MEKSEA.COM – Covid-19 has been putting pressure on Vietnam’s economy, especially the seafood export industry. Many enterprises faced the risk of bankruptcy due to the inability to pay their bank debts. Recently, Meksea proposed solutions to the Vietnam Association of Seafood Exporters and Producers (VASEP) to help businesses recover production after the pandemic.

It is difficult to maintain production

By the end of August 2021, about 30-40% of seafood businesses in the Southern provinces are eligible for “3 things at the factory” (produce, eat, rest), the others have to shut down because of the costs incurred too much. However, these factories also only mobilized about 30-50% of the workforce and the processing capacity has decreased by 50-60% compared to before.

Operational capital is interrupted, purchasing of raw materials cannot be continued, but bank capital still has to be paid, along with taxes and fees such as VAT, social insurance, corporate income, etc causing many businesses to face the risk of bankruptcy.

Quarters 3 and 4 are considered as key times, 3/4 of the year’s revenue and profit depend on these two quarters. However, since the beginning of July, sales have fallen sharply, resulting in almost 100% of small enterprises being at risk this year. Not only is the supply chain of raw materials interrupted or difficult to transport, but many businesses have also lost customers due to the long social distancing and the failure to ensure the delivery schedule.

Pressure from customers

Facing the force majeure situation, Meksea customers are very sympathetic because not only in Vietnam but also for suppliers from other countries have similar difficulties. Most customers try to adjust their consumption distribution plan. In August, the continuous and prolonged lockdown made customers worry about their signed orders and constantly rushed to delivery. In addition to this, very few considered new orders

Businesses actively produce for year-end orders. (photo: Internet)

In September, their markets are in high demand because of the back-to-school season, holidays in Europe, Christmas, and other holidays at the end of the year are coming making customers impatient. Most want to stop the contract and find other suppliers. Once the partner has found an alternative supply, it is difficult to contract again. However, the last 4 months are an important sales season that determines the whole year’s business performance.

Meksea proposed solutions to recover production and business after the pandemic

With the role of the leading seafood distributor for export in Vietnam, facing the current great challenges, Mr. Hoang Van Duy – General Director of Mekong Seafood Connection made the following recommendations:

Firstly, there should be mechanisms and policies made to consume raw materials that are stagnant in individual farming areas and cooperatives. The government should have policies to subsidize prices, reduce taxes, lend money, create conditions for export businesses to collect and restart purchasing and production activities for businesses that meet epidemic prevention requirements.

Secondly, in order to avoid the crisis again in the future, and directly affect the government’s budget revenue, it is necessary to have an incentive mechanism and immediate support for farming households, cooperatives, and businesses to immediately start re-grouping.

Thirdly, there should be support for businesses, especially small and medium-sized enterprises accounting for more than 97% of the total number of enterprises in the country, such as policies related to employees, tax policies, financial and banking policies.

Priority vaccination for “3 things at the factory” workers to maintain production. (photo: Internet)

Fourth, priority vaccination for workers at factories will soon bring production and business activities back on track. It is necessary to thoroughly understand the 5K shortcut, proactively declare health on electronic handbook software, and organize periodic testing. There is a clear and timely mechanism to localize and support infected people to preserve their lives and avoid spreading.

Fifth, cooperatives need to take on the role of preliminarily processing, actively seeking output for product consumption, avoiding dependence on purchasing units. In addition, the establishment of eCommerce helps to facilitate domestic and international supply and demand information, improve competitiveness, transparency, boost production, and meet market demand.

To create favorable conditions for Vietnam’s seafood export activities in the context of the covid epidemic as well as post-pandemic economic recovery, in addition to the supportive policies of the government, businesses, and production units necessary to strictly implement measures to prevent the spread of disease so that production activities can return to normal soon.

By Huyen Duong/Tuyen Ho (Meksea Team)

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