Economist suggests three focuses to revive Vietnam’s economy

Vietnam needs to shift from “Zero-COVID” strategy to vaccinations as the pandemic and the risk of new outbreaks are still lingering on, according to Dr. Nguyen Duc Kien, head of the Prime Minister’s Economic Advisory Council.

The country should step up COVID-19 vaccine rollouts, and minimise the number of infection and fatality rate, Kien told Sai Gon Giai Phong newspaper.

The global economy is on the mend with recovering demand in foreign markets, he said. Vietnam, however, has seen its production capacity and business resilience weakening immensely following prolonged restrictions induced by COVID-19.

Lessons from vaccine powerhouses show that Vietnam must accelerate the approval of home-grown vaccines and soon put them into use, he noted.

Citing the fact that many studies all around the world indicate that coronavirus vaccines may not provide lifetime immunity so booster shots must be offered annually, he said if the country cannot produce the vaccine itself and must rely on foreign donations, the effectiveness of its virus control efforts will greatly suffer.

The government should procure home-grown vaccine doses for mass vaccination under a proper mechanism to encourage domestic manufacturing, he urged.

He further said as impacts of the pandemic greatly vary among economic sectors, support packages should be delivered to enterprises based on how much they are affected by the pandemic, instead of the same amount of aid provided for all.

The economist recommended three focuses for Vietnam to revive and develop the economy as followed – prioritizing COVID-19 fight and expanding immunization coverage to protect public health and the economy; accumulating resources for economic recovery and offering aid to labour-intensive companies; and reviving the economy in tandem with fostering economic restructuring towards digital and green transformation.

He said it comes as no surprise to him that the Ministry of Planning and Investment has revised down the GDP growth forecast to just about 3.5 – 4% this year, much lower than the initial projection.

The move is necessary as Hanoi, Ho Chi Minh City and other southern cities and provinces have imposed social distancing under the PM’s Directives 16 and 16 Plus to stamp out the spread of the virus for months, according to the economist.

Goods and passenger transport nationwide has been restricted or suspended; business, production and investment have remained stagnant and declined with enterprises struggling with rising costs, he explained. So it is understandable if some economic goals, which were devised without taking into account unexpected damages from the COVID-19, cannot be achieved.

“We must accept it and find ways to adapt,” Kien said.

Referring to the National Assembly’s Standing Committee’s plan to adopt new support measures for affected businesses on October 1 at the latest, he noted that the uncertainties of the pandemic will negatively affect the State budget revenue in the coming months.

The support is clearly important but it must come with both fiscal and monetary policies as well as the State budget’s resilience taken into account, he said.