74 pct of enterprises face bankruptcy should Covid-19 linger: survey

By Anh Minh   March 10, 2020 | 12:01 am PT
74 pct of enterprises face bankruptcy should Covid-19 linger: survey
Workers at a textile company in Hanoi. Photo by VnExpress/Anh Minh.
If the Covid-19 epidemic lasts for over six months, 74 percent of firms in Vietnam would go bankrupt as revenues fail to cover operational expenses, a study found.

The Private Economic Development Research Board (IV Board) survey of over 1,200 firms from March 2-3 revealed nearly 30 percent had lost 20-50 percent in revenues, while 60 percent had their revenues reduced over half.

Three quarters of firms surveyed are of a small scale, each employing less than 100 people.

The sectors hardest hit by the Covid-19 epidemic are tourism, education, textiles, footwear and wood production.

The IV Board is managed by the Government’s Advisory Council for Administrative Procedure Reform.

The novel coronavirus has slashed $7 billion off Vietnam’s tourism revenue for January-February while the number of hotel guests across the country during the first two months of this year decreased by 60-70 percent, Government Office Chief Mai Tien Dung told a meeting last week.

Meanwhile, restaurants, popular food streets and street eateries have been left deserted or serve only a few customers even during peak hours, forcing owners to lay off staff to reduce costs.  

"Without customers and students, many enterprises in the fields of tourism and education are struggling," said the report.

Hanoi and Ho Chi Minh City, the country’s two biggest metropolises, alongside other localities decided to keep all students at home until March 15.

For textile and footwear sectors, the most concerning issue is the lack of raw materials from China, which make up 61 percent and 57 percent, respectively. As a result, most could only maintain operations until early March or April.

The wood production sector is also under huge pressure as the current trade flow with China, one of the sector’s key markets, remains limited due to Covid-19.

According to the IV Board’s report, China is not only Vietnam’s major source of raw materials in manufacturing and processing, but also a market for 60-70 percent of the country’s wood chips and paper product exports.

Severely affected by the epidemic that has spread to 113 countries and territories and killed over 4,000 globally, most domestic enterprises are offering employees unpaid leave or temporarily suspending operations, leaving hundreds of thousands of workers in dire straits.

Moreover, around 20 percent of enterprises said they do not have appropriate measures to fight the epidemic, indicating the passivity of small and medium enterprises as well as their limited capabilities.

This could be an early warning that a more serious crisis could follow the epidemic.

Besides looking for their own solutions, enterprises are seeking support from the government in forms of lower corporate tax, value added tax, the waiver of fines for delayed tax payment, among others.

Vietnam’s GDP growth in 2020 could hit a seven-year low of 5.96 percent, according to the Ministry of Planning and Investment.

The country has recorded 32 infections as of Tuesday.

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