Weakening demand continues to dog Vietnamese firms

Falling orders caused by weak demand have left firms with no choice but to shed jobs and scale down production in the last months of the lunar year.

Hoang Trung Dung, chairman of the Rosa Bonita Company, reveals that his firm participated in the national programme "Vietnam Grand Sale 2022" in December to boost sales, but got little results because of weak demand.

"We offered big discounts in the late months of the year to boost sales but it didn't work. Domestic demand now is much lower than in the previous years," said Dung.

Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), shares Dũng's view, saying that seafood exports reached just 780 million USD in November and 785 million USD in December, down 14% and 13% year-on-year, respectively.

"The seafood industry is facing a plunge in orders from abroad. Workers in the industry have had to either work in shifts or face redundancy since Q4/2022," said Nam.

Hoang Van Cuong, vice president of the National Economics University, is concerned that 2023 would be a tough year for Vietnamese firms as global demand is weakening.

"Orders are falling steadily, leading to job cutbacks in the late months of 2022. The situation would remain tough in 2023," said Cuong.

Cuong believes that the expiration of many favourable policies this year would add to their woes as they have to pay back their old debts which were extended to 2023 under the policies. 

In the face of the situation, the vice president urges the Government to reinstate the expired policies and expand the scope of beneficiaries to lift the debtors out of hardship.

"The favourable policies should be kept in place this year. Additionally, their scope should cover more beneficiaries," said Cuong. 

Dung opines that the policies should focus on small- and medium-sized enterprises (SMEs) and involve a debt extension of about three years to give them more time to recover.

VASEP deputy general secretary calls for preferential bank loans to help seafood producers stay afloat amid the weakening demand. He says that interest rates are rising steadily to the detriment of their profitability.

"Seafood producers need preferential bank loans to stand fast during this tough time," said Nam.

He also calls for governmental measures to improve the local business environment and help local firms move up in the regional competitive rankings. 

“Regulations on the business environment have shown cracks in recent years, to the concern of many firms. As such, the authorities need to double down on their effort to enhance the business environment," said Nam.

The national census shows that 528 firms have been hard-hit by falling orders so far, of which 65.3% are FDI-financed. About 637,500 workers have begun to feel the pinch of the ensuing economic downturn.

Of the workers, 53,674 have lost their jobs, 359,087 have faced reduced working hours, 22,679 have been temporarily removed from the payroll, and 35,081 have had their labour contracts suspended. The rest have been laid off unofficially by taking unpaid time off./.