Covid-19: Vietnam’s economy cannot rebound immediately

Some provinces in Vietnam have begun to open their doors to welcome domestic flights.

A scholar from the UK analyzes the factors that make it difficult for Vietnam’s economy to “boom” again.

In an interview with BBC Vietnamese, Dr. Ho Quoc Tuan, senior lecturer in the Department of Finance and Accounting, University of Bristol, UK, also talked about the “good and bad” points in the way to fight the epidemic and economy recover of the UK that Vietnam can learn.

Assessing Vietnam’s economic prospects from 6-12 months, Dr. Tuan talked about the immediate difficulties:

In the next six months, Vietnam’s economy will not be able to bounce back immediately because Vietnam has a low vaccination rate, so many provinces will be very reluctant to open up. And as long as it hesitates, a lot of production will not return.

We see in the past few days a large number of people have moved out of the economic centers of Vietnam. When production resumes and orders do return but there are no workers, it is unlikely that growth will return immediately.

The Ministry of Finance of Vietnam also gave a growth forecast of about 3-3.5%, similar to the growth forecasted by ADB, a very low level compared to the forecast at the beginning of the year of 6.5% and some Vietnam’s economists forecast even lower numbers, ie less than 3% this year. In general, in the short term, there will be no boom.

Statistically, I think the fourth quarter may have a return of growth and look quite nice, but it is still a decrease in the whole country,” added Dr. Tuan.

Supply chain in Vietnam is broken because of Covid

Scholars from the University of Bristol, UK, said that if looking at the 12-month mark, Vietnam must hope that the global economy must maintain growth in the last 6 months of 2022, then Vietnam can take advantage of that.

That is currently a mystery. Now that China has announced that growth is forecast to decline and we see that high inflation is still returning, economic growth in Europe and of the US next year is not expected to be equal to this year.

Vietnam recovers in a situation where global growth will slow down, so it will certainly be very difficult to boom.

But can expect growth of about 5-6% next year if all goes well with no further damage related to Covid-19 pandemic and other things then in a 5-6% growth trajectory is to be expected.”

British experience

Regarding the good things in anti-epidemic and economic recovery in the UK that Vietnam can learn from, Dr. Ho Quoc Tuan said that the UK has a fairly clear blockade route:

The beauty of the UK I think lies in the fact that the UK is very pragmatic to see that long-term lockdowns can have bad consequences. So what the UK is aiming for is when they’re in lockdown they try to do a very short lockdown and so before that they open up to economic activity that can run at full capacity and then they’ll start the lockdown again.”

In general, people can judge the situation of lockdown, and even during lockdown a lot of businesses can still maintain production. This is different from Vietnam’s approach in the recent epidemic, especially in the Ho Chi Minh City area and some provinces in the Southwest region.”

Dr. Tuan described that while Vietnam has now recognized the need for a change in strategy on how to fight the epidemic, the change in “leadership thinking” is still very slow.

Strategically, the Prime Minister once said, and the leaders of provinces, such as Dong Nai, also frankly determined that it was towards the West’s way of fighting the epidemic. But speaking is a problem and there is still a huge gap from talking to implementation.”

Currently, many places are proposing to reopen flights, but many provinces do not want to open them, Hanoi itself is the same, it is a sign that there is a change in leadership thinking still very slow.”

Dr. Tuan also talked about the UK’s “bad side” that Vietnam can also learn from, such as the fact that some times the government opened up and took some measures and then changed very quickly, such as online learning or not, keeping the distance between people, the regulations on how to sit in the restaurant, are the things that also create difficulties when operating.

The UK service sector has many activities that require close contact, such as eating and drinking, which are interrupted for quite a long time. That is, you can buy takeaway, not eat at the restaurant. There are economic activities other than football or the university sector, although it is online learning, but the loss in the university sector is very large.”

We see that although there are differences between the UK and Vietnam in terms of economics, if we consider the characteristics of big cities like Hanoi and Ho Chi Minh City, the scope of service activities accounts for proportion is high and not much different from that of major British cities. Especially economic centers can learn what the UK can and has not done,” said Dr. Tuan.

Government’s Invest

In an interview with BBC, Dr. Ho Quoc Tuan also emphasized the need for public investment.

Disbursement of public investment is still slow, which is a bottleneck that the government has seen but has not been able to remove in recent times. Bad debt can only be changed when it is changed with new projects for investment banks, banks to generate profits, and bring profits from new projects to deal with their bad debts.”

Therefore, investment plays a very important role because when it creates capital for the economy, it helps the private economic sector to have a channel to invest, only to solve the bottleneck of the problem.”

Simply, if public investment projects are good, real estate projects will also benefit, stimulating related economic areas to develop such as the Mekong Delta to solve problems about climate change leading to salinity… Everyone knows that the problem lies there, but the problem is that it has been talked about for two or three years without changing, while the epidemic is more difficult.”

Answering the BBC’s question about what is the main problem in the disbursement of funds, Dr. Tuan said that the problem lies in the “mechanism.”

There are too many regulations that are no longer relevant. For example, when people disburse money now, it may be due to price fluctuations due to changes in the economic situation … which changes rapidly compared to the original plan, now the disbursed person is entangled in a lot of documents that if they handle it flexibly, they are considered wrong.”

There is a problem with the document, but at the same time it has a problem that people are afraid to think about corruption, so people delay these activities. Vietnam’s anti-corruption strategy has positive sides, but in return, because of that strategy, some people don’t dare to be flexible to implement it,” said Dr. Tuan. (Translated)


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