According to estimates from the Vietnam Textile and Garment Group, if the Covid-19 epidemic prolongs the Vietnamese textile and garment industry, it will lose 3 trillion VND per month, and many companies will lose their ability to pay.
High pressure
Although the United States and the European Union have not yet proposed to stop importing goods from Vietnam Policies for importing textile and garment products, but due to sharp decline in consumer demand, the above two major markets may have to suspend imports or cancel orders.
Vietnamese textile and garment orders have continued to be canceled, stopped, and suspended since mid-March 2020, resulting in a lack of job opportunities for many companies in April and May 2020. The decrease in orders for famous Vietnamese brands is even greater, with no signs of recovery. Domestic demand in Vietnam is also expected to decrease due to economic slowdown. Although China’s production and business activities have begun to recover, the reduction in international demand will lead to a significant global price reduction, with a price reduction of approximately 20%.
The current situation puts Vietnamese textile and garment enterprises facing financial and labor pressure. If policies are not adjusted, many companies may be unable to pay by the end of April.
At the Vietnam Textile and Garment Group (VINATEX) video conference, the general manager of the group stated that if the number of labor jobs in the textile and garment industry decreases by 30-50% in April and May, The industry’s losses are about VND5 trillion, of which VINATEX’s losses are about VND403 million. If the epidemic is prolonged, the industry will lose VND3 trillion every month.
In addition, Vietnam’s textile and garment industry imports raw materials each month to approximately US$1.5 billion. If customers cancel 20% of orders, the inventory of imported materials will amount to US$300 million.
If the Covid-19 epidemic ends at the end of May and the economy recovers from June, Vietnam’s textile and garment industry will lose 11 trillion VND, and VINATEX will lose 1 trillion VND.
Implement response measures
According to the above estimates, VINATEX requires all Member companies implement response measures. Among them, enterprises should make good use of the opportunity to find export orders for products needed during the epidemic prevention period, such as masks, antibacterial fabric medical clothing, and disposable non-woven clothing. Based on communication between labor and management, a flexible work system is implemented, with weekly working hours reduced to 32-40 hours, with shifts; publicity to workers about force majeure difficulties and sharing difficulties with the company to overcome difficulties. Reduce costs, postpone investments, and reduce the wages of indirect workers (equivalent to the salary reduction of workers directly involved in production); apply for exemptions and exemptions from paying social insurance, unemployment insurance, and union fees.
In order to help textile and garment enterprises tide over this crisis, VINATEX leaders suggested that Congress, the government and relevant ministries allow the export of masks and anti-epidemic clothing, and reduce or postpone various tax exemptions. Insurance premiums, taxes, land taxes, and the use of unemployment insurance funds to assist with labor shortages and other policies.
The Central Bank of Vietnam and various commercial banks are planning to provide a grace period for long-term loans due in 2020 and extend the time of short-term loans to 11 months without reducing the loan amount and not Change the type of loan to provide loans to pay wages to workers in shortage of jobs.
VINATEX also recommends that the group set up a window to receive orders for anti-epidemic products from the Vietnamese government and various countries, assign them to various garment units with needs, and be responsible for applying for medical products (including medical clothing) that meet the standards. formalities.
