The "bright" and "dark" segments of the business after the second wave of COVID-19

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Enterprises need to calculate strategies to overcome difficulties. Source: Internet

Losses in forecast

According to the General Statistics Office, in the first eight months of 2020, the number of newly established enterprises decreased, but the number of enterprises temporarily suspending their business for a definite period reached nearly 34,300, up 70.8% over the same period of the year before. Up to 24,200 enterprises stopped working, waiting for dissolution procedures, down 5.9%; 10,400 enterprises completed dissolution procedures, down 1.9%.

Enterprises completing dissolution procedures were mainly in the fields of wholesale, retail, repair of cars and motorcycles; processing industry, manufacturing.

In the eight months, there were 30,600 enterprises in the country that did not operate at the registered address, an increase of 39.3% over the same period last year.

According to the results of the third survey of the Private Economic Development Research Board (Section IV - of the Prime Minister's Administrative Procedure Reform Advisory Council), the impact of this second wave of the pandemic to particularly large enterprises: 20% of enterprises questioned have suspended operations; 76% of enterprises cannot balance their revenues and expenditures, of which 54% say that the cash inflow can only meet 50% of costs; 2% of enterprises were dissolved; only 2% of businesses are temporarily unaffected.

The Association of Handicraft and Wood Industry in Ho Chi Minh City estimates that about 20% of member enterprises must temporarily suspend a part of business activities. The Vietnam Tourism Association (VITA) estimated that about 20% of business members (about 1,600 enterprises) stopped operating and 10% of them dissolved. According to statistics from the Hanoi Stock Exchange, the number of enterprises with losing business results is 74 of 343 enterprises, up 34.5% over the same period last year, with the total loss value in the first six months of 2020 is VND711.9 billion, an increase of 32.9% over the same period in 2019.

Six of 11 industries with a total loss in the first six months of 2020 increased compared to the same period in 2019, of which, industries with high business losses especially the real estate industry with a total loss value from VND 27.5 billion in the first six months of 2019 to VND121.3 billion in the first six months of 2020 (up by 341%), the mining and oil and gas industry with total price loss value increased 225%, transportation and warehouse increased 214%.

In the transport industry, Vietnam Sunshine Joint Stock Company (Vinasun) is suffering a volatile business cycle, when the second quarter consolidated net revenue decreased by 70% to VND156 billion, making after-tax loss over VND111 billion– a record quarterly loss for the company.

As explained by the leader of one of these taxi companies in Vietnam, Q2 profit after tax decreased by 486% year-on-year due to the prolonged influence of the Covid-19 pandemic. This situation has caused Vinasun to sharply cut staff in the first half of the year, the 2020 plan is also forecasted by this company to have a loss of up to VND115 billion, while in 2019 the total profit after tax will reachVND108.7 billion.

Similarly, in the processing and manufacturing industry, the Southern Food Corporation (Vinafood 2) in the second quarter continued to lose nearly VND44 billion, lower than the loss of the same period of 2019 of VND68 billion.

According to leaders of Vinafood 2, the reason for the loss is that the rice import policy of many countries has changed in the trend of trade liberalization, increasing barriers to protect production, and fierce competition. Mining enterprises are also in the same situation. For example, Nui Beo Coal Joint Stock Company (Vinacomin) reported a net loss of more than VND140 billion – the highest in the company’shistory, due to the impact of the pandemic leading to a shortage of labor, production arrangements faces difficulties, while low output did not reach the plan.

Look at the "bright" road

Although the number of losses is not small, the business losses in the present are not surprising or unpredictable. Similar to Vinasun, many businesses have self-forecasted the number of losses for the whole 2020 only after the first wave of the disease. For example, Vietnam Railways Corporation (VNR) expects consolidated volume and revenue this year to decrease 23% compared to 2019, resulting in a heavy loss of up to VND1,400 billion. Transport Tourism and Marketing Joint Stock Company Vietnam(Vietravel) expects a loss of about VND22 billion by 2020 after many consecutive years of profit.

According to the opinion of many businesses and associations, the businesses that have existed up to this point have made a great effort to both maintain operations and help ensure social security. Moreover, although the number of businesses with losses is not small, the good thing is that the Vietnamese economy still has positive growth, many enterprises in the banking, technology, and food sectors are still "excited" to report a trillion VND profit, businesses and investors still have great faith in investment and business in Vietnam.

The proof is that on the stock market, the VN-Index in recent days has soared to over 900 points, shares of many companies are still growing steadily, still playing a leading role in the market.

Therefore, looking at the number of enterprises that dissolved or suspended operations, you can see a gray "picture", but when looking at the number of enterprises returning to operations, the "light" area is wide.

According to the General Statistics Office, in the past eight months, 32,600 enterprises returned to operation, an increase of 27.9% compared to the eight months of 2019, bringing the total number of newly established enterprises and enterprises returningto operations in eight months to 121,300, up 4.5% over the same period last year, which means that on average, each month there are nearly 15,200 newly established enterprises and firms resuming operations.

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Commenting on the above situation, economist Dr. Vo Tri Thanh said that Vietnamese enterprises did not surrender, but many enterprises overcame difficulties, creating a premise for the next development steps, although not enough due to the strength of businesses, especially small and medium enterprises. Therefore, in addition to supporting activities from authorities, businesses need to continue to identify the danger, continue the spirit of urgency and urgency to "rethink, redesign, and rebuild”in a changing world.