News - Events

South-east Asia’s economies battered as Covid-19 chokes off supply chains

29/08/2021

By Jeff Hutton
Regional Correspondent

JAKARTA – With eight factories churning out kitchen appliances and industrial goods up and down the length of Vietnam and one more in Myanmar, Son Ha has been scrambling to keep pace with a virus seemingly intent on wreaking havoc with production.


Two factories have been closed since early August. Its site in Myanmar was mothballed for a month before reopening to reduced capacity in early August.
The plant in Hanoi fed, housed and paid bonuses to 140 workers, who were required to stay in tents on site until Monday on worries they might catch the coronavirus if they went home.
All told, the company has idled as much as 30 per cent of its capacity and Mr Dao Nam Phong, the company’s chief executive, worries lockdowns could stretch into the end of September.
“There are difficulties not only for us but also for all businesses,” Mr Phong told The Straits Times.
As the Delta variant of the coronavirus tears through South-east Asia, the region’s export powerhouses like Vietnam and Malaysia have become the economic ground zero.
Factory lockdowns aimed at corralling Covid-19 cases are driving up shipping costs, blowing out balance sheets and choking off the intricate supply chains that feed stainless steel to Vietnam to make pipes or chips from Taiwan to be cut in Malaysia for electronics that eventually find their way into United States cars.
This month, Nissan said its plant in Tennessee would close for two weeks owing to a shortage of chips from a Malaysian supplier.
Mr Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, said chip and electronics makers including Intel, Micron Technology and Plexus are racing to vaccinate workers.
Just over a third of the country’s electronics workers have been fully vaccinated. Under Malaysia’s rules, at least 80 per cent of workers must have received a second vaccination no sooner than 13 days before to resume full production.
“There is a major shortage,” Mr Wong told ST, referring to chips.
“We have a lot to catch up. The backlog is tremendous.”
At stake is roughly 5.7 per cent of global trade estimated to originate from big Asean exporting countries of Indonesia, the Philippines, Thailand as well as Malaysia and Vietnam, according to a report from Paris-based investment bank Natixis.
For the world’s biggest economies the disruption to supply chains means choking off the flow of shoes to China, which relies on South-east Asia for at least two-thirds of its footwear.
The US, for its part, gets more than a quarter of its furniture from the region and a third of its tyres.
While vaccination campaigns are being ramped up, big chunks of the region’s population – especially in more remote areas with scant access to healthcare – remain unvaccinated, leaving them susceptible to the Delta variant.
About 11 per cent of Indonesia’s population is fully vaccinated, while in Vietnam the figure is 1.5 per cent, according to Bloomberg’s Vaccine Tracker.
Mr Ridwan Kamil, governor of West Java, told ST that Indonesia’s most populous province has received only enough vaccine to fully inoculate 6.5 million of its 50 million people as at Aug 1.
Though it is home to 60 per cent of the country’s industrial output, some 200 factories are currently closed, owing to Covid-19 outbreaks, the governor said.
“I can’t control the supply,” Mr Ridwan said, referring to vaccines.
“Hopefully by the end of the year we will get the majority of our people vaccinated but only if our allocation is proportionate to our big population.”
Adding to headaches is a sharp spike in transport costs as the local authorities restrict where delivery trucks go and cargo languishes in containers amid idled factories and port closures.
Last week, China’s Ningbo-Zhoushan container port, the world’s third largest, halted all services at its Meishin container terminal owing to a Covid-19 outbreak.
Container prices have soared more than fourfold since July, according to the composite World Container Index, compiled by London-based shipping consultancy Drewery.
“Transportation is a big problem for us right now,” Mr Phung Anh Tuan, chief executive of electronics maker Manutronics told ST.
The manufacturer assembles electronic components for Canon and LG at two factories outside of Hanoi. About 20 of his 200 workers are staying on site on worries they may catch Covid-19 if they go home.
“We have seen an increase in transportation services cost, vehicle cost and container cost. Sometimes we can’t find vehicles to take our shipments,” Mr Phung said.
To be sure, there are signs of a turnaround.
A sharp uptick in vaccinations in Malaysia portends a return to full capacity soon for some of the country’s big chipmakers in the coming weeks, said Mr Wong.
The country’s electronics segment, which includes semiconductors, accounts for roughly a quarter of Malaysia’s economy. About 36 per cent of Malaysia’s population are fully vaccinated, according to Bloomberg data.
Mr Wong said the disruption caused by Covid-19 will trim semiconductor output by about 20 per cent this year – an improvement over a drop of as much as 40 per cent he was forecasting in media interviews in June.
“This isn’t fully behind us,” Mr Wong said.
“It will depend on vaccinations.”

https://www.straitstimes.com/business/south-east-asias-economies-battered-as-covid-19-chokes-off-supply-chains

TIN LIÊN QUAN

19/06/2021
90% OF CUSTOMERS SURVEYED CHOOSING ELECTRIC MOTORCYCLE TRANSPORTATION FOR THE CHILDREN TO SCHOOL

This is the number listed at the discussion program about electric motorcycles organized by Son Ha Group. According to the latest survey, trams are at the top of the list of gifts that students dream of being given by their parents when entering the new school year. As the manufacturer and sales unit of electric […]

see more
17/06/2021
SON HA ORGANIZED THE 2021 ANNUAL GENERAL MEETING WITH ONLINE MEDIA COVERAGE

In the morning of June 5, 2021, Son Ha successfully organized the 2021 Annual General Meeting of Shareholders online. In the process of organizing the GENERAL MEETING 85.6% of shareholders follow online. At the General Meeting of Shareholder in 2021, it was agreed to increase the charter capital up to VND 1,506 billion and the […]

see more
15/06/2021
SON HA ENERGY DEVELOPMENT JOINT STOCK COMPANY: LEADING THE CLEAN ENERGY TREND

June 15, 2021, at the 2021 Annual General Meeting of Shareholders, Son Ha Energy Development Joint Stock Company (Stock code: SHE) passed a report on the summary of production and business activities in 2020 and the business plan in 2021, which continues to promote investment in the electric motorcycle industry, aiming to become one of […]

see more