Association proposes measures to ease textile industry plight
Association proposes measures to ease textile industry plight
The Vietnam Textile and Apparel Association (VITAS) has proposed various solutions to deal with difficulties caused by the Covid-19 pandemic, especially concentrating on cost reduction and easing cash flow for enterprises.
Textile and garment enterprises are facing massive difficulties
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Declining profits
In a recent report on Vietnam's textile and garment industry, the VNDIRECT securities company forecast a likely drop in the profit growth of textile and garment enterprises due to the Covid-19 outbreak in the southern region, which has disrupted the supply chain.
According to VITAS, the prolonged social distancing will greatly affect the business results. Many garment factories in the south, mainly small and medium in size, have had to suspend production as they could not afford the “three-on-spot” production model of supplying workers with accommodations and meals so they could be isolated at work. VNDIRECT also said that the shortage of available shipping containers and high logistics costs may affect businesses with ODM (Original Design Manufacturer) and OBM (Original Brand Manufacturer) orders.
VITAS President Vu Duc Giang said a shortage of human resources and disruptions in transportation and circulation of goods and materials poses a major challenge to the textile and garment supply chain.
While some firms suspended operations, others slashed 50-60 percent of their workforce and cannot supply some of the orders they received during the strong recovery in the second quarter. In addition, transportation costs have increased about four times due to increased pandemic prevention and control measures, hampering the transportation of goods from the south to the north to support production.
VITAS proposes reduced lending interest rates
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Suspended payments, cheaper loans
To solve difficulties for textile and garment enterprises, VITAS has proposed to the Government Office and the Ministry of Planning and Investment a 30 percent discount for enterprises on their electricity bills until the end of 2021. It also proposed that Hai Phong City stop collecting seaport fees until December 31, 2021 and consider a 50 percent reduction for 2022 and that Ho Chi Minh City postpone the collection of seaport fees until June 30, 2022. It also asked to reduce land rent by 50 percent for businesses in localities applying pandemic reduction measures. The State Bank is requested to reduce lending interest rates from 0.5-1 percent per year and extend the repayment period for 2021 and 2022.
At the same time, VITAS proposed that the Vietnam General Confederation of Labor stop collecting trade union fees until June 30, 2022 and suspend payments to employees’ retirement and death funds instead of 50 percent at present. Other suggestions include an exemption from trade union fees until December 31, 2021 for enterprises located in provinces/cities implementing Prime Ministerial Instruction 16 on pandemic control and allowing trade unions of enterprises to use their trade union funds to pay for quick worker testing and for supporting workers in difficulty.
The association also requested the Ministry of Labor, Invalids and Social Affairs to consider payment suspension to the retirement and survivorship fund for one year.
