Vietnam: Production suspended – exports affected

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In the first seven months of this year Vietnam's wood and wood product (W&WP) exports earned US$9.6 billion, up 55% year-on-year. However, the suspension of production at local wood processing enterprises due to the COVID-19 pandemic is having effects on exports, according to the Vietnam Timber and Forest Product Association (VIFOREST).

Many members of the Ho Chi Minh (HCM) City Fine Arts and Woodworking Association (HAWA) have outstanding orders from overseas but because of the recent surge in infections and the control measures being enforced factories have experienced severe production problems and more than half the works force in the industry has been laid off according to VIFOREST.

In the Southern region, a major producer of wood products for export, had 265 wood processing enterprises with a total of 119,300 employees before the covid control measures were introduced, now only 141 enterprises are now in operation with 30,700 employees.

HCM City, Dong Nai, Binh Dương and Tay Ninh have reported 134 wood processing enterprises suspended production as they were unable to implement the “3 onsite” model, which involves workers living on site.

Businesses implementing this model face additional costs due to the testing of thousands of employees.

The other issue is that to maintain production enterprises still have to secure raw materials, chemicals, packaging and other requirements and also process export documents through Customs and their banks which creates a risk of infection.

VIFOREST has proposed that the Government allows the association and the businesses to buy COVID-19 vaccines and vaccinate staff and workers. The association also said the Government should consider financial support to wood processing enterprises. This could be in the form of a reduction or delay in paying corporate income tax and other taxes, delay of social insurance payments and land rent exemption for this year. The Government could also allow enterprises to extend loan payments and restructure debts.

The association has requested the Ministry of Industry and Trade to add raw materials for the wood processing industry to the list of essential goods to ensure the supply chain.

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