Gasoline prices has continued to rise to a new threshold, leading to a hike in input materials and logistics services, sending some businesses Viet Nam-wide, and those in Da Nang in particular, facing many difficulties in production and trade operations. Although enterprises are striving to balance financial resources, increasing cost pressure is now still a big barrier to their production expansion plans.

Gasoline price hikes have affected production and business activities of many enterprises. The scene of production is pictured at the Sinaran Viet Nam Co., Ltd in Son Tra District, Da Nang. Photo: M.Q

Enterprises manage to overcome difficulties

In addition to transportation, seafood is considered to be a group of industries that are strongly affected by the growing price of gasoline and oil because input materials mainly depend on offshore fishing. So, when gasoline and oil prices go up, such seafood processing companies citywide also manage to remain resilient on its strong feet.

Mr. Tran Van Linh, Chairman of the Board of Directors of Son Tra District-headquartered Thuan Phuoc Seafood and Trading Corporation, analysed that after Tet until now, the source of seafood processing materials has been greatly affected, partly due to the unfavourable weather, but sudden increase in gasoline and oil prices as reported over recent times are cited as the main reason why many fishermen are have been reluctant to head out to sea.

In addition, seafood processing and exporting enterprises are also facing many other difficulties such as the export price of finished products has not increased, while the USD value is decreasing and the interest rate on bank loans has climbed up, thus pushing many businesses into more financial troubles because most of them have borrowed money from banks to do business.

Mr. Linh said that, unless the competent authorities take timely measures to stabilise petrol and oil prices as soon as possible, not only the transportation sector but many other fields will suffer more difficulties, even huge losses.

Also getting stuck in troubles triggered by skyrocketing hikes in gasoline and oil prices, the production of chemical products, rubber and related items are also managing to stabilise their performance.

As a large rubber tyre manufacturer, the Da Nang Rubber Joint Stock Company (DRC) cannot avoid being affected when the prices of gasoline and series of materials such as iron, steel, aluminum and glass have also continuously soared.

Mr. Le Hoang Khanh Nhut, the General Director of the company, said that many people have tightened their spending in the face of gasoline and oil price hikes, which has caused the domestic market of the company fell deeply. In addition, increased logistics costs have affected production and business efficiency. In a great effort to deal with this challenging situation, DRC is expanding its export markets.

Meanwhile, Mr. Huynh Trinh, the Director of Da Nang Forestry Export and Production JSC, informed that the company's production and transportation costs were all increased as compared to the end of 2021 because oil is the raw material for mixing PU paint sprayed on wood, or the freight transport fares for truck trips from the company based in Cam Le District to the Da Nang Port for export also climbed from VND1.2 million to VND1.5 million each, up 20%.

Hoping for a comprehensive solution

Businesses said that the price of gasoline and oil increased rapidly with a large margin, making it difficult for businesses to calculate production and business scales because most orders signed contracts with partners 2 - 10 months in advance.

Fluctuations in gasoline and oil prices when negotiating and signing with partners have also been included in the contract's price fluctuation range, along with labour and raw material prices.

However, up to now, the increasing amplitude of gasoline and oil prices is beyond the enterprise's calculation, so many businesses are at risk of losses or breakeven when implementing the previously-signed orders.

In addition to the deep concern about raw materials, the worry about transportation costs weighs heavily on businesses with the possibility of a new price adjustment coming soon and the shortage of containers that has not been resolved.

Mr. Pham Bac Binh, the Chairman of the Da Nang Association of Small and Medium-sized Enterprises, said that, in the current context, businesses must calculate carefully to cut unimportant stages and reduce production costs to maintain their corporate operations.

Some businesses with strong internal resources are now proactive in stockpiling raw materials and diversifying supplies but that's only a temporary solution.

As reported by many businesses, some suppliers have announced to increase the price of raw materials by 5 - 15%, depending on the type of products. Meanwhile, it is difficult for businesses to increase the prices of products on sale in the market at the corresponding rate.

According to Mr. Binh, there is no optimal solution for production and business amidst soaring gasoline and oil prices, so it is high time for the national government to adopt tax and interest rate reduction policies in a bid to help the business community overcome the ongoing tough time and push ahead their production.

It is also suggested that relevant agencies reduce the operating cycle of gasoline prices further so that the domestic market can react more quickly to the world petroleum market and make adjustment of business expenses norm in the base price of petrol and oil.

Reporting by MAI QUE – Translating by A.THU