October 16, 2021
Holding high hopes for Hanoi’s transformation in the post-Covid-19 pandemic, representatives of foreign business associations and international experts shared their views with The Hanoi Times on steps the capital city could take to reopen the economy and adapt to a new normalcy.
“No doubt the fourth Covid-19 outbreak has hit us hard,” Chandan Singh, General Director of ABB Power Grids Vietnam (Sweden), told The Hanoi Times, as he looks back to more than two months of social distancing period in Hanoi.
“The stay-at-home order means a lot of our workers could not enter Hanoi, and the company was forced to operate at 75-80% of full capacity. But we were still able to pay our employees full salary, including those who are not in the city,” said Singh.
Singh noted the fact that the company was still able to operate and have the resources to pay workers’ salaries was due to support from the authorities in Hoang Mai District, where it is located.
“Along with clear instruction on how to ensure effective restriction measures, the introduction of “business green zone” is essential for firms to keep operating in low-risk areas,” he said.
At the peak of the pandemic, Singh noted the district’s timely issuance of travel permits with QR code for 294 out of 500 employees helped the company overcome the difficult period.
Sharing Singh’s view, Director of ICHI Vietnam Pham Hoang Long noted close cooperation with the authorities was key for his company to keep business running during the outbreak.
“Under the business’ green zone model, the company’s employees were subject to weekly Covid-19 testing as part of anti-pandemic measures, while the authorities’ “one route, two destinations” approach ensured safety for workers traveling from workplace to home and return,” he said.
As the pandemic has now been contained and restriction measures are gradually eased, Hanoi’s focus is now shifting to reopening the economy and making up for economic losses that the city had sacrificed to protect people’s health.
“It looks like the peak of the fourth wave is over. Vaccine rollout has progressed, and the cities built several new hospitals to secure more patients. The situation today means the country should shift in a new direction. The economy should reopen. That is what the business community wants,” Takeo Nakajima, chief representative of the Japan External Trade Organization (JETRO) in Hanoi told The Hanoi Times.
This time, Hanoi has changed its approach from a “zero Covid” strategy to one focusing on safe and flexible adaptation to the pandemic.
While supporting this switch in approach, Yee Chung Seck, partner at Baker & McKenzie Vietnam told The Hanoi Times he still expects the city to have certain social-distancing measures – for example, how many people can gather in a physical meeting or at a restaurant or a bar, while that customer records should be kept (use of QR code for convenience) to enable contact tracing if necessary.
“Other than that, vaccines must be obtained and deployed as swiftly as possible - and at the same to improve healthcare support/services given there will be cases of infection and people falling ill. e-Commerce and online ordering and delivery should be encouraged to reduce the number of people who go physically to the shops,” said the expert, who has been living in Vietnam for the past 20 years.
Marko Walde, AHK’s Chief Representative, told The Hanoi Times that strict social distancing measure is no longer a sustainable solution. In this context, Walde said opening borders and lifting mobility restrictions are the way to go to restart the economy.
Walde proposed a four-phase plan as the city is now trying to adapt to the pandemic situation.
In the first phase, Hanoi must ensure a low level of community transmission before placing the city in a position of reopening its economy. To do so, the capacity of the healthcare system should be sufficiently expanded, while social distancing and regular tests must be continued in very high-risk areas.
“The city must proactively take measures to prevent an outbreak from spreading and be able to handle public transmission as soon as they occur to protect the healthcare system from overload and minimize the number of deaths,” he said.
For the second phase, Walde noted the necessity to lift the mobility restrictions and issue green cards systematically for fully vaccinated people.
On the other hand, the Government should provide stimulus packages for business and financial aid for unemployed people, along with keeping supply chains in essential sectors intact.
Walde expected the city to prioritize business activities with less social interaction and in large opening spaces, such as outdoor agricultural production and outdoor construction work.
“For some essential industry but with indoor business activities, be sure to separate each department and implementing the 5K prevention measures,” he said.
Coming to phase three, businesses in all sectors are allowed to reopen but need to maintain physical distancing, frequently monitor people’s temperatures for early detection, and transparent report to health authorities.
During this phase, Walde noted key supply chains can operate on a market basis. Meanwhile, no restriction to mobility within the city but interregional mobility is limited.
In the last phase, all sectors should be encouraged to operate normally in a safe manner as the city starts implementing specific requirements and procedures to guarantee the health of workers and the rest of the community in the new normal period.
“Priorities should be placed on infrastructure development of essential business manufacturing activities and supply chains to mitigate unforeseeable issues of the pandemic,” he said.
Nakajima from JETRO in Hanoi suggested the manufacturing sector will lead the recovery process, particularly exports and imports goods to the big markets (US, China, and Europe).
“IT and digital space are promising and less damaged by the restriction. Public investments and construction should keep upholding the economy,” he said.
Meanwhile, the food services and travel sectors may see the process of recovery dragging on, he noted, adding real estate and durable goods are also slow to grow because of the cash restraints of the consumers.
“How to open the borders is also a critical question," Nakajima said.
The JETRO Hanoi chief identified [the entrance of) experts and engineers, FDI, and international travel are vital elements for Vietnam's economy. “A multinational cooperation with neighboring countries, including Japan, should start quickly to accelerate border reopening, in which digital technology also contributes to ensuring effective implementation,” he said.
Echoing Nakajima’s view, Chung from Baker & McKenzie Vietnam said quarantine measures should be more relaxed for foreign investors, managers, and experts with evidence of vaccination and negative tests.
“For foreign citizens already working and living in Vietnam, there should be greater ease as to the extension of stay and work permits. Tourism and aviation, which are amongst the hardest hit industries, would also welcome the easing of restrictions. These travelers can be confined to certain selected areas or provinces at initial stages, and again, subject to evidence of vaccination and negative tests, and stringent monitoring around their movement,” he said.
The latest Covid-19 outbreak in Vietnam has put the foreign business community in a hard time minimizing its impacts on their businesses, especially as production is on hold and restrictions of logistics are disrupting supply chains.
Chairman of the European Chamber of Commerce in Vietnam (EuroCham) Alain Cany said the current Covid-19 outbreak and restriction measures have led to the diversion of 18% of orders of European firms in Vietnam to other countries, 16% are under consideration.
“There is no disguising the fact that this fourth wave outbreak is having a dire impact on business. The EuroCham Business Climate Index is now recording the lowest sentiment in more than a decade. If lockdowns, social distancing, and travel restrictions continue for much longer, new investment projects could be put at risk and companies could consider relocating elsewhere in the region,” Cany warned.
Meanwhile, a survey by the Delegation of German Industry and Commerce in Vietnam (AHK Vietnam) shows that 67% of German companies are planning to find alternative supplies to Vietnam in other countries.
“GDP of 3Q is negative 6.17%, which is historically low. Now, economic recovery is the most urgent task. The high vaccination rates don't mean zero COVID cases; even Singapore and Israel have witnessed the spikes again. But society is much safer if adequate measures are in effect. The economy should keep operating under limited risk,” Nakajima said.
“If Vietnam faces "the fifth wave," which is possible, balancing the policy is crucial for outside investors”, he said. The "post-fourth wave" is a crucial step for Vietnam to regain the reputation and confidence from the international investors that the country is safe to do business," he concluded.
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