Covid-19 epidemic has caused the shrinking of the consumer market, the declining revenue in services, tourism and aviation sectors, causing a big "shock" to Vietnam’s economy.
The outbreak of the Covid-19 pandemic has made the world’s as well as Vietnam’s economy suffer a lot of negative effects. According to statistics of the Business Registration Management Department – Vietnam’s Ministry of Planning and Investment, in the first 2 months of this year, there were 16,151 enterprises temporarily suspending their business for a definite period, an increase of 19.5% over the same period of last year. Along with that, 2,807 enterprises have completed dissolution procedures.
It can be said that this pandemic is a big “shock" to Vietnam’s economy. Specifically, the consumer market has been shrinking while the sales of the service, tourism and hotels sectors have declined. For manufacturing industries, it is difficult to secure jobs for workers in March because of shortage of raw materials.
Businesses are heavily affected
One of the sectors heavily affected by the Covid-19 epidemic is textiles and footwear. Most enterprises of these two sectors only reserve raw materials until early March or early April. It is likely that a series of businesses will have to temporarily suspend production due to lack of raw materials.
Mr. Than Duc Viet, Deputy General Director - May 10 Corporation informed that currently, his company has reviewed each product code, each customer, each category of goods and each production market. Due to lack of materials, the company is expected to take a break in the period from March 15 to April 15. This will greatly affect employees, revenue plan as well as profit plan of May 10 Corporation in 2020.
Not only textiles and footwear, businesses in the electronics sector are also the “victims” of the disease. Materials for the production of this industry depend heavily on two markets, China and Korea. However, the outbreak was onset in China and has been booming in South Korea. If it is not controlled early, it is forecast that by the end of the first quarter, electronics giants like Samsung will be staggered.
If raw materials are of lacked for half a month, the textile industry will suffer losses of USD 1.5-2 billion. With electronic components, this figure may be more significant. Therefore, searching for new supply of production materials along with increasing local raw material capabilities is critical for businesses to overcome difficulties during the Covid-19 outbreak.
Along with many others, aviation is one of the industries heavily damaged by the Covid-19 epidemic. So far, the industry's revenue has reduced to VND 25,000 billion. If the epidemic continues, the industry is expected to lose nearly 20 million passengers this year, which is a huge loss. According to economic experts, if there is no optimal solution, the consequences of the disease will last longer and have a more negative impact on the development goals of the transport sector.
Double crisis to SMEs
Regarding the impact of Covid-19 epidemic on the economy, Mr. Le Xuan Sang, Deputy Director of Vietnam Economic Institute, said that the influence on each industry depends on the nature and development of each business. In general, it can be seen that the epidemic has the most direct impact on the tourism and travel industries. Other industries, such as online education or e-commerce, have grown relatively well. However, e-commerce is not included in Vietnam’s GDP.
Mr. Mac Quoc Anh, Vice Chairman and General Secretary of the Association of Small and Medium Enterprises (SMEs) in Hanoi, said that the country now has 760,000 businesses, of which 98% are SMEs. For the SME community, this was a double crisis, because after the trade war between the US - China came the Covid-19 epidemic. This is a very strong blow to this community since SMEs are limited in many aspects such as capital, human resources, etc.
“When the epidemic broke out, the sales of the SMEs declined because foreign markets have restricted imports while in the domestic market, people have tightened spending” said Mac Quoc Anh.
Bonny Le - VietnamCredit