In March, raw materials run out and industrial production faces fear of "freezing"

	HCMC: Many businesses suffer from Covid-19 epidemic
	Textile and footwear enterprises in short supply of raw materials
	Material autonomy key for Vietnam to fully tap EVFTA

Minister Tran Tuan Anh chairs the meeting

Most affected industry is electricity and electronics

At the meeting assessing impacts of acute respiratory infection caused by new strain of Corona virus (Covid-19) on Vietnam’s industries held by the Ministry of Industry and Trade on the afternoon of February, 26, Director of Industrial Department (Ministry of Industry and Trade) Truong Thanh Hoai said Vietnam’s industries including processing and manufacturing industries mainly rely on imported raw materials and components from China and other countries that are affected by the epidemic such as South Korea and Japan.

The electricity and electronics industry is one of the most affected. In 2019, Vietnam imported about US$40 billion of electronic component products from China, South Korea and Japan. Now, electronics enterprises have enough raw materials for production until the middle or the end of March.

Similarly, most of garment and textile enterprises have enough raw materials for production tillthe beginning of March or beginning of April. Therefore, it is likely that many enterprises will have to suspend production.

For the automotive assembly and manufacturing industry, the story of raw materials is also not better. In 2019, the industry imported nearly $4 billion of components and spare parts, including from China $0.7 billion and South Korea $1.14 billion. It is expected that be the end of first quarter 2020, automotive assembly and manufacturing enterprises will be greatlyaffected by the shortage of components.

“If production activities have to stop partly or wholly due to a shortage of raw materials and components, enterprises will face rising costs such as bank loans, machinery maintenance andsalary for employees within the non-operation in accordance with the labour law” Hoai said.

He added that in addition to shortage of materials, export marketsarea concern of many enterprises.

China, South Korea and Japan are large consumers of Vietnamese goods such as textile, garment, handbags, computers and more. Thus, the epidemic also has a significant impact on export turnover and consumer markets of the above items.

Do not aggravate the situation

Speaking at the meeting, Minister of Industry and Trade Tran Tuan Anh emphasised that China is the largest exporter of intermediary goods to the world's industries, and is a major consumer market of many multinational industries. Therefore, the epidemic in China is expected to have a major impact on the manufacturing, transportation, logistics, distribution and service industries worldwide, not onlyin Vietnam.

Moreover, more and more complexdevelopments of this epidemic outside of China areexpected to make the world economy seriously affected such as South Korea and Japan are facing the outbreak and Europe and America have recently detected some cases.

“The epidemic development is becoming more and more complex; Vietnam’s important markets are being affected by the epidemic. But I think that we do not aggravate the situation. We need to carefully evaluate the impact of the epidemic to make effective and feasible support policies for enterprises. Some key industries currently affected are textiles, footwear, electronics, manufacturing and processing industries; the domestic market is also strongly impacted,”said Minister Tran Tuan Anh.

Regarding solutions to remove difficulties for production activities, many people said in the immediate future, the Government should direct ministries, sectors and localities to work with local authorities of China as well as China's central level to take appropriate border control measures while preventing epidemics to ensure raw materials, components and accessories for domestic industrial enterprises.

At the same time, it is necessary to take measures to encourage domestic supportive industry enterprises; especially those producing input materials for industries such as textiles and footwear enhance the production to partly meet the domestic demand.