As the fourth wave of COVID-19 is brought under control in Viet Nam, the billion-dollar textile and garment industry is overcoming difficulties to resume production.
The worst wave of the pandemic so far has caused garment inventories to increase, production activities to be delayed, and the labour supply disrupted as many workers left for their hometowns.
According to a survey by the Research Center for Employment Relations (ERC), the industry could be exhausted with more than 60 per cent of migrant workers leaving or deciding to leave for their hometown.
Meanwhile most experts said as many orders were unfinished, demand for production and business from now to the end of the year was very high, adding if localities do not soon ease social distancing restrictions and implement measures to promote economic development, the export target of US$39 billion this year will be difficult to achieve.
In the most positive scenario, experts from the Vietnam Textile and Apparel Association (VITAS) said Viet Nam would control the pandemic and realise a ‘new normal’ from the beginning of this month, with exports reaching between $37.5 billion and $38 billion. In the worst-case scenario, when restrictions remain in place until the beginning of December, exports were expected to reach $33.5 billion to $34 billion.
Director of the Center for WTO and Integration, under the Vietnam Chamber of Commerce and Industry (VCCI), Nguyen Thi Thu Trang, said during the pandemic many enterprises had their production chains broken, leading to a number of orders signed being cancelled or transferred to another country by customers.
Concerned about the export future of these products in such a situation, Trang said large textile and garment brands could move their orders to be produced in areas with good pandemic control to meet the needs of the year-end shopping season in European and American markets.
Therefore, Trang said: “If enterprises quickly restore production and smoothly complete the remaining orders in the coming months, there is no need to worry too much about the future,” adding that in the long run, compared to many competitors, Viet Nam's textile and garment sector still has certain advantages in terms of product quality, technical level, ability to meet strict requirements on labour and environment, and especially preferential tariffs under FTAs.
Trang said the most important thing for garment enterprises was direct support policies such as financial support, exemption or reduction of taxes and other fees and an interest rate support package to quickly restore full production.
She said at the same time, the State would need to develop policies to help businesses make effective use of existing labour resources, loosen or remove restrictions on the maximum number of overtime hours, and help businesses attract workers to return to work through supporting the cost of meals, accommodation, or organising free periodic testing for employees.
Examples of bright spots amid the pandemic
While experts predicted most textile and garment enterprises would experience a challenging and difficult year in 2021, they also said the period until 2023 was a decisive time for recovery and enterprises needed to take advantage of opportunities.
As one of the biggest production firms in the northern province of Thai Binh and one of Viet Nam’s leading apparel manufacturing and exporting companies, Tan De Garment launched a mobile app earlier this month to connect all its employees from all nine factories in Thai Binh and Hung Yen provinces.
A representative of the firm said the app was not just a venue for more than 17,000 workers to exchange their activities and training but also to get updates on the company’s policies, adding that all workers had been given at least one dose of vaccine and received cash thanks to Government policies.
Nguyen Tien Phuong, chairman and CEO of Tan De Garment Company, told Viet Nam News: “As the company has policies to support employees from the beginning of the pandemic and actively recruits employees in Thai Binh Province, it does not have to face the issue of workers leaving this time.”
Phuong added that a quick vaccine roll-out and insurance support also helped in keeping workers at this time.
Deputy general director of Garment 10 Corporation, Bach Thang Long told local media that thanks to many flexible solutions, the firm’s revenue in the past nine months remained the same as in the same period last year, adding that he was striving to increase year-end profit compared to last year through cost cutting and increased productivity.
Vinatex General Director Cao Huu Hieu also said that the group had implemented many response measures to limit the negative impact of the pandemic and the increase in input material prices.
Hieu said: “There is no other way, the production unit must work closely with customers for the most optimal solution.”
Hieu added: “In addition, the enterprises must work with suppliers to avoid excessively high prices affecting output, improving market forecasting to have a plan to import raw materials for reserves, avoiding the impact of high prices.”
He said enterprises needed to develop many response scenarios in 2022 when the market recovers and production is resumed, adding that at the same time, they needed to take advantage of new-generation free trade agreements (FTAs) to boost exports.
Hieu said in the first nine months, Vinatex's total revenue reached VND24.68 trillion, down 12.4 per cent and profit was up 136.9 per cent, reaching VND1.14 trillion over the same period in 2020 thanks to active solution and good support of customers.
Commenting on the textile and garment market in 2022, Le Tien Truong, chairman of Vinatex, said that the global market would continue to recover in terms of demand, especially in developed countries.
Truong added that in the first half of 2022, textile and garment enterprises would still have to implement solutions to prevent and control the pandemic. He said thanks to the Government's continuous promotion of vaccinations, localities would not implement large-scale social distancing, so in the second half of 2022, businesses would adapt and feel secure to work under the "new normal". — VNS