Second COVID-19 wave could sink local businesses

A woman works at Hanoi-based Garment 10 Jsc (Garco 10). Photo by VnExpress/Han Pham.

The number of new orders from across many provinces and cities also began to drop. "I was trying to minimize losses from the first semi-lockdown earlier this year, and now this... everything stands still," the owner of the garment factory in Hanoi's Long Bien District said.

Her greatest worry now was that all the capital she’d spent on fabric that has recently arrived will now be stuck in inventory. Trang said she was considering a plan to find sewing companies to make cloth masks once again.

Trang is one of many local entrepreneurs that have seen their plans upended even as they were recovering from the first disruptions caused by the COVID-19 pandemic.

Tien Nam, deputy director of a construction enterprise in Hanoi sighed after being on the phone for nearly half an hour with the investor of a construction project in Da Nang.

"We have agreed to postpone the construction date from early August because the outbreak is strong there. This is a difficult decision for both sides but there is no other way," he said.

This is the second time that Nam's construction project in Da Nang has been delayed by the pandemic, the first postponement happening in March. Nam is worried and does not know when the project can be kick-started again.

"The machinery was transported to Da Nang a week ago and engineers and workers were mobilized. But now everything has been postponed indefinitely," he said.

At the beginning of the year, the company was forced to cut its staff by half and reduce salaries of the remaining, including managerial cadre by 30-50 percent. The second wave of COVID-19 infections has him wondering: "What will the future be?"

Enterprises in sectors other than manufacturing have also been hit hard by the second COVID-19 wave.

The pandemic returned to the community on July 25 after more than three months. Since then the country has reported 174 domestic infections, including 120 cases in Da Nang. Six COVID-19 patients had died since Friday, including three on Sunday alone.

Luu Huynh, representative of an event management company in Ho Chi Minh City (HCMC), said customers had just canceled five events scheduled for August and this number would increase sharply if the outbreak escalates.

The last event to be canceled was a customer's conference specializing in electrical equipment to be held in Da Nang for which payment had been made for all air tickets and guest expenses. The company had already spent its own money to cover 50% of the event's construction costs, but the customer just canceled the event, giving no specific time when it can be reorganized.

Dinh Trong Thinh, a professor at the Academy of Finance in Hanoi, said: "If the second COVID-19 wave develops complicatedly, the economy could go into a state of turmoil. Then businesses, especially small and medium-sized enterprises with limited capital will not make it," he said.

The coronavirus pandemic has caused 7.8 million workers to lose their jobs or have working hours reduced.

Up to 1.4 million lost their jobs, mostly in the processing, retail, logistics, and hospitality sectors, according to the Ministry of Labor, Invalids and Social Affairs.

The number of businesses temporarily suspending operations was 29,200 in the first half of the year, up 38.2%.