Businesses ready for reopening of Vietnamese economy

The recent positive progresses in Vietnam’s COVID-19 prevention and control efforts are the important groundwork for policymakers to consider relaxing social distancing and reopening the economy step by step.

Manufacturing garments at Garco 10 Corporation
Manufacturing garments at Garco 10 Corporation

Although the virus has yet to be completely exterminated, the gradual reopening is consistent with the dual goal and meets the wishes of the business community whose health has reached the threshold of being unbearable due to prolonged suspension of operation.

In this context, enterprises are also making plans for resumption under the new normal state, ready to seize on the opportunities provided by the market for quick recovery.

Amid the COVID-19 storm, air transport is one of the sectors hit hardest and the latest outbreak has thrown airlines, already struggling since the onset of the pandemic, on the edge of collapse. Thus, following the relaxation of social distancing, the Civil Aviation Authority of Vietnam (CAAV) has begun formulating a recovery plan for the airline industry towards maintaining domestic air transport activities and helping remove difficulties for carriers.

Based on the CAAV’s plan and the fact that several localities are easing restrictions and reopening some services, including tourism, domestic carriers are also making plans to meet the market demand while still placing emphasis on safety.

It is forecast that the demand for air travel will spike after economic reopening, especially for business and essential needs in the first stage of recovery, before the rise of other needs such as tourism.

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Air travel demand is projected to increase after economic reopening.

National carrier Vietnam Airlines (VNA)’s Deputy General Director Trinh Hong Quang said the company aims to vaccinate all of its pilots, flight attendants and ground workers who serve passengers directly by the end of September.

He added that it is also necessary to prioritise inoculating workers at airports, and in the travel and accommodation industries.

In addition, the application of vaccination certificates such as vaccine passports need to be accelerated and implemented on the electronic platform to maximise their efficiency, said Quang.

PetroVietnam General Director Le Manh Hung said the oil and gas industry is also severely affected by COVID-19, so the reopening will help enterprises alleviate current difficulties and bolster their business. The corporation has developed plans to meet demand for economic recovery and adapt to changes in the energy market.

The garment sector is also among the industries hit hardest by the pandemic as a number of factories have had to scale down manufacturing or even shut down for months.

As global consumption recovers and orders increase, which are usually regarded as golden opportunities, domestic enterprises are facing the risk of supply chain disruptions if they are unable to quickly restore manufacturing. Therefore, garment makers are longing for and have been preparing for the moment of reopening.

However, there remain a great deal of obstacles facing enterprises. For those in the northern and central regions, the reopening will help them foster production and exports. But for many in the south, it will take one to two months for them to rebound to the pre-closure productivity level.

It is even more worrying when enterprises will face the shortage of workers and the departure of even more workers who possibly will quit jobs to return to their home provinces immediately after reopening due to being haunted by pandemic difficulties.

Furthermore, orders are being relocated to other countries such as India and Bangladesh as foreign customers are uncertain about Vietnam’s reopening plans.

This is apparently a dual problem, since if there are workers but no orders, the burden on enterprises to cover wages and land and factory lease costs will be even greater.

Vinatex Deputy General Director Cao Huu Hieu suggested that the government facilitate enterprises to vaccinate their workers in order to maintain their workforce and production, emphasising that curbing the virus and reopening the economy are the prerequisites for enterprises to overcome this difficult period.

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A garment factory in Dong Nai Province

To remove the difficulties facing the business community, Vice Chairman of the Hanoi Small and Medium Enterprises Association Mac Quoc Anh stated that it is necessary to continue supportive fiscal and credit policies until the end of 2022 so that enterprises will have more time for recovery.

For now, many foreign investors are reconsidering the Vietnamese market following the recent disruptions to the supply chain, which have caused delays to many orders. Therefore, strong and quick measures are needed to mend the linkage between foreign and domestic enterprises.

EuroCham Vice Chairman Nguyen Hai Minh suggested that the Government should divide the zones by risk levels and create scenarios on distancing and requirements for operation so that enterprises can proactively make their business plans. Enterprises should be given more autonomy based on the standard rules in accordance with distancing scenarios and risk zoning. Under all circumstances, closing an entire factory when infections are detected should be avoided.

It is recommended to simplify the entry requirements for foreign experts and managers, who play a very important role in the running of foreign-invested firms, as the infection risks in Vietnam are equivalent to or even higher than some countries and territories.

The most important thing is that enterprises should be provided with the optimal conditions for them to rescue themselves and their employees. As major markets in the world are starting to recover and grow strongly, Vietnam should quickly return to its important position in the global supply chain so as not to miss out on opportunities and roles in the future.