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The complicated situation of the Covid-19 epidemic has had great impacts on the business situation of distribution enterprises. Photo: Nguyen Thanh

The risk of losingtrillions of dong

The latest report of the Ministry of Industry and Trade shows that the total retail sales of goods and services in the first three months of the year was estimated at VND1,246 trillion, up 4.67% over the same period in 2019. This is the lowest increase in recent years (in 2019 it increased by 11.96%; 2018 increased by 9.86%; 2017 increased by 9.18%; 2016 increased by 9.7%).

In March alone, total retail sales of goods and services decreased by 0.8% over the same period last year. This is the first decrease in the period of 2016 - 2020 (the growth rate of total retail sales and consumer service revenue in March compared to the same period last year in the years 2016-2019 respectively: 10.4%; 12.2%; 11.4%; 12.3%).

The Ministry of Industry and Trade assessed that the complicated situation of the Covid-19 epidemic had great impacts on the business situation of distribution enterprises.

As reported by several businesses, the Covid-19 epidemic directly affected the business situation of the system. Compared to January and February 2019, sales increased but the growth rate was slower. The group of essential commodities, such as food and foodstuffs, has increased due to the psychological accumulation of movements of the epidemic,while other commodity groups decreased.

Specifically, as with Lotte,sales in February 2020 decreased by 50% compared to January 2020 and decreased by more than 20% compared to the same period in 2019. For Aeon Vietnam,sales of January 2020 decreased by 2% and February decreased by 6% compared to the plan.

With Saigon Co.op,retail sales in the first two months of this year decreased by 50% compared to the same period last year and could have decreased by VND1,000 billion if the epidemic was controlled in the second quarter, and a decrease of VND2,000 billion if the epidemic continues.

Similarly, with Saigon Trade Corporation - Limited Company,retail sales in the first two months decreased by about 50% compared to the same period last year.

Large inventory, high price

Notably, according to the evaluation of domestic trade activities, the Ministry of Industry and Trade carefully analyzed the activities of the enterprises trading in liquefied petroleum gas (LPG). The output of LPG trading enterprises decreased by 40-50% due to the sudden reduction indemand from the industrial manufacturing sector, while restaurants and hotels closed down.

“The number of employees in the LPG distribution industry is greatly affected by the decline in business output. It is estimated that 30,000 workers are directly involved in LPG retail, 2,500 employees work directly at filling stations, supply stations and workers directly engaged in service activities such as transportation, maintenance, maintenance,” the Ministry of Industry and Trade said.

In addition, world LPG price plummeted. LPG business is mainly signed with LPG trading contracts with long-term contracts and closing prices in advance. Therefore, LPG enterprises currently have a large volume of goods with a high price. Gas businesses such as filling stations, supply stations and LPG retail shops have stopped operating or scaled back.

For petroleum products, due to the effect of the Covid-19 epidemic, gasoline consumption fell sharply, inventories of enterprises were high.

According to estimates by the Vietnam Petroleum Association, gasoline consumption decreased by about 30%. This volume of gasoline inventories, in addition to generating storage costs, also causes great damage to petrol and oil trading enterprises when the world petrol and oil price has continuously decreased, so businesses have to sell at reduced prices.

If the disease lasts long, it will directly affect the distribution business. Sales decreased (due to low demand for fashion items, electronics) but it was difficult for enterprises to reduce costs (because they still had to maintain the apparatus and ensure to reserve goods to stabilizemarket). Some distribution businesses may have to shut down or scale back. Workers will have to reduce their working hours, or become unemployed, affecting social security.

“In the current period, there should be a support mechanism for businesses to reduce difficulties, maintain production and business, to ensure continuous supply of petrol and oil for the market, to serve the daily life and production of people,”said the Ministry of Industry and Trade.

Particularly for petroleum products, in the updated report assessing the situation, the impact of Covid-19 epidemic and orientations, solutions to boost production and business in 2020 of Industry and Trade sector on April 8, the Ministry of Industry and Trade proposed the Government to consider and direct the Ministry of Finance in studying and submitting plans to reduce environmental protection tax on petrol and oil at appropriate levels.

Currently, the proportion of taxes and fees in petrol prices is high (about 55% - 60% for gasoline products, 35% - 40% for petroleum products). In which, environmental protection tax is about 32% for gasoline and from 11% - 20% for oil.

In particular, the Ministry of Industry and Trade proposes to consider further reducing environmental protection tax on E5RON92 biofuel to suit the reality to create a price difference and encourage the use of biofuel.