Difficulties surround key manufacturing industries of Nghe An

Manufacturing businesses face many difficulties.

Accordingly, the textile and garment industry's export turnover decreased by 11.6% compared to the same period in 2022. The common difficulty of enterprises in this industry is reduced consumption demand, possibly due to high inflation, reduced orders, enterprises not being able to access loans, many enterprises not being able to disburse, and transferring bad debt.

The textile and garment industry is facing difficulties due to a decline in the market, high interest rates and reduced orders. In the photo: Director of Nghe An Department of Industry and Trade and some local departments and agencies study the actual production at factories

According to some textile and garment enterprises in Nghe An, the difficulties have lasted from mid-2022 until now, due to the lack of orders, so enterprises do not invest in new products and tend to change their business lines. It is forecasted that the coming months will still be a difficult period for enterprises in the textile and garment industry.

Meanwhile, the general situation for wood chip products is that orders have decreased, some businesses have even decreased by 50%, or domestic orders for on-site export have decreased by 30-40%.

At Nghe An PP Paper Materials Joint Venture Company in Khanh Hop Commune (Nghi Loc District), the main export is to countries such as China, Korea, etc. Currently, there are over 2,500 tons of wood chips in stock. According to the representative of this company, since the beginning of 2023, the partners have stopped purchasing, the factory has had to operate at a low level to retain workers. The company has 70 employees, so it had to cut by half. In the first 6 months of 2023, the unit only achieved a turnover of 604,000 USD, a decrease of 1.4 million USD compared to the same period.

Similarly, products such as MDF and finger jointed boards are facing difficulties in exporting because the United States and European countries are conducting investigations into evasion of anti-dumping and anti-subsidy taxes on plywood using hardwood materials imported from Vietnam. Some businesses such as Tan Viet Trung and The Gioi Go have had to stop operating.

Currently, local enterprises are facing fierce competition from FDI enterprises, especially small and medium enterprises, forcing them to reduce working hours and cut labor to reduce production costs in order to survive.

Currently, local enterprises are facing fierce competition from FDI enterprises. In the photo: textile workers working at Sangwoo Garment Company in VSIP Nghe An Industrial Park

At the Frescol Tuna Factory (Nam Cam Industrial Park), production was stagnant, workers had to reduce working hours. It is known that due to the impact of the El Nino phenomenon, seafood production decreased, the source of wild-caught tuna decreased seriously, the supply was in short supply and scarce globally. The raw material supplier could not provide enough, the factory was forced to close, temporarily suspend production (for 1 month) due to lack of raw materials.

Electronic components industry decreased by 22.3%, steel and iron of all kinds decreased by 19.1%, wood chips decreased by 28.2%, cassava and cassava products decreased by 26.7%; textile fibers of all kinds decreased by 68.5%; pine resin and fir resin group decreased by 28.6%, superfine white limestone powder decreased by 19%,... it is likely that by the end of 2023, many businesses will close if nothing changes.

Regarding the difficulties of export enterprises, Mr. Hoang Minh Tuan - Head of Import-Export Department, Department of Industry and Trade shared: In recent times, Nghe An's traditional export markets have encountered difficulties such as China, which has just opened, the supply chain has not recovered, and the policy of tightening control over agricultural and food products. Or the US market, due to the economic recession, consumer demand has decreased. For the EU, due to the tight monetary policy, increased inflation, and increasingly strict standards and regulations.

“Due to export market factors, all industries are facing difficulties due to high inflation and reduced aggregate demand worldwide, especially non-essential consumer goods. However, the impact on each industry is different. Industries whose main export markets are the US, EU... such as textiles, footwear, wood, seafood have the biggest decline; while industries whose main export markets are Asia such as rubber, rice, vegetables, cashew nuts... are less affected ...”, Mr. Pham Minh Tuan added.

Need more capital support policies

Faced with the difficulties of businesses, Nghe An Department of Industry and Trade has proposed a series of solutions to stimulate investment, support trade promotion, administrative reform... emphasizing the factor of capital support.

Steel and corrugated iron products of all kinds decreased by 19.1% in the first 6 months of 2023.

The Department of Industry and Trade said that small and medium enterprises always lack capital for business. Meanwhile, enterprises have borrowed from banks to invest in machinery, purchase raw materials... and have mortgaged all assets with legal ownership.

Currently, businesses want to borrow more but have no more assets to mortgage, banks do not accept factories as collateral, so businesses are facing great difficulties.

According to a representative of the State Bank of Vietnam, Nghe An branch: Some groups of small and medium-sized enterprise customers have needs but do not meet the loan conditions or are still stuck with legal procedures.

Specifically, for the group of small and medium enterprises, the capital scale is small, the equity and financial capacity, management and administration are limited; Lack of feasible business plans; Information on the financial situation is still lacking transparency. Meanwhile, the implementation of solutions to increase access to credit through state support mechanisms (Credit Guarantee Fund for small and medium enterprises, Small and medium enterprise Development Fund...) has not been effective.

To help businesses recover and develop quickly, Ms. Nguyen Thi Thu Thu - Director of the State Bank of Vietnam, Nghe An Branch said: The Branch is currently directing credit institutions to review procedures and documents to increase access to credit; continue to direct the reduction of lending interest rates. With existing outstanding debts, due to customers having difficulty in repaying their debts, the State Bank has issued Circular 02 allowing debt restructuring and maintaining the debt group.

The State Bank will continue to direct the drastic implementation of this policy to support existing outstanding loans with enterprises (so far, the loan structure has been implemented for 110 customers and is continuing to be implemented). With new outstanding loans, banks will actively lend if qualified.

In the first 6 months of the year, businesses have made efforts to export to 126 countries and territories around the world. Some traditional markets of Nghe An businesses have decreased turnover such as: China decreased by 11.14%, the United States decreased by 1.5%, Taiwan (China) decreased by 38.6%, Switzerland decreased by 10.6%, the Philippines decreased by 21.44%, Bangladesh decreased by 45.8%...

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