Fear of cost escalation "hits" businesses

VCN- As reflected by businesses to Government leaders, rising costs are hitting the speed of recovery and growth in the last months of the year.
Vietnam accelerates coal imports as demand peaks in 2030 Vietnam accelerates coal imports as demand peaks in 2030
Enterprises are excited when Ho Chi Minh City reduces seaport infrastructure fees Enterprises are excited when Ho Chi Minh City reduces seaport infrastructure fees
Fear of cost escalation
The price of animal feed has increased by about 20%, greatly affecting businesses in the seafood industry. Photo: T.Hoa

The increase in business expenses is higher than revenue

Reporting to Prime Minister Pham Minh Chinh at the National Conference between the Prime Minister and businesses on the morning of August 11, Mr. Truong Van Cam, Standing Vice Chairman and General Secretary of the Vietnam Textile and Apparel Association, acknowledged textile and garment enterprises are facing many difficulties and challenges at the end of 2022.

In particular, Vietnam's textile and garment goods are mainly exported, so it is affected by global geopolitical fluctuations. For example, high inflation in the US and Europe has diminished the purchasing power of workers, causing orders to decrease.

Besides, Vietnamese enterprises are facing rising costs in fuel, input materials especially transportation costs at 3 times higher than in the last 5 years due to the ongoing Russia-Ukraine conflict.

According to Mr. Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers, the worryingly high increase in production costs is followed by product prices skyrocketing and threatens to reduce competitiveness. In particular, the price of animal feed since the pandemic has increased by about 20%. Remarkably, catfish and shrimp enterprises suffer from the hike of rising costs because input materials are accounting for 65-70% of the overall expense.

According to a report of the Ministry of Planning and Investment, in the last months of the year, businesses still face many difficulties due to the hike of gasoline, raw materials, input materials, logistics costs which is followed by the escalation of production and business costs. Particularly, the cost of construction packages increased by 18-30% from time to time, logistics costs was 3-5 times higher. The increase in costs of enterprises was higher than the increase in revenue in the second quarter of 2022 compared to the previous quarter and the same period last year.

Mr. Nam also said that, in the past two years, shipping costs and labor have also increased due to the pandemic.

Currently, the price of transporting a container as well as other input costs such as packaging, chemicals, transportation, and integration has all skyrocketed. For example, a container to Europe has increased four times to US$10,000-12,000 and to the West Coast of the US is at VND400 million.

Therefore, seafood businesses in particular and businesses, in general, need the attention of ministries and sectors to take measures to support and direct cost reduction, especially for animal feed prices.

Given the impact of high fuel prices, Mr. Nguyen Quoc Ky, Chairman of the Board of Directors of Vietravel, said air transportation is difficult, fuel prices are high, sometimes accounting for over 60% of the cost while the price of petrol adjustment is usually delayed after 1 month.

As a result, airlines are not immediately benefiting at the time of the price cooling down.

According to Mr. Le Quang Trung, Vice Chairman of the Vietnam Logistics Business Association, logistics businesses highly appreciate the efforts and results achieved in operating and stabilizing gasoline prices. But he said that it is necessary to maintain and ensure stable gasoline prices at least until the second quarter of 2023.

In terms of rising transport prices, Mr. Le Quang Trung said that Vietnamese businesses do not benefit, instead, profits "fall into the pockets" of large foreign firms. Therefore, he suggested that it is necessary to increase connectivity based on large logistics center platforms. In addition, it is urgent to support the development of fleets and ports with Vietnamese brands.

"Vietnam is in need of importing some certain goods, but the Vietnamese fleet is still quite small compared to the world fleet, so it is very necessary to have a mechanism to win the right to transport for 20-30% of import and export volume," proposed Mr. Le Quang Trung.

Reasonable price management

Due to such difficulties, according to Mr. Pham Tan Cong, Chairman of the Vietnam Confederation of Commerce and Industry (VCCI), the authorities need to actively improve the business environment, enhance international competitiveness with a focus on reforming administrative procedures, business conditions, cutting costs for businesses including time and human resources costs.

In addition, businesses and associations also expressed a desire to prolong a number of support policies, create favorable mechanisms to encourage private investors, and promptly support businesses in the face of pressure on prices and manufacturing charges.

Fear of cost escalation
The Prime Minister talks with delegates attending the Conference. Photo: VGP

Therefore, Minister of Agriculture and Rural Development Le Minh Hoan emphasized the role of state management agencies in cooperation with enterprises. In response to the direction of the Prime Minister and Deputy Prime Minister Le Van Thanh, the Ministry of Agriculture and Rural Development has been self-sufficient in input materials and cooperated with associations and businesses to proactively stabilize input material sources.

According to Minister of Industry and Trade Nguyen Hong Dien, the Ministry will continue to implement solutions to stabilize production, ensure large balances, supply and demand for basic and essential goods such as: stable prices of gasoline, fertilizer, etc. electricity, coal with the support of the development of enterprises. Closely monitor gasoline price movements and coordinate with the Ministry of Finance to regulate prices accordingly; update information on markets, prices, and changes in policies of importing countries so that enterprises can grasp information actively and flexibly in production and business; support the digitization of business operations, contributing to reducing time and costs.

Sharing this difficulty with businesses, at the conference, Prime Minister Pham Minh Chinh directed that ministries, branches and localities should push up supporting measures in order to reduce taxes, fuel fees, raw materials and fuel inputs for production and business; research and develop alternative raw materials to replace current imported ones.

Hương Dịu/ Thu Phuong

Related News

Sustaining growth solutions for coffee exports

Sustaining growth solutions for coffee exports

VCN - The continuous increase in coffee prices has provided a strong boost for coffee exports, aiming for a record of US$5 billion. However, it still requires many comprehensive solutions to enhance quality and value to ensure sustainable development for the coffee industry in the future.
The Prime Minister requested that before April 25, complete the revision of regulations on import and export of medicinal materials

The Prime Minister requested that before April 25, complete the revision of regulations on import and export of medicinal materials

VCN - The Ministry of Health, according to its assigned functions, tasks and authority, presides and coordinates with the Ministry of Finance and relevant agencies to urgently review, research, amend and complete the Ministry's regulations on import and export of medicinal materials.
Quang Ninh Customs: Flexible solutions to raise revenue

Quang Ninh Customs: Flexible solutions to raise revenue

VCN - In addition to closely following budget revenue developments, Quang Ninh Customs Department flexibly and creatively organizes accompanying activities to support businesses, contributing to attracting and retaining businesses and increasing budget revenue across the province.

Latest News

Made-in-Vietnam wind turbine towers bound for RoK

Made-in-Vietnam wind turbine towers bound for RoK

Ten domestically-manufactured offshore wind turbine towers are set to depart from Phu My Industrial Zone in the southern province of Ba Ria-Vung Tau by the end of April 2024, bound for Jeonnam 1 wind power project off the coast of the Republic of Korea (RoK)'s Jeonnam province.
Cashew nut exports is estimated at US$ 782 million in the first quarter

Cashew nut exports is estimated at US$ 782 million in the first quarter

VCN – Vietnam’s cashew nut exports in March reached 55 thousand tons, surging in volume and value compared to the previous month.
Maintain the reputation of Vietnamese coffee amidst soaring prices

Maintain the reputation of Vietnamese coffee amidst soaring prices

VCN - Nguyen Nam Hai (photo), Chairman of the Vietnam Coffee-Cocoa Association (Vicofa), shared about the landscape of the Vietnamese coffee industry in the context of continuously increasing prices.
Find opportunities in niche markets to increase exports

Find opportunities in niche markets to increase exports

VCN - New markets and niche markets are the way for exports to reduce dependence on traditional markets. Exploiting opportunities in these markets will open up many new opportunities.

More News

Vietnam transforming into new global manufacturing hub: experts

Vietnam transforming into new global manufacturing hub: experts

Vietnam is transforming into a new global manufacturing hub, offering a diverse range of products that are competitively priced and continuously improving in quality, assessed foreign distributors and importers, who will participate in the Vietnam International Sourcing expo this June.
Vietnam National Brand Week to be held in mid-April

Vietnam National Brand Week to be held in mid-April

The Vietnam National Brand Week 2024 will be held nationwide from April 15-21 to raise public awareness of Vietnam national brand and promote products recognised as national brands to domestic and international communities.
Textile industry in sustainability push to meet stringent requirements

Textile industry in sustainability push to meet stringent requirements

Textile and garment businesses are making a green push with development of eco-friendly products adapted to global fashion trends and by meeting the stringent requirements under free trade agreements the country has signed, according to industry insiders.
Loosening the belt buckle for sustainable development of the maritime industry

Loosening the belt buckle for sustainable development of the maritime industry

VCN - Recently, the growth of maritime and waterway transportation has been impressive, with a double-digit rate of about 10-12% per year. However, despite many advantages, the waterway system has not been efficiently utilized, commensurate with its potential. The Customs News had a discussion with Pham Quoc Long, Vice Chairman of the Vietnam Shipowners' Association, on this issue.
Vietnam ready to ride US investment wave

Vietnam ready to ride US investment wave

Vietnam is on the verge of seeing a massive influx of investments from the US, and stands ready to welcome the wave.
Investing in wages is investing in development

Investing in wages is investing in development

VCN - According to Dr. Bui Sy Loi (photo), senior expert of the Ministry of Labor, War Invalids and Social Affairs, former Deputy Chairman of the National Assembly's Committee on Social Affairs, the National Assembly's adoption of the reform policy salaries, resource decisions and salary reform policies on July 1, 2024 is a suitable time, both historical and topical, contributing to ensuring life, creating peace of mind for staff, civil servants, public employees and workers.
Import and export in the first quarter: clearer and clearer bounce- back trend

Import and export in the first quarter: clearer and clearer bounce- back trend

VCN - As calculated, total import-export turnover of goods in the first quarter of the year reached over 178 billion USD, up 15.5% year on year. Both exports and imports achieved high growth rates, clearly showing a recovery trend.
Measures sought for coffee firms to adapt to EU Deforestation Regulations

Measures sought for coffee firms to adapt to EU Deforestation Regulations

Experts gathered in the Central Highlands province of Gia Lai on April 9 to seek measures to help local coffee businesses to adapt to the EU Deforestation Regulations (EUDR) and promote exports to the EU market in particular and the world in general.
Vietnam’s export to India maintains growth momentum

Vietnam’s export to India maintains growth momentum

Vietnam kept its export growth momentum in the Indian market in 2023 after two-way trade hit a record high of 15 billion USD in 2022, Vietnamese trade counsellor in India Bui Trung Thuong told the Vietnam News Agency.
Read More

Your care

Latest Most read
Made-in-Vietnam wind turbine towers bound for RoK

Made-in-Vietnam wind turbine towers bound for RoK

Ten domestically-manufactured offshore wind turbine towers are set to depart from Phu My Industrial Zone in the southern province of Ba Ria-Vung Tau by the end of April 2024, bound for Jeonnam 1 wind power project off the coast of the Republic of Korea (RoK)'s Jeonnam province.
Cashew nut exports is estimated at US$ 782 million in the first quarter

Cashew nut exports is estimated at US$ 782 million in the first quarter

VCN - In the first quarter of 2024, Vietnam's cashew exports reached about 147 thousand tons, with the turnover of US$782 million, up 31.8% in volume and 20.5% in value compared to the same period in 2023.
Maintain the reputation of Vietnamese coffee amidst soaring prices

Maintain the reputation of Vietnamese coffee amidst soaring prices

VCN - Nguyen Nam Hai (photo), Chairman of the Vietnam Coffee-Cocoa Association (Vicofa), shared about the landscape of the Vietnamese coffee industry in the context of continuously increasing prices.
Find opportunities in niche markets to increase exports

Find opportunities in niche markets to increase exports

VCN - To support businesses in accessing the market, Vietnamese trade agencies abroad are actively providing information and connecting Vietnamese businesses with potential markets.
Vietnam transforming into new global manufacturing hub: experts

Vietnam transforming into new global manufacturing hub: experts

Vietnam is transforming into a new global manufacturing hub, offering a diverse range of products that are competitively priced and continuously improving in quality, assessed foreign distributors and importers, who will participate in the Vietnam International Sourcing expo this June.
Mobile Version