Supply Chain Facilitation Needed

Vietnamese Prime Minister Pham Minh Chinh recently delivered a new message in the fight against the COVID-19 pandemic, saying “The pandemic will be long, we must accept to live with it in the long run as completely containing it seems to be impossible, requiring adaptive and suitable approaches to it.”

On specific solutions, the Prime Minister demanded continued business activity in places where safety conditions are suitable. Businesses need to be encouraged, facilitated and supported to adopt “safe production” to avoid supply chain disruptions and ensure timely and smooth transportation and distribution of goods across the country.

This message inspires the business community with a lot of hope while social distancing measures are applied from place to place, input costs of enterprises increase dramatically and potential supply disruptions may result in input shortages and labor shortages.

Business operation in moderation

Nearly 700 tenants in export processing zones, industrial zones and high-tech parks in Ho Chi Minh City are applying “three-on-site” or “one route-two destinations” measures. Most companies, particularly foreign-invested ones, make every effort to maintain stable production to keep their positions in supply chains.

Mr. Nguyen Van Be, Chairman of the Ho Chi Minh City Industrial Park Businesses Association (HBA), said, most employers and employees are already very tired but still have to work hard to keep supply chains undisrupted. “Especially, since August 23, they have not been allowed to apply an alternative choice for the so-called “three-on-site” measure nor change the number of registered employees to increase or decrease the workforce because of mobility restrictions,” he said.

Mr. Nguyen Phuong Lam, Director of the Can Tho Branch of the Vietnam Chamber of Commerce and Industry (VCCI Can Tho), said, the fourth wave of COVID-19 pandemic has caused a crisis in southern provinces. Agricultural and aquatic processing industries in the Mekong Delta are being severely affected, with many unprecedentedly incapacitated.

In three months from June to August, the Mekong Delta region witnessed over 10,000 corporate bankruptcies while the figure was just over 6,000 in the first six months of the year. Nearly 90% of companies temporarily suspended their operations, with the second-quarter revenue plunging 40-50%. “Agricultural and aquatic products are major products in the Mekong Delta. Shrimp, fish, fruits cannot be left unharvested. If they are not harvested, farmers will suffer enormous losses. However, harvested but unpreserved products will give rise to input shortages in many sectors,” he added.

A lot of companies announced to extend their operational interruptions for a longer time, posing a grave danger to current supply chains. Prolonged social distancing clearly leads to unfavorable logistics and procedures. Localized policies, mobility restriction and “green freight” flowing rejected by many localities are said to be “four different keys to unlock a lock by the representative of the Vietnam Logistics Business Association.

The most serious and extreme matter is how to keep employees safe and maintain the production force when many workers are afraid of being exposed to infection risks as the “three on the spot” model is revealing a lot of shortcomings. Accordingly, companies find it extremely difficult to ensure smooth operations to meet orders that they signed. They are facing the risk of paying compensation for orders that they cannot meet. Subsequently, they may lose customers and drop their positions on global supply chains.

Source: Vietnam Business Forum