Enterprises strive to return to production
Hai Phong is a locality that was heavily affected by the recent Storm Yagi and many enterprises predict that it will take a long time to restore production. Recently, during a working session with the Hai Phong Economic Zone Management Board, a representative of Saigon-Hai Phong Industrial Park Joint Stock Company (the infrastructure investor for Trang Due-Hai Phong Industrial Park) said that due to proactive work to prevent and combat Storm Yagi, property damage was minimised.
This enterprise also focused on quickly handling and resolving the traffic system, electricity and water lines, etc. so that enterprises could quickly return to work. Up to now, all enterprises in the industrial park have returned to normal operations.
Along with the industrial production sector, the agricultural sector has also received great attention to prepare supplies for the end of the year. Every year, Tien Minh Agricultural Cooperative in Yen Lang, Hai Phong, produces more than 300 tons of shrimp and fish of all kinds.
This year, due to the impact of Storm Yagi, this number is expected to decrease by half. To partially overcome the damage caused by the storm, the cooperative is urgently cleaning ponds and lagoons to start a new batch of farming in anticipation of the year-end consumption season.
The Ministry of Agriculture and Rural Development informed that in some localities such as Hai Phong and Quang Ninh, about 80-100% of aquaculture facilities and households that were slightly damaged by the impact of storm No. 3 have been restored, and marine fishing activities have been enhanced. Notably, 15-20% of ponds, lagoons, and cages that have been invested in have just started to breed.
Phung Duc Tien, Deputy Minister of Agriculture and Rural Development, said that one of the driving forces for aquaculture farmers to urgently restore production is that the selling prices of fish and shrimp are quite positive, increasing compared to the same period last year. In the first 10 months of the year, aquaculture still reached 4.6 million tonnes, up 3.8% compared to the same period last year.
In localities, especially the northern localities heavily affected by Storm Yagi, many businesses have been making efforts to return to production to serve market demand at the end of the year. According to the purchasing managers’ index (PMI) report published by S&P Global, Vietnam’s manufacturing industry has 3 outstanding highlights, which are the ongoing recovery process after the impact of Storm Yagi; output and new orders are increasing again and disruptions to the supply chain and production are still present.
October data showed that Vietnam’s manufacturing sector began to recover from the effects of the typhoon in September, with both output and new orders rising again. However, some of the effects of the storms and floods persisted into October, limiting output growth and leading to delays in supplier deliveries and a rise in outstanding work. The rate of increase in both input costs and output prices accelerated but remained mild.
The Vietnam Manufacturing Purchasing Managers’ Index (PMI) rose to 51.2 in October, up from 47.3 in September and back above the 50.0 threshold after the disruption caused by Typhoon Yagi in the previous month. Business conditions have now strengthened in six of the past seven months, although the improvement in October was only marginal.
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Agricultural enterprises proactively anticipate the year-end consumption season. |
Resolving capital difficulties for enterprises
After production recovery, capital is one of the factors that most affects the production of enterprises. Therefore, the State Bank of Vietnam has directed commercial banks to actively provide loans to restore production.
To support the fisheries sector, as well as the agriculture in general, the State Bank recently announced that it will double the size of the credit package for forestry and fisheries from 30 trillion VND to 60 trillion VND.
This is the second time this loan package has been increased in size, showing that the capital demand for the forestry and fisheries sector is quite large, and the disbursement is effective. In addition, the State Bank also requires commercial banks to promote lending for production and business and have support policies to help people and businesses recover after storms and floods.
On the part of commercial banks, many solutions have also been proposed. Specifically, Saigon-Hanoi Commercial Joint Stock Bank (SHB) has decided to halve the interest payable to customers affected by storms and floods. At the same time, it continues to offer incentives for new loans to have funds to rebuild production.
Vietnam Public Joint Stock Commercial Bank (PVcomBank) has also launched a 2.5-trillion-VND credit package to support people and businesses to overcome the damage caused by Typhoon Yagi. Specifically, customers participating in preferential credit packages will have their loans extended for another 12 months with unchanged interest rates; for customers whose preferential interest rates have expired, their interest rates will be reduced by 2%-7%, bringing the interest rate to only 6.99% per year for the next 12 months.
In addition, the bank has also implemented a number of solutions on debt restructuring, keeping the debt group unchanged according to Circular No.02 of the State Bank on debt extension and deferral to reduce the burden on customers. At the same time, from now until January 31, 2025, customers affected by Typhoon Yagi will also have the opportunity to access suitable capital sources for purposes such as: home loans, home repairs and consumption with interest rates from only 3.99%/year; loans for production and business with interest rates from 5.49%/year.
For the small and medium enterprise (SME) customer segment, PVcomBank proactively supports businesses according to the direction of the State Bank. From now until December 31, 2024, the bank will apply a preferential credit package with a limit of 500 billion VND, applying a loan interest rate lower than the normal interest rate from 1.5%-2%/year and a loan term of 6 months for customers. This is a practical solution to support small and medium enterprises to reduce the burden of financial costs, while having more favourable conditions in terms of capital to quickly stabilise and focus on developing production and business.
As of mid-October 2024, PVcomBank has successfully supported many customers affected by Typhoon Yagi, with the total outstanding balance of new loans and re-credit reaching nearly 76 billion VND and the total outstanding balance of loans with reduced interest rates reaching more than 130 billion VND.
To facilitate production recovery, stimulating consumption is also an important solution. According to Tran Quoc Hung, former Executive Director of the Institute of International Finance (IIF), strong measures are needed to accelerate the disbursement of public investment capital, thereby stimulating demand and building infrastructure to serve production. In addition, it is necessary to cut direct and indirect taxes as well as public fees to increase household purchasing power, increasing total domestic consumption demand. Thereby creating a reverse momentum for businesses to increase production.
