Vietnam to miss out on potentially lucrative opportunities if it delays reopening

Slow reopening could lose Vietnam great foreign investment opportunities. Photo: Le Toan

Four leading foreign business associations in Vietnam including AmCham Vietnam, the US-ASEAN Business Council, EuroCham, and KoCham have recently shared its concerns and recommendations to Prime Minister Pham Minh Chinh. Accordingly, the associations said that Vietnam is missing out on investment opportunities that may not return due to the slow reopening.

Investment will not increase without a clear plan for reopening and recovery. Even existing businesses have most investment plans on hold, given the current uncertainties. Potential new investors cannot visit without streamlined policies for entry of foreigners.

"Vietnam will miss out on a huge opportunity to capitalise on diversification of supply chains away from China if it cannot demonstrate it is a reliable alternative. To maintain regional and global competitiveness, including compared to Malaysia, Indonesia, and Thailand, Vietnam must take action now," said the associations.

In addition, they urge the government to reopen manufacturing to a “new normal” now. Businesses with proven track records and clear plans need to be enabled to take on more responsibility for their operations and worker safety and reopen as they are able, with post-implementation monitoring. Overtime caps need to be lifted to allow for the unique requirements of the manufacturing bubble models, and the need to meet pent-up demand when more normal manufacturing operations resumes.

The manufacturing bubble models created in Ho Chi Minh City and in other provinces to allow continuity of operations during COVID-19 have been extremely useful as an interim measure. But the models do not work well for large, labour-intensive factories, such as in the footwear and apparel sector. And they are not sustainable long-term, from a cost, logistical, and worker health, safety, and morale perspective.

Surveys that the associations have conducted show that at least 20 per cent of our manufacturing members already have shifted some production to another country, with more discussions underway. Many of their members have calls every night with regional and global headquarters deciding what customers to honour, which to turn away, and what production to shift. Once production shifts, it is difficult to return, especially once production lines have been expanded elsewhere. Therefore, it is crucial that businesses need a clear roadmap and date certain for reopening now.

The representative of the associations said, "We support Vietnam's strategic policy direction to adapt to 'living with the virus safely'. We want to join hands together with you and provincial leaders throughout the country, particularly in Ho Chi Minh City and the Southern Economic Region and Danang, to reopen the economy safely, enabling economic recovery and a 'new normal'. That will mean moving away from Directive 15 or 16 soon, and avoiding returning to similar restrictive measures in the future."

Vaccines are the key to enabling a safe reopening and economic recovery. The foreign business associations have been strong advocates of vaccine diplomacy for Vietnam. So far, the associations have welcomed donations of nearly 10 million doses of vaccines from member countries, and support a transparent, equitable, efficient, and safe distribution of vaccines, according to priority risk groups.

As Vietnam moves toward a new normal, in addition to more vaccinations, it will be important to have country-wide coordination of policies, including for transportation of goods and people, availability of rapid tests, and policies to isolate and remove F0s rapidly to ensure worker safety and minimise the impact on operations.