While tourism, transportation and F&B sectors are suffering heavily from Covid-19, the impact on other business fields has been less severe.
According to Tran Viet Tien from Hawa (Handicraft and Wood Industry Association of HCMC), Covid-19 has caused difficulties for many business fields because of the interruption of material supply from China, but it has not had a big impact on the woodwork industry.
This is attributed to the modest reliance on Chinese materials of the industry. Vietnamese woodwork enterprises control 70 percent of materials, while imports are mostly from Africa, the US, Canada and New Zealand.
The accessories for furniture production such as handles, screws and fabrics for sofas are imported from China, but in small quantities.
Vietnamese woodwork enterprises see big opportunities. Since many factories in China are operating at moderate level because of the epidemic, Vietnamese enterprises can attract more orders from foreign clients.
Big importers from the US, Europe, Australia and Japan now tend to place orders with non-Chinese producers, targeting Southeast Asian suppliers.
Vietnam is the best candidate. Meanwhile, FTAs, with preferential tariffs, will help strengthen connections between Vietnam and FTA-member countries.
However, Covid-19, to some extent, has also affected wooden furniture manufacturers, as many furniture trade fairs have been canceled, which lessens the opportunities for Vietnamese enterprises to introduce their products to foreign clients.
To deal with the problem, woodwork enterprises have utilized virtual reality (VR) technology to access clients. The technology allows clients to ‘visit’ factories in Vietnam, while e-commerce and digital platforms approach clients quickly.
Hawa, Bifa (the Binh Duong provincial woodwork enterprises’ association) and Dowa (Dong Nai enterprises’ association) have recently signed a cooperation with FPT, the Vietnamese largest IT group, on accelerating the digital transformation process of woodwork enterprises so as to optimize operations and save costs.
Reza Akbari from RMIT University said that this is the time for new opportunities, when businesses can identify weaknesses and improve the supply chain. By moving towards a smart city model and digital transformation, Vietnam can overcome many problems.
Commercial banks have begun launching credit packages to assist enterprises facing difficulties.
According to the State Bank of Vietnam, 23 credit institutions estimated that VND926 trillion worth of outstanding loans, or 14.27 percent of total outstanding loans, will suffer from Covid-19.
More than 44,000 clients with outstanding loans of VND222 trillion have been given support through debt restructuring, interest rate remission and banking service fee reductions.
VietinBank has reserved VND15 trillion and $150 million for a program to promote short-term credit growth with the interest rate of 5 percent for VND and 2.8 percent for dollars.