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Concerns about reducing production costs at the end of the year

14:59 | 02/12/2021

VCN - Many economic experts predict that the pressure to increase prices in the last month of 2021 will be great, especially as this is the peak period for production and business of goods. Therefore, businesses need practical solutions to reduce production and business costs.

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Enterprises are making efforts to reduce costs and take advantage of opportunities to restore production. Photo: H.Dieu
Enterprises are making efforts to reduce costs and take advantage of opportunities to restore production. Photo: H.Dieu


Input increases, but the output price must be maintained

In the agricultural sector, commodity prices are continuously increasing. A representative of the Ministry of Agriculture and Rural Development said that the selling price of rice varieties, especially copyrighted rice varieties, has continuously increased. Previously, the average selling price was VND13,500 /kg, now it has increased to about VND15,000/kg. The prices of some input materials (fertilizers, plant protection drugs) are also increasing by 30-40%. In addition, according to businesses, gasoline and many other raw materials, components and accessories are also increasing in price. In particular, the sharp increase in petroleum products is causing many impacts on businesses. Despite the support of the Petroleum Stabilization Fund, the price of gasoline in Vietnam is still increasing by about 48% compared to the beginning of 2021.

A food production business said that after the outbreak caused the business to stop operating a part of its production line, it has now returned to more than 70% of operations, but the prices of many raw materials and goods increased by about 20% while businesses have to keep output prices to keep consumption.

Also talking about this issue, Mr. Bui Thanh Tung, Deputy General Director of Kido Group, said that the scarcity of global supply combined with high demand caused the price of gasoline to increase sharply. In addition, when businesses deploy the "3 on-site" model it also causes operating costs to increase by 12-15% compared to normal.

Now, enterprises continue to suffer from additional costs of transportation and logistics due to the increase in gasoline prices, which puts upward pressure on goods prices.

Regarding agricultural enterprises, Mr. Tran Duc Minh, Chairman of the Board of Directors of Trieu Son Joint Stock Company (Triso Group), said the consumption market of agricultural products at the end of the year is also very active, but the consumer market is still very active.

Output for agricultural products is not stable, people and businesses often face the situation that when the crop is good, the price will be lost; if the crop is bad, the price will be gained.

Moreover, export markets always require very high product quality, so enterprises must apply high technology. However, the application of high technology in the production process requires a very large initial investment capital, large investment costs lead to high product prices, causing difficulties in competition and sales.

The survey results of the Hanoi Association of Small and Medium-sized Enterprises show that most businesses are still facing many difficulties, in which, the biggest problem is in terms of finance to serve production and business, pay the wages for workers.

In addition, many types of rising costs such as logistics costs, pandemic prevention costs, etc. are putting pressure on businesses.

Depending on the practical situation for production

The above situation is causing the year-end production plan of many businesses to follow the method of based on the practical situation of the market to save costs. Moreover, the number of orders decreased, causing businesses to rebalance the workforce, equipment, etc. to match the existing financial resources. In addition, the labor force has returned to the hometown during social distancing measures, causing businesses to incur additional costs to recruit new people and re-train.

Therefore, at the conclusion of the meeting of the Steering Committee for Price Management in early November, Deputy Prime Minister Le Minh Khai said that pressure on the price level of a number of consumer goods that are not on the State list.

Valuation and price stabilization are very high due to the impact of supply and demand and difficulties in goods circulation. Therefore, price management needs to continue to be carried out cautiously, flexibly and proactively, closely following market movements, regularly assessing and forecasting in detail to adjust accordingly, focusing on in controlling inflation by the target and supporting the implementation of the Government's dual goals.

Therefore, in the last months of the year, solutions to reduce costs - even the smallest ones, are taken advantage of by businesses. Most recently, the Government issued Decree No. 92/2021/ND-CP dated October 27, 2021 guiding policies on exemption and reduction of corporate income tax and value-added tax in the spirit of Resolution No. 406/NQ-UBTVQH15 of the National Assembly Standing Committee. Businesses all assessed that this is a practical, timely and motivating solution and the source of "life force" is finance for businesses to continue to restore production.

Along with the issued support policies, currently many products and costs have increased for objective reasons, according to market supply and demand, so businesses still want the Government and ministries to study soon on solutions to support businesses, limit the rise of goods and costs that directly affect production activities. For example, a leader of Triso Group said that agribusinesses need a floor price subsidy policy (price stabilization fund) for agricultural products to be able to confidently invest and produce, and overcome uncertain price protection. In addition, like many other businesses, Mr. Tran Duc Minh wishes to have access to preferential loan policies, easier access to loan sources to invest in technology and optimize production costs.

In addition, according to the Vietnam Chamber of Commerce and Industry, regulatory agencies promoting administrative procedure reform is also an effective solution to help businesses reduce costs. For example, currently the list of goods subject to specialized inspection is too much; if the ministries consider continuing to reduce the number of product groups, the number of product lines to be inspected and the number of shipments to be inspected, thoroughly implemented according to the principle of risk assessment, testing according to probability, they will help businesses save both costs and time, helping to speed up import and export activities.