Vietnam factories short of workers after heavy-handed lockdowns3 min read

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© Reuters. FILE PHOTO: Women work at Hung Viet garment export factory in Hung Yen province, Vietnam December 30, 2020. REUTERS/Kham

By Sayantani Ghosh and Miyoung Kim

(Reuters) – Factories in Vietnam are struggling for staff after many migrant workers returned home when a coronavirus lockdown that had kept them in Ho Chi Minh City for months last year was eased, a partner at venture capital firm Cento Ventures told Reuters.

A mass exodus from the city and its nearby industrial provinces has raised fears labour shortages will hamper the recovery from a record GDP slump in the third quarter.

“When the heavy hand of the government … causes hundreds of thousands of workers to stay in factories to keep the exports churning, eventually when this heavy hand is withdrawn, workers go back to the villages and they do not return,” Cento’s Dmitry Levit said at the Reuters Next conference on Thursday.

Vietnam is one of the world’s largest garment manufacturers, with more than 6,000 clothing and textile factories employing about three million people. They supply brands like Zara, Ralph Lauren (NYSE:), North Face, Lacoste and Nike (NYSE:).

Tens of thousands of people left Ho Chi Minh City after restrictions were eased in early October, ignoring requests from authorities that they stay to work.

Vietnam said last month that it was aiming to fix the labour problem by end of this year or early in 2022.

Tough and prolonged lockdowns in Asian countries after the Delta variant swept through gutted economies and consumption and have made life especially difficult for companies whose businesses depend on putting feet on the ground.

“The pandemic has hit a hard reset on supply chains. Any businesses that were not viable have … been destroyed,” said Nipun Mehra, co-founder and CEO of Ula, an Indonesian startup that provides inventory and delivery services to the country’s mom-and-pop kiosks.

Ula, valued at some $500 million, recently attracted funding from Amazon (NASDAQ:)’s Jeff Bezos.

Southeast Asian countries are the lifeblood of supply chains feeding large companies in the West, and lockdowns and port jams have snarled supplies in the weeks leading up to Christmas.

Malaysian chip suppliers, important players in the global semiconductor production line, have predicted it will take two or three years for the market to normalise, although the crisis is easing.

“Malaysia seems to be recalibrating itself quite nicely,” Levit said.

Justin Hall, a partner at Golden Gate Ventures, said governments in the region were not stepping up as they should to ease the supply crunch, and that the private sector was not capable of sorting out such problems by itself.

There may be some improvements over the next 12-18 months, he said, but added: “It is an unhappy status quo for the time being.”

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