The survey, the board’s third, done in mid-August, found that businesses had been “further exhausted.” Of the businesses participating in the survey, 20 percent had been forced to stop operating, 76 percent could not manage their expenses, 2 percent had to wind up, and only 2 percent remained unaffected.
Businesses in the travel and accommodation sectors continued to be the worst affected since they have no contracts for the next six months but still have to pay bank loans, salaries and others.
“Covid-19 has caused widespread damage to industry, breaking supply chains, causing a market crisis and making businesses insolvent with double pressure on them as they still need to make immediate payments for materials and workers,” the report said.
A more serious consequence of the new outbreak is that a large wave of job cuts has started, in contrast to the first outbreak during which most businesses tried not to lay off employees.
The second outbreak has forced more than 47 percent of businesses to downsize. In the travel industry, most small and very small agencies have had to lay off all their employees. This rate was 80 percent for international travel companies and 40-50 percent for large local ones.
The Vietnam Fruit and Vegetables Association and the Vietnam Pepper Association have both reported a 10 percent cut in jobs in their sectors.
Members of the Vietnam Plastics Association have had to lay off 30-60 percent of employees, while in the wood processing industry the rate is 30 percent.
Most businesses and business groups said surviving up to this point has required “an extremely great effort,” but their efforts to keep their employees, especially key personnel, have been “even greater.”
Business owners recognize that the opportunity cost of mass layoffs and recruiting costs are both very high, and so have been taking many measures to retain employees.
But the pressure to keep paying salaries, social and health insurance premiums and trade union-related fees in addition to bank loans and others despite dwindling cash flows has forced their hand.
Unemployment data recently published by the General Statistics Office confirms the layoffs, and there are fears of major social problems due to tens of millions of people losing their jobs.
Another noteworthy fact that surfaced in the latest survey was a decline in businesses’ confidence in the government’s policies. They were no longer eager to propose solutions to the government, and some even expressed disappointment that “we have made suggestions many times but there has been almost no change.”
It called for policies that reduce businesses’ outward cash flows so that they could use their already limited finances for retaining their workforce and running their business.
The board also called for reducing corporate income tax this year by 30 percent for all businesses instead of just for those with revenues of VND200 billion ($8.6 million) or less.
It pointed out that while small and very small businesses might shut down immediately due to the epidemic, large businesses suffer even greater losses by trying to maintain operations, which in turn impacts the economy more without timely support policies.