Covid-19outbreak is returned to Vietnam like the way it causes great obsession to every corner of the world. Each 15 second interval is recorded with one Covid-19-related death. That is why the global economy has been unprecedentedly covered by such extensive dark shadow since the Second World War. Bloomberg unveiled that the global economy is pushed back to more intensive depression by the second Covid-19 wave. Economic recovery must be supported by more time and significantly depended on epidemic development as acknowledged by the Minister of Planning and Investment Nguyen Chi Dung.
Vietnam Economy cannot be stood out of such depression vortex. In fact, Vietnam economy has started to boom after social distancing and Covid-19 prevention are successfully launched. Growth is recorded in industry, agriculture, service, tourism and import-export. Unfortunately, the happiness does not last long.
In the beginning of the year when Covid-19 start has just been triggered, the 2020 economic scenarios have been designed with the most optimistic scenario that 2020 GDP growth shall be 6.27%.
- Quarter I ended with estimated GDP growth of just 3.82% and such figure was re-calculated as only 3.62%. Then, any forecasts were upside down.
- Quarter II was recorded with economy’s growth of 0.36%, and 6-month growth of 1.81%.
Although it is said that “Vietnam economy is still recognized with positive growth rate”, Vietnam economy has been really suffered from extremely serious impacts by Covid-19. Vietnam situation is “serious” and “urgent” as what referred to Vietnam Economy by the Minister Nguyen Chi Dung. That was the time that the second Covid-19 wave outbreak has not been triggered.
This year’s growth rate of 2-3% is “so good” as quoted from experts by the Prime Minister Nguyen Xuan Phuc. The Prime Minister showed his great determination that: “Economy must not be broken down. Negative growth rate is not accepted”. This unveiled that the Government leader thoroughly understands Vietnam economy difficulties. Negative growth risks are potential. No economies are merely relied on domestic market for development. Vietnam economy is even supported by the world leading openness. Therefore when the global economics depression is submerged, Vietnam is hard to trade as usual.
Once the second Covid-19 wave outbreak is sharply triggered, both the world and Vietnam situation shall be much more deteriorated. “Possibly, the economy shall be recorded with negative growth rate when sharp epidemic outbreak is realized. The favorable land for Vietnam growth is no longer available,” said by Mr. Nguyen Duc Thanh, former General Director of VEPR.
Quarter II was merely recorded with economy’s growth of 0.36%. Quarter III situation is not more optimistic. The last Quarter III was recorded with economic growth up to 7.31%. Hence, expectation about high growth rate on the last year’s growth basis is “impossible”.
Vietnam economy has been being hit with extremely heavy strike by the second Covid-19 wave. The most visible and clear strike is found in tourism and passenger transportation industries. HCMC unveiled that on just 26- 27 July, nearly 21,000 Vietravel tours were canceled, equivalent to expected revenue of VND 88.6 billion. 10,000 Saigontourist tours were also canceled. Surely, myriad of nationwide tour operators is suffered from such tour cancellation.
“Many tour operators may not be successfully stood up beyond this second outbreak”, forecast by Mr. Nguyen Huu Tho, the Chairman of Vietnam Tourism Association (VITA).
Meanwhile, Vietnam Airlines shareholders have just been reported that a loss of VND 15,000 billion may be suffered in this year. Its first-half-year accumulated revenue hit VND 24,808 billion, reducing 50% and the loss after tax was VND 6,642 billion. However, loss was not the end of the problem. The most concern is the cash flow. Urgent support worth VND 12,000 billion is required to be injected to avoid money empty at the end of August and the Government support has been called for.
The Government support is also called by Bamboo. The airlines’ desire is clearly expressed to obtain a loan with 0% interest rate, an unprecedented event in Vietnam.
In such context, industries with export value of billions of USD are also seriously affected by Covid-19 epidemics. Up to now, last-half-year POs have not been received by myriad of garment and textile enterprises, yet. These sectors shall be continued facing with a series of difficulties in the last months of the year.
- In the second half of the year, Vietnam garment and textile export is still recorded with deduction of 14-18% compared to the same period of last year after only US$ 16/18 billion in 7 months, reducing 12.1%.
- Leather shoes export shall be continued the reduction trend, regardless of the fact that EVFTA has been valid and enforceable, to “unblock” goods to penetrate into European market. The last 7 months were recorded with footwear export turnover of only US$ 9.53 billion, decrease in 7.9% against the same period of 2019.
- Electronic category, especially mobile phone, is struggling with “ocean of difficulties”. The last 7 months were recorded with phone and component export turnover of only US$ 25.65 billion, decrease in 6.6% against the same period of 2019. Samsung, the local biggest mobile phone manufacturer and exporter in Vietnam, concerned that production and export of this product shall be sharply reduced regardless of introduction of new Galaxy Note 20 series.
It is not too exaggeration to say that the Vietnamese economy is as fragile as it is on the wire, and it is totally depended on the Government governance.
In last April, the extensive social distancing order was launched by the Government. Consequently, GDP growth of Quarter II only obtained 0.36%, the lowest value in many decades; 31 million of workers were unemployed and lost with income. If the social distancing order is triggered now, the consequences shall be unanticipated. The economy with horizontal GDP is acknowledged as “a great success”, unveiled by Mr. Nguyen Duc Thanh.
However, it seems that the Government’s first experience is much more prudent. The Prime Minister shared that, “block river, prohibit market” is not conducted regardless of epidemic quarantine, “economy must not be fractured”, no social distancing is announced without considering logical plan, especially when outbreak is not found, resulting in a deadlock of socio-economic activities, etc.
While the Minister, the Chairman of Government office Mai Tien Dung, said that: “Overall viewpoint is that when the epidemic outbreak is found, it must be contained depending on its size to successfully extinguish it”.
It means that governance aims to fulfill double tasks, i.e., epidemic control and economic development maintenance, which are known as prudent considerations and smarter combination. Unless the epidemics widely spreads that is assumed not to happen under expert viewpoint. As Vietnam has had extensive experience and outperformed such tasks, the extensive social distancing shall not be conducted.
Ms. Stefanie Stallmeister, acting National Director of the World Bank (WB) in Vietnam released 3 recommendations to help Vietnam economy to successfully overcome Covid-19 crisis, concretely:
- Consideration to remove domestic and international traveling, starting with Covid-19 safe countries, for the purposes of boosting tourism operations, which have contributed 10% to Vietnam’s GDP. That is an important action orientation to attract potential investors and technical experts.
- Public investment program launch is facilitated.
- Private sector is supported, particularly enterprises which are temporarily affected by crisis.
Among such 3 recommendations, the first recommendation seems to be impossible as Covid-19 epidemics is complicatedly developed. Public investment improvement and private sector support are solutions that have been being applied by Vietnam.
However, many enterprises fail to access to the support policies. On the other hands, the monetary policies are not provided with various favorable benefits when bad debt story is concerned in Covid-19 period by the banking system. That is why the most important key now is the fiscal policies as judged by the Minister Nguyen chi Dung. On one hand, public investment disbursement is facilitated. On the other hands, it is required to extend and supplement the support packages for enterprises and local residents to boost up production – business, job generation and solving the social security problems.
Under another perspective, the enterprises are assumed to make great efforts to well adopt, adapt and work out solutions to improve production and growth.
In fact, regardless of Covid-19’s serious impacts on the global and local economy, many fields are still developed in difficulties. The fields related to pharmaceuticals, health care, essential goods, foods and foodstuff, online education, technology, etc., are assumed to have more “space” to thrive.
- In the first 6 months of the year, DHG Pharma was still recorded with profit of VND 185.7 billion, increase in 6.3% compared to the same period of the last year.
- Quarter II was recorded with DNM’s net revenue of VND 239 billion, profit after tax of nearly VND 17.4 billion, increase in 380% and 569%, respectively, against the same period of last year. This is because of Covid-19 outbreak, DNM focused on producing epidemic prevention items such as masks, protection clothes, resulting in sharp revenue and profit.
- The first half of the year was recorded with KIDO’s net revenue of VND 3,683 billion, increase in 14.2% compared to the same period of 2019; profit of VND 180 billion, increase in 17.4%, fulfilling 54% of whole year target.
- Masan hit consolidated net revenue of VND 35,404 billion, increase in 103.3%compared to the first half of 2019. In Quarter II/2020 alone, net revenue of Masan Group grew up 92%. Such growth was mainly supported by two-digit growth rate at The CrownX (TCX) – consolidated company, holding contributed capital at VinCommerce (VCM) and Masan Consumer Holdings (MCH). Port business sector of Masan MEAT DELI was relatively promissory, obtaining revenue of VND 1,055 billion in the first half of 2020. The Quarter II-related revenue of this category climbed up to 32.7% compared to Quarter I/2020.
- Vinamilk, in the first half of the year, hit consolidated net revenue of VND 29,648 billion, increase in 6.7% compared to the same period of 2019 and fulfilled 50% of annual plan. Meanwhile, Vinamilk’s consolidated profit after tax obtained VND 5,861 billion, increase in 2.8% compared to the same period of 2019 and fulfilled 55% of annual plan.
Covid-19, under perspective of economic experts, is acted as a nudge to boost the investment wave moving away from China faster. In such wave, Vietnam is submerged as a top investment location to be selected thanks to its success in Covid-19 fight as well as great efforts in improving investment and business environment. The past 7 months were recorded with registered FDI into Vietnam of US% 9.46 billion, increase in 14.4% compared to the same period of last year. If reduction occurs, it shall be mainly caused by investment through capital contribution and share acquisition. Once foreign investment wave is sharply rushed into Vietnam, production capacity shall be improved and Vietnam economy shall be facilitated and motivated to successfully step out the “door of death”, quickly recover when Covid-19 disappears.