The Ho Chi Minh City Department of Industry and Trade predicts that many import-export sectors will be affected by the conflict in the Middle East and has issued recommendations for businesses.

At the regular socio -economic press conference on the afternoon of March 5th, Ms. Nguyen Le Thien Thanh, Head of the International Economic Department of the Department of Industry and Trade, stated that the conflict in the Middle East has significantly impacted the import-export and logistics activities of businesses in the city.

Currently, the US market accounts for 23% of the city's total export turnover, with most of the goods exported to this market passing through the Middle East to the East Coast.

"Goods will take an additional 7-10 days in transit, driving up costs for businesses significantly," Ms. Thanh said.

According to the Ho Chi Minh City Export Processing Zones and Industrial Parks Management Board (HEPZA), at least eight key export and manufacturing sectors are being affected to varying degrees.

Electronics and components industry

This sector is most significantly affected due to its heavy reliance on global supply chains. Some businesses have reported a risk of shortages of imported chips and semiconductor components from Europe as shipping routes across the Red Sea are disrupted. The shift to air transport has led to a sharp increase in logistics costs, driving up product prices.

Clothing and footwear

The textile and footwear industries face the risk of delays in deliveries to the European market due to extended shipping times.

Some businesses are concerned about the possibility of having their summer orders canceled if they cannot meet contract delivery deadlines.

Chemicals and industrial raw materials

The prices of many input materials such as plastic pellets, solvents, and additives are rising in line with fluctuations in world oil prices. This increases production costs, especially for businesses that use imported chemical raw materials.

Seafood and food

Seafood exporting businesses, especially those exporting frozen shrimp and pangasius, are facing difficulties due to airspace restrictions and changes in shipping routes. Many cargo flights have been canceled or rerouted, leading to increased air freight costs, while refrigerated containers have become scarce.

Some export shipments to Europe and the Middle East, such as the UAE and Jordan, are being held at transit ports longer than usual, potentially leading to increased storage costs and damage to goods.

Processing agricultural products for export.

Businesses with markets in the Middle East and North Africa are facing difficulties in international payments due to disruptions in the operations of some regional banks. At the same time, sharply rising logistics costs are reducing export profits.

Gasoline and fertilizersOil and gas are among the commodity groups most heavily impacted by the conflict in the Middle East.

Global oil price fluctuations have led to higher prices for fuels and petrochemical products, resulting in increased production and transportation costs. These are crucial input materials for many industries.

Wood processing and furniture

Ms. Thanh assessed that the wood industry has not been significantly impacted at present, but businesses predict that the impact could become more apparent in the medium and long term if logistics costs continue to rise or consumer demand in export markets decreases.

Logistics and transportation

The logistics sector was most severely impacted as many shipping lines canceled voyages or diverted routes via the Cape of Good Hope (South Africa), extending transit times by 3–4 weeks. This led to increased transportation costs and the 발생 of additional charges such as war risk surcharges and diversion surcharges.

In addition, the detours by ships prolong the container turnaround cycle, leading to a shortage of empty containers at Ho Chi Minh City ports.

Businesses proactively respond

Given the complex developments in the Middle East, representatives from the Department of Industry and Trade and Hepza stated that they are continuing to closely monitor the activities of businesses, especially those that depend on raw materials or markets in this region.

These agencies also coordinate with relevant departments to implement the recommendations of the Ministry of Industry and Trade, while supporting businesses through administrative procedures related to import and export, issuance of certificates of origin, and other trade procedures.

Amidst ongoing geopolitical conflicts posing significant risks, export businesses are advised to diversify their transportation routes, raw material sources, and consumer markets to reduce dependence on volatile regions.

According to Hepza, Ho Chi Minh City currently has 58 operational export processing zones and industrial parks with over 4,600 projects, many of which have supply chains closely linked to the EU and Middle Eastern markets. By 2025, the total export value of businesses in these zones is expected to reach approximately US$48.4 billion; however, direct trade with the Middle East will only account for about 3-5%. Nevertheless, indirect impacts through logistics, raw materials, and transportation are increasing.

"The Department will propose to the Ho Chi Minh City People's Committee to reassess the impact of the war on economic activities and recommend solutions to support import and export businesses in the area with tax and interest rates," Ms. Thanh said.

Source: VTV

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