Recently, 14 trade associations in the sectors with the largest contributions to economic growth made a proposal to the Prime Minister that imposing lockdown by geographical areas should be avoided as prolonged distancing and lockdown have worn out the health of businesses.
Under the proposal, the epidemic should be managed by small areas: residential points (houses, neighbourhoods), points of services (offices, markets, supermarkets), points of production (households, cooperatives, service businesses, factories, construction sites) and “red” points where cases are detected.
People should be allowed on the road and to take part in social activities when testing negative for coronavirus. Enterprises and individuals can conduct the tests themselves, report their health status on a national software platform and are responsible for their declarations.
The government should use a single piece of software for pandemic control nationwide and grant enterprises the autonomy to establish their own virus prevention methods, avoiding the extremity of shutting down all factories if infections only take place within a small scope.
According to enterprises, now is the vital moment to their production and business as they have been exhausted due to a series of difficulties for more than a year. Detailed statistics have started to come in about economic losses due to protracted distancing and extreme pandemic prevention measures, which have disrupted production and supply chains in many localities.
The Ministry of Planning and Investment (MPI) informed that in the first eight months of 2021, more than 85,000 enterprises left the market, up 24%, while the number of new enterprises was 81,000, down 8%. It is the second time since 2016 that the number of newly established enterprises has dropped. It is notable that the number of enterprises returning to business has also started to fall, indicating that investors’ start-up spirit has been affected as the future is uncertain and unpredictable.
This year’s production and business no longer follow the regular pattern in the face of COVID-19’s devastating impact. Instead of ramping up production from the beginning of the third quarter to fulfil the 2021 business plan, many are still unable to bolster production as many provinces and cities have yet to have specific plans on easing social distancing. Furthermore, some localities are still enforcing strict requirements, such as asking lorry drivers to test negative even when they are already fully vaccinated, making both enterprises and their employees extremely tired.
The reduction in enterprises’ production capacity and other growth drivers has caused the economies of pandemic-hit localities fall sharply in the first eight months of 2021. Ho Chi Minh City’s industrial production index dropped 6.6%, foreign investment pledges declined 43%, and public investment disbursement reached only 30%. Businesses have been hit hard with 3,000 enterprises forced to close and another 12,000 having to suspend their operation. The city’s daily government income also fell from VND1,400 billion (US$61.1 million) to VND800 billion (US$35.1 million).
According to a projection by the MPI, economic growth of six provinces and cities in the south-eastern region could be negative 0.13%, compared to the original forecast of 6.2-6.5%. Minister Nguyen Chi Dung stated that if the pandemic is well put under control in September and Vietnam returns to the new normal, its GDP could reach 3.5-4% this year, which requires great effort from the whole political system, especially local governments.
According to Dung, amid the difficulties caused by COVID-19, local governments’ attitude towards enterprises are very important, even more important than the central government’s support. Therefore, localities should stand ready to accompany enterprises by avoiding the introduction of administrative procedures that inhibiting their operation. Building the confidence of enterprises and society is the most important thing now so that enterprises can feel assured and make long-term investments.
According to National Assembly Deputy Phan Duc Hieu, the Government’s Resolution 105 on four groups of measures to support businesses reflects the balance between fighting the pandemic and maintaining socio-economic development. The resolution grants localities and enterprises greater autonomy in applying the appropriate production models in accordance with real situations and maximises digital tools to reduce hassle for enterprises. The resolution also requests local authorities to correctly follow the guidelines of central agencies, and not create sub-licences and requirements that obstruct the circulation of goods and increase costs for enterprises, co-operatives and household businesses.
