry of Industry and Trade proposed to the National Assembly and the Government, allowing businesses to meet disease safety conditions to negotiate with workers to speed up production, increase production and increase productivity. shift, increase working hours in a day (working day in a month) with the motto of taking speed, compensating time without violating the Labour Law to take full advantage of the opportunity to recover the supply of the world market, promote domestic production, contributing to economic recovery. For firms in the South and Central Highlands, although still having to apply Directive 16, it is also necessary to consider allowing firms and factories to apply flexibly and appropriately to the model of "three on-site" or "one road, two destinations” to maintain production and business.