Textile and garment exports are unpredictable because of Covid-19

Hoang Ngoc Anh, General Secretary of the Vietnam Textile and Apparel Association (Vitas)

What are difficulties faced by textile and garment firms in organising production due to the complication of the Covid-19 outbreak nationwide?

The first difficulty to be dealt with is pandemic prevention. Previously, Decree 82/2018/ND-CP on the management of industrial parks and export processing zones did not allow residents to live in industrial parks or export processing zones so there are no residences for employees to stay in after working hours. However, to apply the three-on-site working production, only textile firms with the characteristic of small workforce and a large number of machines are possible to flexibly apply the method of downsizing the factory size for room to produce. Meanwhile, garment firms with a large number of employees, especially those with a scale of 1,000 employees cannot afford for a long time, especially for basic needs such as bathing, personal hygiene, and safety management.

It is unpredictable how long the application period "3 on the spot" will last so businesses cannot take the initiative for anything, including receiving more orders or predicting the reactions of workers after being quarantined for a long time.

On the other hand, up to 60-70% of employees do not agree to stay at the company due to the fear of bacterial cross-contamination. Many businesses wonder if these employees are entitled to State subsidies according to Resolution 68/NQ-CP dated July 1, 2021 on policies to support employees and employers in difficulties caused by the Covid-19 pandemic and Decision No. 23/2021/QD-TTg dated July 7, 2021 on the implementation of policies to support employees and employers facing difficulties due to the Covid-19 pandemic.

From this perspective, Vitas has proposed the State include these workers in support under Resolution 68, because if it is applied according to Clause 2, Article 99 of the Labour Code (no salary for stopping work), workers will suffer more difficulties, while the disease is spreading dangerously, the fear of workers is acceptable. Meanwhile, most firms are currently incapable of paying severance salary (applicable under Clause 3, Article 99 of the Labour Code).

In addition, many businesses located in blocked and isolated areas have to let their workers quit or relax. Due to huge delivery demands, firms have to arrange overtime right after reopening. However, Article 107 of the Labour Code stipulates that overtime work “is not allowed to exceed 40 hours in a month”. Therefore, Vitas proposed that the State allow firms, after the blockade period, to arrange overtime work beyond the above regulations to handle backlog orders. Firms will still offset the months to ensure no more than 300 hours/year as set in Clause 3, Article 107.

On July 29, the Government Office issued Official Letter No. 5187/VPCP-CN on facilitation of goods transportation during the Covid-19 pandemic, removing many obstacles in the circulation of goods. Does Vitas have any further recommendations or suggestions?

Vitas proposed the provision of QR code on the "green stream" should be abolished nationwide. Besides, the association also proposed to remove the regulation that only essential goods can be circulated, instead allowing the circulation of goods as in normal conditions if ensuring pandemic prevention, except for prohibited or restricted goods in accordance with regulations. This content was also proposed by the Ministry of Industry and Trade on July 27. Because the implementation of "dual goals" means export goods, imported raw materials and accessories can’t be circulated are also have to be dealt with at the same time.

How are Vietnamese fashion and textile industries coping with such difficulties in meeting orders of textile firms in particular, the export situation of the industry in general?

Industries like textiles and garments, leather and footwear contribute greatly to export turnover, and at the same time to the social security system because of the large number of vacancies. In the first half of this year, the textile and garment export gained considerable results, but in the coming time, it is not clear what the situation will be.

As the matter of fact, most brands accept business failures to complete orders for objective perspectives but in the long term if there are no changes and the production chain is continually broken, the key partners will gradually shift to other markets.

Does the association deliver any more recommendations to facilitate smoother production and export for garment and textile firms in the near future, madam?

The prerequisite is still the vaccine because the nature of the impact of the Covid-19 pandemic on businesses in 2021 is completely different from the impact in 2020.

Currently, the whole political system of Vietnam is actively fighting against the pandemic. However, with new variants of Covid-19, the fundamental solution is that workers and people must be vaccinated as quickly and as much as possible.

Therefore, Vitas proposed that the State should give priority to workers in firms to be vaccinated early (can be considered on the basis of firms at their own expense) to ensure the safety of workers and so that firms can soon return to stable production and business activities. At the same time, special priority should be taken to the driver team to ensure the circulation of goods to serve people's essential needs and ensure production, not to disrupt the supply chain.