Record number of businesses stop operations in Q1

The number of businesses which stopped operation in Vietnam hit a record number of nearly 35,000 in the first quarter of this year, according to the Vietnam Chamber of Commerce and Industry (VCCI).

If wages are fully paid, most garment businesses would run out of capital within the next three months

According to a VCCI survey, the COVID-19 pandemic was the main reason for the closures, marking the first time companies that halted operation outnumbered newly-established ones since the VCCI began keeping such records.

Vu Tien Loc, the VCCI’s chairman said 85 per cent of surveyed firms said the pandemic narrowed their consumption market. Meanwhile, 65 per cent of the companies said COVID-19 has left them short of capital.

More than 40 per cent of the firms said the pandemic caused a lack of materials, 43 per cent laid-off labourers and 82 per cent predicted a sharp decline in revenue this year compared to 2019. About 30 per cent forecast their revenue could be reduced by 30 to 50 per cent this year while 22 per cent said they would have revenue decreased by more than half.

The survey also revealed that if the pandemic continues with complex changes, nearly 30 per cent of businesses will be able to maintain their operations for less than three months and 50 per cent for about six months.

 

More than 75 per cent of the companies said they would have to reduce their workforce in size. About 10 per cent of the surveyed firms would have to fire half of their labourers. Only 1 per cent planned to employ more people, meaning millions of people could lose their jobs in the upcoming months.

Loc said the business community was in need of help from both labourers and consumers nationwide.

VCCI asked labourers that were willing to accept only a portion of their salary, with the rest made in late payments to help businesses overcome difficulties.

Earlier, the Viet Nam Textile and Apparel Association said if wages were paid in full, most garment businesses would run out of capital within the next three months.

The VCCI, therefore, asked some agencies to apply some new articles in the Law on Labour 2019 sooner than the scheduled time at the beginning of 2021, allowing them to reduce their spending on salaries during an epidemic. — VNS

 
 

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