Adapting to the 'new normal', businesses 'getting better'

According to the Business Climate Index (BCI) report of the European Chamber of Commerce in Vietnam, two-thirds of business leaders surveyed believed that Vietnam's economy was likely to stabilize and improve in the second quarter of 2022 with nearly 66% expecting revenue to increase.

Profits increased sharply

Announcing business results for the first quarter of 2022, Cuu Long An Giang Seafood Import-Export JSC (ACL) recorded a sudden increase in net profit to nearly VND63 billion, 5.7 times higher than the same period. In 2022, ACL targets net revenue of VND1,450 billion (up 20%) and pre-tax profit of VND200 billion (four times higher than the previous year).

An ACL representative said that this year, the company would focus its resources on farming and processing pangasius for export. Additionally, the company is expected to grow in depth in all aspects of production and business activities, and diversify products from pangasius with the goal of making pangasius familiar to more markets.

In the field of fertilizers, DAP - Vinachem JSC recorded a profit after tax of VND136.5 billion, 3.8 times higher than the same period last year. This business said that the increase in profit was mainly due to the increase in selling price.

In the textile and garment sector, TNG Investment and Trading JSC recorded VND38 billion in profit after tax, up 74% over the same period last year. A representative of TNG said that the increase in profit was due to the fact that the company added machinery and equipment, controlled production according to the hourly mark for each employee, helping to improve the number of employees and products. In addition, increased purchase demand, improved container scarcity, and no longer congested export goods at the port resulted in increased revenue.

Businesses said that after the Government's Resolution 128 on safe adaptation to Covid-19 was issued, businesses immediately started production to keep up with orders for partners as well as compensate for the time interrupted due to social distancing.

Therefore, many businesses have quickly regained recovery momentum and increased revenue. According to a survey on business trends of enterprises in the processing and manufacturing industries in the first quarter of the General Statistics Office, 28.4% of enterprises said the production and business situation was better than the fourth quarter of 2021; 35.8% of enterprises rated it as stable.

Along with that, the number of enterprises registering for new establishment and re-entering the market in March 2022 was three times higher than those withdrawing from the market. Generally, in the first quarter, the number of newly registered enterprises increased by 18.1% over the same period last year. This is the strongest increase in the past five years and the number of businesses returning to operation also increased by 73.6% over the same period, showing that businesses are recovering.

According to businesses, this result was achieved thanks to the implementation of many solutions to support businesses in recovery, which removed "barriers" in terms of capital, high interest rates and costs, thereby making operations more convenient.

Beliefs and expectations

Business recovery is still ongoing. According to the General Statistics Office, 50% of enterprises surveyed assessed that business trends in the second quarter of 2022 would be better compared to the first quarter. In which, the foreign-invested business sector is the most optimistic group, 84.7% of enterprises forecast that the production and business situation in the second quarter would be better and stable.

According to the latest BCI (Business Climate Index) report of the European Chamber of Commerce in Vietnam (EuroCham), two-thirds of business leaders surveyed believed that Vietnam's economy was more likely to stabilize and improve in the second quarter of 2022 with nearly 66% expecting revenue to increase. Alain Cany, President of EuroCham, assessed that European business leaders wholeheartedly supported Vietnam's new normal investment environment after the pandemic. Vietnam remains one of the most effective and attractive investment destinations in the world.

Therefore, Samsung has "poured" an additional US$920 million to invest in expanding the project for Samsung Electro-Mechanics Vietnam Co., Ltd in Thai Nguyen. With this adjustment, the investment capital of Samsung Electro-Mechanics factory in Thai Nguyen has increased from US$1.35 billion to US$2.27 billion. Furthermore, there are many other big companies looking to Vietnam such as LEGO Group (Denmark) which invests in toy factories and exercises the right to import, export, and wholesale and retail goods.

In particular, many businesses in the fields heavily damaged by the pandemic have been "reviving". For example, since the beginning of 2022, especially since the opening of international tourism on March 15, 2022, the tourism industry has "awakened". In 2022, Vietourist Tourism JSC sets a revenue target of VND180 billion, up 20% compared to 2021, while net profit is VND4.8 billion, higher than the pre-pandemic level. According to data from the Google Destination Insights travel trend analysis tool, from the beginning of the year to the end of March 2022, international search volume for Vietnam tourism (for airlines and accommodation establishments) is increasing rapidly, ranked among the highest group in the world, reaching more than 75%. This is the basis for tourism businesses to recover.

Besides, many businesses strongly invest in production and business. For example, Nam Viet JSC (Navico) decided to invest VND200 billion to establish Nam Viet Aquatic Feed Processing One Member Co. Ltd. In March, Navico also contributed VND81 billion, equivalent to 100% of the charter capital of Nam Viet Real Estate One Member Limited Liability Company.

Navico aims to apply high technology to be self-sufficient in high-quality pangasius seed, invest in collagen and gelatin production, with a capacity of 780 tons/year. Additionally, Navico plans to invest in the production of organic fertilizers from fish manure with a capacity of 70,000 tons/year and invest in solar power. Notably, from August 2022, the company will export pangasius products to the US market. Therefore, Navico plans to gain VND4,900 billion in total revenue, up 40% and VND720 billion in pre-tax profit, 4.8 times higher than the result in 2021.

Similarly, Nam Kim Steel JSC will establish Nam Kim Phu My Ton Co., Ltd with charter capital of VND500 billion. The PAN Group said that it would not pay dividends in 2021 and 2022 to devote resources to implementing the merger and acquisition (M&A) strategy for growth in the coming period.

A representative of this group said that their business segments were having many opportunities for development. For example, the seafood export segment will benefit from great demand from the US, European, and Japanese markets when these countries have opened their markets before Vietnam and are in a period of strong economic recovery.

These positive signs have reflected the strong expectations and beliefs of the business community, and domestic and foreign investors in the process of opening up and recovering the economy as well as the medium and long-term growth prospects of Vietnam.