Speaking to Vietnam Economy/VnEconomy, Mr. Tran Duc Hoan, Director of Thai Hung Investment & Production Company Limited, an enterprise specializing in packaging for foreign direct investment businesses (FDI), was quite optimistic when sharing positive signs in the production and business situation in early 2024 when partners and export enterprises recovered significantly above the same period in 2023.
The signal of recovering consumption in the world market, especially in Vietnam’s key markets (such as the US and Europe), contributes to the increase in export orders. Therefore, many businesses involved in the global supply chain, such as Thai Hung Company, maintain order growth, and business is more prosperous.
TURNING THE LAMP INTO A TORCH
In the textile and garment industry, after a long year of unprecedented difficulties causing a sharp decline in orders from both export and domestic customers, in the early months of 2024, many businesses in this industry signed orders until the end of the second quarter of 2024, some even had enough orders until the end of the year.
The leader of KLW Vietnam Joint Stock Company, specializing in processing garments for export, said that the market is showing better signs for orders. By the end of the first quarter of 2024, the company exported over 460,000 products and is recruiting about 600 more workers to meet production demand.
According to Ms. Dinh Thi Thuy Phuong, Director of the Department of Trade and Service Statistics (General Statistics Office), the global demand has shown a trend of recovery since the end of the fourth quarter of 2023. Some international organizations such as the World Bank (WB) predict that global trade growth will increase to 2.3% in 2024 from 0.2% in 2023; The International Monetary Fund (IMF) also assessed that global trade growth this year will reach 3.3%.
“Domestically, some leading FDI enterprises such as Samsung or Intel set positive growth targets in their 2024 production and business plans. Therefore, the results of import and export activities in the first quarter of 2024 were positive, with export turnover increasing by 17% and import turnover increasing by 13.9% compared to the same period last year,” Ms. Phuong informed.
Analysts said that the global demand for many of Vietnam’s commodities has recovered, which is a very positive point in the context that the economy still faces many challenges. Besides, the Government’s decisive direction and ministries, sectors, and localities closely follow the timely removal of difficulties and obstacles, along with the quick grasp of opportunities of free trade agreements, promotion of trade, and promotion of products to foreign markets become drivers for the recovery process of businesses.
SUPPORT FROM FISCAL POLICIES
According to Mr. Tran Duc Hoan, Director of Thai Hung Investment and Production Company, thanks to the participation of the Government, all levels, sectors, and localities regularly meeting to discuss difficulties and the effectiveness of fiscal and monetary policies, Vietnam’s economy has remained stable and has not been dragged into a crisis like many other countries.
“It may not be possible for all industries, fields, and people in all localities to receive these positive values, but a stable and solid country through the crisis storms has been a success and great fortune, which will create momentum for the next stage,” said Mr. Hoan.
In front of the consequences caused by the impact of the Covid-19 pandemic and many negative impacts from the political and economic situation in the world, solutions in the financial sector to support and remove difficulties for businesses and people of the Government, the Ministry of Finance has not only received consensus from society, but also helped businesses gradually overcome difficulties.
Regarding the policy of extending, exempting, reducing taxes, fees, and land rents; exempting and reducing corporate income tax, personal income tax, value-added tax, import tax, environmental protection tax, along with many fees and charges, according to statistics from the Ministry of Finance, the total scale of support during the 2020-2023 period amounted to 700 trillion VND.
In which, the scale of support solutions in 2020 was about 129 trillion VND, in 2021 about 145 trillion VND, in 2022 a record support of about 233 trillion VND, and in 2023 about 200 trillion VND.
Not stopping there, many policies continued to be extended in 2024, such as: reducing value-added tax until the end of June 2024 and reducing environmental protection tax on gasoline and oil until the end of 2024 to support businesses to overcome difficulties. According to the calculation of the Ministry of Finance, these policies are expected to reduce state budget revenue by about 68,000 billion VND.
In the first 3 months of 2024, the policies to support businesses and people in removing difficulties in production and business activities and recovering and developing the socio-economy, the estimated amount of tax, fee, and charge exemption and reduction in the first 3 months is about 20.6 trillion VND.
Many experts said that in the context that the state budget revenue was greatly affected, it is still necessary to ensure the spending needs for regular activities, focus resources on investment development, and meet the spending needs for social security, which creates challenges for balancing the state budget.
The implementation of the above support policies further demonstrates the determination to always accompany and support businesses and people. The counter-cyclical fiscal policy continues to leave many marks and is a cornerstone for promoting GDP growth.
Thanks to the support, production and business activities gradually improved, import and export increased, and state budget revenue collection in the first quarter of 2024, although facing many challenges, recorded a positive growth rate of 9.8% compared to the same period last year, estimated at 539.5 trillion VND, equal to 31.7% of the annual estimate.
Besides the above support solutions, solutions to control inflation, develop a sustainable financial market, securities, insurance, and corporate bonds also contribute to stabilizing the macroeconomy and are an important foundation for promoting Vietnam’s economic development in the context of global economic recession risk.
However, the difficulties of the business community seem to have not subsided yet. According to Mr. Truong Van Cam, Vice Chairman and General Secretary of the Vietnam Textile and Apparel Association, although businesses’ orders have returned, the contracts are signed for the short term each quarter while the average price has decreased by 30%, even some orders have decreased by 50-60%, but businesses still have to sign to maintain production and create jobs for workers. Remarkably, many businesses in 2023 were weak, and in 2024, they could not survive and had to withdraw from the market; therefore, the difficulties have not been completely resolved.
MORE SUPPORT POLICIES ARE NEEDED
Before the negative impacts from the international situation, the escalation of tensions in the Red Sea, Mr. Cam said that although Vietnamese businesses did not suffer direct damage, customers suffered, which put additional pressure on subsequent orders. In addition, pressure on delivery time and greening requirements from many markets also put pressure on businesses in the textile and garment industry.
Vietnamese businesses participating in the supply chains of large FDI enterprises also face many challenges, although the most difficult period seems to have passed.
According to Mr. Tran Duc Hoan, when FDI enterprises boost production, it means that the number of jobs and orders of suppliers in the packaging sector will increase, but competition will be fiercer. According to the leader of Thai Hung Company, Canon is currently maintaining several packaging suppliers and asking businesses to reduce prices or extend payment time.
“This creates many costs, so the business efficiency is not as expected, even some businesses cannot survive, have to reduce production or even close down”, Mr. Hoan said…
The content of the article was published in Vietnam Economic Journal No. 18-2024, released on April 29, 2024. We invite readers to read it at here:
https://postenp.phaha.vn/chi-tiet-toa-soan/tap-chi-kinh-te-viet-nam
