PETALING JAYA: Given the integrated nature of the Asean’s supply chain, the impact from Vietnam’s Covid-19 woes which culminated in the extension of lockdown measures under the government’s Directive 16 in various provinces in the south are felt by Malaysian businesses that have a presence there.
The directive stipulates the closure of non-essential businesses, ban on public gatherings and severely limited transport services, in an attempt to contain the wave of Covid Delta variant infections.
In the past, Vietnam enjoyed success in containing the pandemic attributed to prompt border closure and lockdown measures, as well as an extensive testing and contact tracing strategy.
Vietnam recorded 8,324 new Covid-19 cases on Friday, according to the country’s Ministry of Health. The new infections brought the total tally to 193,381, with 3,016 deaths, the ministry said.
Currently, 19 southern localities in the country, including Ho Chi Minh City, have implemented a lockdown via Directive 16 until Aug 16. Meanwhile, The lockdown in Hanoi, Vietnam’s capital, has been extended by 15 days until Aug 22.
As a result, a number of Bursa Malaysia-listed issuers with facilities in Vietnam have reported suspension of operations there.
YBS International Bhd
Its subsidiary, Oriental Fastech Manufacturing (Vietnam), which is involved in high precision metal fabrication and assembly, is partially suspending its operations to comply with the government’s directive.
Magni-Tech Industries Bhd
Its garment production facilities in Vietnam have been suspended in line with the government’s directive. The group is mitigating the impact of the closure via close engagement with its customers to manage the production capacity challenges as well as rescheduling delivery dates to meet customer’s demand. It is assessing the impact of the closure on its financial performance and announcements will be made if there is any material development.
Poh Huat Resources Holdings Bhd
The group’s subsidiary, Poh Huat Furniture Industries Vietnam Joint Stock Co, which has factories in Binh Duong Province and Dong Nai Province, has halted production activities in line with the lockdown order. As of July 21, it said none of its employees in the two locations has exhibited any Covid-19 symptoms and it will undertake screening and quarantine measures should any employee exhibit symptoms or be confirmed positive of the virus.
Consequently, the production interruption is expected to cause delay in the shipment of orders to its customers in the US. Poh Huat’s management is in discussions with affected customers to reschedule their delivery dates for affected orders. It said it is able to mitigate some of the impact from the closure as it has a certain amount of ready inventory to meet the orders and it will increase production with extended shifts upon resumption of production activities, if necessary.
Latitude Tree Holdings Bhd
Two of the group’s subsidiaries, Latitude Tree Vietnam Joint Stock Co and RK Resources Co Ltd, are partially suspending operations to comply with Vietnam’s Directive 16. It said the two factories are implementing the ‘3 on the spot’ approach allowed by the authorities, which entails on-site production, on-site dining, on-site rest. This approach will allow it to operate at a reduced production capacity.
Latitude Tree estimates the production loss from the ‘3 on the spot’ approach to be around 1.2% to 1.8% of its total forecast annual output volume for FY2022.
