- 27 September 2021
Businesses need an appropriate solution to combat the epidemic
The spread of COVID-19 has disrupted how global supply chains operate, making it difficult for businesses to model and assess risks. Supply chains in every country, including Vietnam, and across all economic sectors are severely affected.
Due to the wave of Covid-19 infections, Restrictions on mobility will continue to affect the service sector, which relies heavily on domestic demand. The agricultural and manufacturing sectors are also affected by social distancing measures as logistics becomes complex and challenging. However, a strong recovery in the global market will partially offset the negative impact due to the significant role of exports in these sectors.
AMRO’s latest growth outlook report forecast Vietnam’s GDP growth in 2021 to hit 6.4% and 6.8% in 2022. However, this report was built when the fourth Covid-19 epidemic broke out in some northern provinces and soon became controlled.
Many businesses were forced to operate below capacity or had to close factories because of the epidemic temporarily. Prolonged production disruptions could, in the short term, shift foreign demand to other countries. In the coming months, businesses should work with the government to implement safe distancing measures to prevent infection among workers and implement a strategy to vaccinate workers as soon as possible.
Businesses need to minimize production disruptions while looking for new market opportunities to get more sources of growth by taking advantage of the free trade agreements (FTAs) that Vietnam has signed. In recent years.
In addition, the Government should provide financial support packages such as tax breaks, rentals, wage subsidies, or preferential loans, speeding up the distribution of vaccines to workers to support businesses affected by disease control measures can continue to operate and remain solvent.
Furthermore, fiscal support on both the revenue side (such as tax deferrals and fee/tax reductions) and the spending side (loan subsidies) can help companies overcome challenges posed by the pandemic.
Vietnam needs to protect the economy and people’s lives from the terrible devastation of future Covid-19 waves with the appearance of other variants. It is essential to recalibrate and strengthen the pandemic prevention strategy. More effort is devoted to timely vaccination strategy as well as other medical means of disease control.
Meanwhile, efforts to develop domestic supporting industries are essential to help strengthen national participation and enhance domestic value-added in global value chains, mainly to take advantage of the supply chain reconfiguration amid the pandemic.