HCM City: Export production and processing enterprises drop sharply

Customs officers perform professional activities at Processing Customs Branch - HCM City Customs Department. Photo: T.H

Economic difficulties affect businesses

Once one of the few leading enterprises in the textile and garment industry in HCM City, in recent years, Gia Dinh Textile and Garment Joint Stock Company encountered difficulties due to the impact of the Covid-19 epidemic resulting in a difficult production situation. For example, lack of export orders, operating moderately, and falling into a situation of intentionally deplaying tax debts. At the end of February 2024, HCM City Tax Department sent an official dispatch requesting the Processing Customs Branch (HCM City Customs Department) to apply enforcement measures to stop customs procedures for export and import goods of Gia Dinh Textile and Garment Joint Stock Company. The reason was that this company owed overdue taxes 90 days from the deadline for payment following the regulations, with a total debt of over VND97.7 billion. According to the enforcement decision of the Customs authority, the Company must temporarily suspend procedures for exports and imports from March 6, 2024,

In recent times, many businesses operating in the fields of processing and export production have encountered difficulties in production and business activities. The number of processing and export manufacturing enterprises completing procedures at Processing Customs Branch - HCM City Customs Department in 2023 dropped by more than 31% compared to 2022.

Analysis of Processing Customs Branch showed that, in 2023, import and export activities of enterprises faced many difficulties, turnover decreased compared to the previous year, especially imported raw materials dropped by nearly 15%. It only reached nearly US$3 billion; export turnover decreased by nearly 5%, reaching over US$5.1 billion. The reason for the decrease in turnover is due to the difficult economic situation affecting business operations. Many businesses operate moderately, with no export production orders.

According to the HCM City Customs Department, the main export and import items of export processing and manufacturing enterprises are cashew nuts, garments, seafood, wood products, plastic beads, bags, shoes, iron and steel, agricultural products, garment raw materials, footwear raw materials... Among them, the item which has a large turnover include cashew nuts, seafood, garments, garment raw materials and accessories, and footwear.

Facing the above difficulties, Processing Customs Branch has implemented many solutions to maintain import and export activities in the context of difficult economic situations. At the same time, proactively receive the business's problems through channels such as phone, and email. To promptly handle problems for the business or report and advise superiors on problems beyond authority to be resolved timely for businesses.

Recommendations to remove problems with raw materials

According to some enterprises producing and exporting agricultural products, enterprises encountered difficulties handling imported raw materials during the implementation when the export market experienced fluctuations. Specifically, businesses import raw cashew nuts to make exported products. They could not carry out procedures for transfer to domestic consumption due to problems with specialized management regulations under Official Dispatch No. 906/BVTV-ATTPMT dated April 5, 2018 of the Plant Protection Department (Ministry of Agriculture and Rural Development).

Currently, enterprises producing and exporting agricultural products (cashew products) are facing difficulties when they are not allowed to change the use purpose of raw materials imported for export production originating from some African countries. According to regulations, to be able to open customs declarations for domestic consumption, businesses must complete food safety inspections for imported raw materials. However, African countries where businesses import raw materials are not on the list of countries, territories and organizations and individuals allowed to export products of plant origin to Vietnam following Official Dispatch. No. 906/BVTV-ATTPMT, so food safety inspection agency does not accept inspections for these cases.

The number of businesses importing cashew raw materials from African countries is very large. Before the Covid-19 epidemic occurred, these businesses had stable export markets, otherwise, they could still export to the Chinese market by road. However, since the Covid-19 outbreak until now, due to the generally difficult situation in the world, businesses have faced difficulties in finding markets to export their products.

On the other hand, if cashew products are left for a long time, they will be of poor quality and cannot be used, and businesses cannot transfer them to domestic consumption due to a lack of food safety inspection, leading to a situation where some businesses intentionally put goods to consume in the domestic market to recover capital, repay bank debt, and minimize losses. Recently, the cases of violations discovered by Processing Customs Branch mostly fall into cases of violations in arbitrarily handling imported materials.

From the above reality, as well as from business recommendations, to facilitate businesses, Processing Customs Branch recommended that specialized agencies allow businesses to register for food safety inspection when businesses need to change the purpose of use for cashew products originating in Africa to remove difficulties for businesses, avoiding violations that occur due to businesses falling into a dead end situation.