Businesses resume production as workers return | Savills Businesses resume production as workers return | Savills

HCM CITY — Sixty per cent of companies in HCM City have resumed production since the lockdown was lifted half a month ago.

Deputy Prime Minister  signed for issuance of a Prime Minister directive on restoring production at industrial production areas amid the COVID-19 pandemic.

The resumption in transportation to other cities and provinces has favoured them, the HCM City Union of Business Associations (HUBA) said.

Chu Tiến Dũng, HUBA chairman, said enterprises have worked actively with their workers and partners to speed up production to complete order backlogs and accept new orders.

Nguyễn Văn Bé, chairman of the HCM City Export Processing Zone and Industrial Park Authority Business Association (HBA), said 1,500 companies, including 500 foreign ones, in the city’s industrial parks and export processing zones have resumed operations, with 60 per cent of them going back to more than 80 per cent capacity.

“Walking around the factories, we realised that the city’s solution of ‘living with the epidemic’ has proven effective.”

For instance, a company that used to stop production in the past when factory workers were found infected, has, in the past 15 days found 20 infections, but with support from authorities, disinfected the factory, sent the infected workers to medical facilities for treatment and continued production.

According to the HCM City Export Processing Zone and Industrial Park Authority (HEPZA), nearly 200,000 out of 288,000 workers at industrial parks and export processing zones have returned to work, and many of its tenants are operating at 90 per cent capacity now.

Companies in labour-intensive sectors such as textile and garment and footwear are now basically back to normal.

Phạm Xuân Hồng, Chairman of the HCM City Association of Garments, Textiles, Embroidery and Knitting, said 80 per cent of workers at Saigon 3 Garment Joint Stock Company are back at work, and many other large member-companies have also reported a positive situation.

Only small firms face difficulty with labour, but this situation seems likely to be overcome when provinces enhance vaccination for people who want to return to HCM City to work, he said.

The solution of “living with the epidemic” has helped businesses’ production and business activities gradually recover, which has led to an increase in demand for industrial land.

City leaders are working with businesses to arrange vehicles to bring workers from other cities and provinces back, he added.

Support measures needed

To enable companies to get up to speed, Dũng of HUBA called for a Government financial support package and simplification of administrative procedures for them to access the funding.

He suggested extending the tax payment deadline and reducing taxes so that enterprises have funds to import raw materials for production.

He also suggested reducing electricity and water tariffs for businesses, and temporarily freezing port infrastructure fees.

Nguyễn Hoàng Ngân, general director of Bình Minh Plastic Joint Stock Company, said the fourth quarter is when companies step up exports of goods and imports of raw materials.

The biggest difficulty right now is the high prices of raw materials, he said.

Plastic raw material prices have increased by two to three times since the beginning of this year, eating up most enterprises’ profits, he said. Businesses also have to bear the costs of COVID-prevention measures, he said.

Therefore, prompt and timely stimulus packages would help businesses overcome difficulties and accelerate their production and trading, he added.

According to experts, the global COVID-19 situation has proved that it is possible to combine both safety and economic activities, and so HCM City should boldly open up and promote public investment to revive its economy.

Nguyễn Xuân Thành of Fulbright University Vietnam said with the global economic recovery and safe adaptation to the pandemic, Việt Nam’s exports could increase again from November.

But Vietnamese exporters are suffering from high logistics costs, and they need to get support in terms of interest rate subsidies, and the city also needs to tackle congestion on roads and at ports after reopening the economy to facilitate trade, he said.

Dr Trần Du Lịch said the city should offer businesses financial and credit support solutions and social security support packages at a higher level than the national average since they have suffered more than their counterparts elsewhere in terms of length and stringency of lockdowns and social distancing.

The city needs to quickly implement key projects that have been suspended such as the HCM City Financial Centre, a creative start-up centre in Thủ Đức City and a programme to help businesses digitise their activities, and clear obstacles to help the property sector recover, he said.

Thành said “HCM City might have suffered the worst, but could be the perfect place to open up first to the world to revive foreign trade, investment and tourism compared to others in the country.”

But the success or failure of recovery in the final months of this year and 2022 depends on the nature of policies and their implementation, he warned.

Land rental cut

The HCM City Department of Taxation has announced a 30 per cent cut in land rents this year for businesses and other organisations affected by COVID as mandated by the Prime Minister’s Decision No 27/QĐ-TTg.

Under the decision dated September 25, the Government reduces payable land rentals by 30 per cent in 2021 for land lessees including organisations, units, enterprises, households and individuals directly leasing land from the State with annual land rental payment.

Land rental reduction levels shall be calculated based on payable land rental amounts for 2021 as specified by law. In case a land lessee is entitled to the prescribed land rental reduction, a 30 per cent reduction of land rental shall be calculated based on the land rental amount he/she/it has to pay after being eligible for the prescribed current land rental reduction.

The beneficiaries include organisations, enterprises, households, and individuals who directly lease land from the State and pay rent annually.

The reduction this year is double the rate in 2020, and the procedures to get the support are also much easier.

Last year businesses and organisations that suspended operations for 15 days and above and sent a notice to the business registration agency were eligible for a 15 per cent reduction in rent.

Many businesses did not benefit since they did not send the notice.

This year the tax authorities have removed that provision.

By Vietnamnews