Adapting to the 'new normal', businesses 'getting better'

VCN - The recovery momentum of businesses has fired on all cylinders after the first quarter of 2022.
According to the Business Confidence Index (BCI) report of the European Business Association in Vietnam, two-thirds of business leaders surveyed believe that the Vietnamese economy is likely to stabilize and improve in the second quarter of 2022 with nearly 66% expecting revenue to increase. Photo: ST
According to the Business Confidence Index (BCI) report of the European Business Association in Vietnam, two-thirds of business leaders surveyed believe that the Vietnamese economy is likely to stabilize and improve in the second quarter of 2022 with nearly 66% expecting revenue to increase. Photo: ST

Profits increased sharply

Announcing business results for the first quarter of 2022, Cuu Long An Giang Seafood Import-Export Joint Stock Company (ACL) recorded a sudden increase in net profit to nearly VND63 billion, 5.7 times higher than the same period.

In 2022, ACL targets net revenue of VND1,450 billion (up 20%) and pre-tax profit of VND200 billion (4 times higher than the previous year).

An ACL representative said that this year, the company will focus its resources on farming and processing catfish for export, not investing outside the industry. In addition, the company plans to grow in depth in all aspects of production and business activities, and diversify products from catfish in order to promote catfish in more markets.

In the field of fertilizers, DAP - Vinachem Joint Stock Company recorded a profit after tax of VND136.5 billion, 3.8 times higher than the same period last year which resulted from the increase in selling prices.

In the textile and garment sector, TNG Investment and Trading Joint Stock Company recorded VND38 billion in profit after tax, up 74% over the same period last year. According to a representative of TNG, this positive result was due to the fact that the company added automatic machinery and equipment, controlled production according to the hourly mark to each employee, helping to improve the number of employees and the number of products.

In addition, increased purchase demand, improved container scarcity and no longer congested export goods at the port helped increase revenue.

Enterprises said that after the Government's Resolution 128 on safe adaptation to Covid-19 was issued, businesses immediately started production to keep up with orders for partners as well as make up for the interrupted time due to social distancing measures.

Therefore, many businesses have quickly regained recovery as well as increased revenue. The results of the survey on business trends of enterprises in the processing and manufacturing industries in the first quarter by the General Statistics Office showed that 28.4% of enterprises rated their production and business better than in the fourth quarter of 2021; 35.8% of enterprises rated it as stable.

Along with that, the number of newly registered enterprises and those re-entering the market in March 2022 was three times higher than those withdrawing from the market. Generally, in the first quarter, the number of newly registered enterprises increased by 18.1% over the same period last year, which is the strongest increase in the past five years and those which return to operation also increased by 73.6% compared to the same period last year. All prove the bounce-back of enterprises.

According to businesses, this result was achieved thanks to the implementation of many solutions to help businesses recover, helping to remove "barriers" in terms of capital, high interest rates and costs, thereby facilitating business operations.

Beliefs and expectations

Business recovery is still ongoing. According to the General Statistics Office, 50% of enterprises surveyed assessed that business trends in the second quarter of 2022 will be better compared to the first quarter. In which, the foreign-invested business sector benefits most with 84.7% of enterprises forecasting that the production and business situation in the second quarter would be better and stable.

According to the latest results of the Business Confidence Index (BCI) report of the European Chamber of Commerce in Vietnam (EuroCham), two-thirds of business leaders polled believe that the Vietnamese economy is more likely to be stable and able to improve in Q2 2022 with nearly 66% expecting revenue growth.

Alain Cany, President of Euro Cham, assessed that European business leaders wholeheartedly support Vietnam's new normal investment environment after the pandemic. Vietnam remains one of the most effective and attractive investment destinations in the world.

Therefore, Samsung has "poured" an additional US$920 million to invest in expanding the project for Samsung Electro-Mechanics Vietnam Co., Ltd in Thai Nguyen. With this adjustment, the investment capital of Samsung Electro - Mechanics factory in Thai Nguyen has increased from US$1.35 billion to US$2.27 billion. In addition, Vietnam still attracts many "eagles", such as LEGO Group (Denmark) has invested in a toy factory and exercise the right to import and export, wholesale and retail goods.

In particular, many pandemic-hit businesses have been "reviving". For example, in the tourism industry, since the beginning of 2022, especially since the opening of international tourism on March 15, the tourism industry has "awakened". In 2022, Vietourist Tourism Joint Stock Company sets a revenue target of VND180 billion, up 20% compared to 2021, while net profit is VND4.8 billion, higher than the pre-pandemic level. According to data from the Google Destination Insights travel trend analysis tool, from the beginning of the year to the end of March 2022, the number of international searches for Vietnam tourism (for airlines and accommodation establishments) is increasing dramatically and even is ranked among the leading searches in the world, reaching over 75%. This is the basis for tourism businesses to bounce back.

Not only that, many businesses also continue to invest in production and business. For example, Nam Viet Joint Stock Company (Navico) decided to invest VND200 billion to establish Nam Viet Aquatic Feed Processing One Member Company Limited.

Previously, in March, Navico also approved to contribute VND81 billion, equivalent to 100% of the charter capital of Nam Viet Real Estate One Member Limited Liability Company. The company aims to continue applying high technology to be self-sufficient in high-quality catfish seed, invest in collagen and Gelatin production, with a capacity of 780 tons/year. In addition, this company also plans to invest in the production of organic fertilizers from fish manure with a capacity of 70,000 tons/year and invest in solar power.

Notably, starting from August 2022, the company will export catfish products to the US market. Therefore, Navico is expected to collect VND4,900 billion in total revenue, up 40%, and VND720 billion in pre-tax profit, 4.8 times higher than the result in 2021.

Similarly, Nam Kim Steel Joint Stock Company will establish Nam Kim Phu My Ton Co., Ltd with charter capital of VND500 billion. The PAN Group said that it will not pay dividends in 2021 and 2022 to devote resources to implementing the merger and acquisition (M&A) strategy for growth.

The representative of this group said that there is still room for development in such business segments. For example, the seafood export segment will benefit from great demand from the US, European, and Japanese markets when these countries have opened their doors before Vietnam and are in a period of strong economic recovery.

These positive signs have reflected the strong expectations and beliefs of the business community, domestic and foreign investors in the process of opening up and recovering the economy as well as the medium and long-term growth prospects of Vietnam.

Economic expert Dr. Can Van Luc:

The socio-economic recovery and development program of the National Assembly and the Government plays an important role and significance in the implementation of the socio-economic development goals in 2022 in particular and in the whole period of 2021-2025.

However, businesses still face many difficulties with the escalation of external risks and raw material prices (petrol, oil, iron and steel, construction materials, labor), leading to narrowing profit margin; the number of enterprises suspending business for a definite time still increased by 49.7% over the same period.

Therefore, the management agencies need to accelerate the improvement of institutions; build a legal corridor for the management and development of the green economy, digital economy, society and digital government. Along with that, it is high time to promote administrative reform in a substantive and practical manner, in which prioritizing the removal of barriers and bottlenecks is essential in order to mobilize and free up resources, especially in the fields of infrastructure investment, land, construction, import and export procedures and business dissolution.

By Bình Nam/ Thu Phuong

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