VOL. 01, NO. 02 (1271), Apr 21 - May 05, 2020 ISSN...

VOL. 01, NO. 02 (1271), Apr 21 - May 05, 2020

ISSN 1859-0632

VIETNAM BUSINESS FORUMPublished by VCCI

Licence No.58/GP-BTTTT dated February 18, 2020Printed by the Trade Union Printing CompanyPrice: VND25,000

Available on

PHAM NGOC TUAN

EDITOR-IN-CHIEF

PHAM THE NAM

DEPUTY EDITOR-IN-CHIEF

In Charge of VIETNAM BUSINESS FORUM

BOARD OF ADVISORS

Dr. VU TIEN LOC

VCCI President & Chairman

Dr. DOAN DUY KHUONG

VCCI Vice President

PHAM NGAC

Former Ambassador to Five Nordic Countries

NGUYEN THI NGA

Chairwoman of Board of Directors, BRG Group

Designer: LE NGOC

Sub-editor: STEVEN GROFF

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JAPAN

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Tel: 81-3-5215-7040

Fax: 81-3-5215-1716

Chief Representative

AKI KOJIMA

VCCI

03 Golden Time to Reactivate Economy

05 Businesses Stand United against Hardships

09 Vietnam, U.S. Sign Agreement to Strengthen BilateralPartnership

09 ADB Triples Covid-19 Response Package

10 Businesses Battered by Market Shrinkage

BUSINESS

12 Investment in Q1: Drop in Both Quantity and InvestmentCapital

18 Joining Forces for Economic Recovery

20 Vietnam Getting Firmer, More Resilient

22 72% of German Businesses Set toContinue Investment Plans in Vietnam

23 How Has Vietnamese Supply ChainResponded to Covid-19 Pandemic?

24 Guidance on Cutting Electricity Price

25 April Rice Export Quota FullyRegistered in Two Days

26 Opportunities for Post Covid-19 M&ADeals

SUSTAINABLE DEVELOPMENT

28 VSS Quang Nam: Consistent Solutions toEnsure Benefits of Policyholders amid

Pandemic

29 Government Issues Instructive Decree onEnforcement of Public Investment Law

29 Decree on Management, Connection andSharing of Digital Data of State Agencies

Issued

30 Urgently Making Economic RecoveryScenarios

32 Public Investment - Catalyst for EconomicRecovery

34 Vietnam Needs to Boost R&D Spending

35 Fitch Ratings Maintains Vietnam’sSovereignty Rating

36 Quang Ninh Planning to 2050: Van Don,Quang Yen and Mong Cai in Focus

37 Binh Phuoc Cashew Industry Bearing Bruntof Pandemic

37

38

CULTURE & TOURISM

38 “Freezing” Tourism: Online Operation,Career Mobility

39 Tourism Services Adversely Affected byPandemic

2 VIETNAM BUSINESS FORUM APRIL 21 - MAY 4, 2020

25

In a press meeting about governmentalsolutions, Dr. Vu Tien Loc, President ofthe Vietnam Chamber of Commerceand Industry (VCCI), said, the onlinemeeting between the cabinet with

localities on April 10 introduced verysignificant decisions that really meant tomobilize social resources for the front assignedto mitigate economic recession and maintaingrowth.

Businesses expect policies to come tolife soon

Dr. Loc said, measures are quite well-prepared and comprehensive, with the wholepolitical system engaged to support businessesin the spirit that protecting business isprotecting the economy.

The remaining matter is how to executethose decisions quickly, transparently,consistently and systematically.

After his meetings with businesses, Dr. Locsaid, businesses applauded the aggressivemessage by the Government, but they still feltless assured when they met enforcementofficials.

“A day sooner can revive a business; a daylater will kill it. The Prime Minister isaggressive, businesses are sitting on the fire;however, public authorities are still at easesomewhere,” Dr. Loc added.

In the past days, while the whole countryand the business community struggled tocontinue operations and ensure jobs for

workers, some localities still banned businessoperations.

The VCCI President said that the support ofmoney, tax, fee and credit is important but it is moreimportant to have an urgent, flexible and responsibleresponse in terms of policies and the apparatus toadd vitality to business.

“We are doing ‘health quarantine” but we haveto ‘join hands in mechanism’ to truly supportbusinesses and businesspeople,” he suggested.

Citing a specific case, Dr. Loc said that face maskproduction is the money spinner for companies inthe time of epidemic. Vietnam’s face maskproduction capacity is huge, much larger than whatthe domestic market needs. Orders from the worldare increasing rapidly. They also want to export someother items such as protective equipment or othermedical supplies. Dr. Loc proposed that theopportunity for this industry to develop and exportthese products is substantial.

Limited resources, key is institutionalreform

Representatives of the business community saidthat, at the business level, a decision of businessleaders must be swift.

“We are in the golden time to control theepidemic and also in the golden time to supportbusinesses to survive and overcome difficulties. Ifmore than 50% of enterprises will not be able tosurvive the next 5-6 months, and 80% will hardlysurvive after 12 months if the plague evolvescomplicatedly (according to VCCI survey results),then the next 5-6 months will be surely a golden timefor us to add strength to them and rescue them,” saidVCCI President Vu Tien Loc.

He emphasized that adding strength byresources is definitely limited but adding it byinstitutions and confidence is indefinite. Thebusiness community expects that institutionalreforms will be promoted in the coming months tosupport and act as a foundation for businesses to getthrough the pandemic and prepare themselves for

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Golden Time toReactivate Economy

TheGovernmenthas madeconsistentdecisionsshowing itssupport forbusinesses.Meanwhile, thebusinesscommunityexpectsenforcementwill be as fast asthe ongoingfight against theCovid-19epidemic. Aday sooner canrevive abusiness; a daylater may kill it.

the stage of recovery and development in the future. During theepidemic era, the focus of the Government must still be institutionalreform.

The world will be different, global supply chains will be reshaped,and technology will evolve. So, preparing what is necessary and thefoundation to overcome challenges and grasp the opportunity torevive the economy after the crisis is a must in the coming months.

He spoke highly of the Government’s command for reforms toclear hurdles in each sector and field. In addition to specific policies,the Government also placed emphasis on two important tasks.

The first is to focus on solutions in Government Resolution02/NQ-CP on improving administrative procedure reform andenhancing business and investment environments. The second is toreview obstacles, conflicts and institutional irrationalities, especiallyconcerning business investment, in order to promptly resolvedifficulties for enterprises. In this context, it is clear that the businessenvironment needs to be further improved to produce goodoutcomes.

To have a regular coordinating mechanism to maintain growthand economic recovery to achieve the same high efficiency as in thefight against the epidemic outbreak, we need a steering committeefor economic reactivation and rehabilitation led by the Governmentleader.

The business community expects the Government reconsiderssocial distancing to restore part of manufacturing and businessactivities, but safety must be placed atop as recommended by healthauthorities.

The VCCI President said, because the risk of Covid-19 infectionvaries widely among sectors, localities, organizations and businesses,behavioral conditions and scenarios are necessarily differentaccordingly. The solution is to develop a set of infection riskindicators to enable classification and application of behavioralscenarios. For example, working is strictly prohibited in a place withhigh risk exposure to infections (over 80%).

A place with lower risk exposure can continue manufacturingand business activity but appropriate preventive measures and riskcontrol actions must be applied as recommended by healthauthorities. The Ministry of Health needs to prepare these plans toguide localities and businesses to take best actions.


Prime Minister’s Online Meeting withBusinesses on Reactivation of theEconomy

At the VCCI briefing session, VCCI President Vu TienLoc said that Prime Minister Nguyen Xuan Phuc hasdecided to organize an online conference and live broadcastwith the business community across the country.

The conference is expected to take place at the end ofApril, with the theme of “Reactivate the economy”. Theevent is designed to thoroughly inform the businesscommunity and authorities at all levels of policies of theParty, the National Assembly and the Government onremoving difficulties and obstacles for economic recovery,while the pandemic is developing very complicatedly aroundthe world.

After the meeting, the Government will have a resolutionon action plans for central and local authorities andbranches and the business community to accomplish thesegoals. Hundreds of thousands of businesses, officials andmillions of people will participate in and watch theconference.

As assigned by the Prime Minister, VCCI will continueto gather opinions of businesses and business associationsand report them to the Prime Minister at this importantmeeting.

Hopefully, the patriotism, the solidarity and consensus ofthe entire political system and of the entire people on thefront against the Covid-19 pandemic in the past days will bespread and promoted to the cause of restarting and restoringthe economy.

Hopefully, Vietnam - a typical success on the healthfront of restraining and repelling the Covid-19 - will also bea typical success in the cause of restarting and recovering theeconomy, where enterprises and entrepreneurs will be thepioneers on this front. We have made good use of the goldentime for the health sector to fight off the epidemic, and nowwe will be determined to make good use of the golden time torestart and drive forward the economy.

VCCI

Prime Minister Nguyen Xuan

Phuc talks with VCCI President

Vu Tien Loc and business

representatives at a meeting

organized by VCCI

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As a highly open economy, Vietnam isfacing severe impacts caused by the Covid-19 pandemic and global recession. Thefrontline force that works to continuebusiness activities during the tough timeand adopt restructuring to recover anddevelop after the pandemic is theentrepreneur force, which is leading nearly800,000 businesses and over 5 millionbusiness households nationwide.

Anh MAi - Bui Lien

According to a survey conducted by the VietnamChamber of Commerce and Industry (VCCI), ifthe plague worsens, nearly 30% of companiescan only operate for no more than 3 months and50% can survive only half a year. Over 75% said

they would have to downsize the workforce and nearly 10%would have to cut staff by 50%. Only less than 1% wouldrecruit more workers. If this trend persists, millions of workerswill be thrown out of work in the coming months.

Having seen this prospect, the Government has introducedmany solutions to support businesses against their hardships,including a VND300 trillion credit package to help capital-

short companies and extend debts for continued operations.Decree 41 extends the payment deadline of value-added tax,corporate income tax, personal income tax and land rentworth VND180 trillion (US$7.7 billion).

However, in fact, companies must cope with manyproblems. At the video conference between VCCI andbusiness associations in early April, Dr. Vu Tien Loc,President of VCCI, said that the Government needs to allowand facilitate businesses to keep manufacturing anddistributing goods, especially essential consumer goods. TheGovernment also should allow companies to resume businessoperations and continue ongoing construction sites whichwere suspended due to misinterpretation of the PrimeMinister’s quarantine order.

In addition, the Government should publish a list ofessential commodities to facilitate production and distributionof these items and related goods and services across supplychains, even in case of tighter social distancing or lockdown.The Prime Minister’s instruction must be strictly respected.No inspections into enterprises are conducted for the timebeing and auditing should be used rather than pre-check.

According to VCCI President Loc, commercial banks arerecommended not only to restructure debts, reduce loan costsand exempt service fees for small transactions, but also striveto lower lending rates by 2- 2.5% more for each group ofcustomers during the time of the epidemic. VCCI has askedthe financial sector not only to reschedule and postponecurrent taxes but also propose the Government to submitexemption and reduction of corporate income tax, personalincome tax, VAT and some other taxes and fees to theNational Assembly.

Businesses Stand United against Hardships

BUSINESS REGISTRATION Q1/2020

Newly established businesses Tempororily suspendedbusinesses

Dissolved businesses

F

Source: GSO

“Currently, businesses strongly recommend amendmentsto Clause 3, Article 8 of Decree 20 and request retroactiveinterest expenses, not being deducted for affiliatedtransactions for enterprises in 2017 and 2018. This is alegitimate right of enterprises and can be achieved by reducingfuture taxes payable to businesses. And, we do not have toworry about negative consequences that may arise fromretroactive implementation when this is done publicly andtransparently, supervised by the masses, and auditedaccording to regulations,” he said.

According to VCCI, base salary should not be increased in2021, and union dues should not be collected until the end of2020 and reduced from 2% to 1% at least in 2020 and 2021.The unemployment insurance fund should stop and reducethe unemployment premium rate from 1% to 0.5% for at least6-12 months.

At the same time, the balance fund of the social insurancefund should be used to support companies to pay salarieswhen their employees have to quit their jobs because ofunderemployment. This surplus fund plus zero-interest loansfrom the Vietnam Bank for Social Policies will supportbusinesses to pay salaries to their employees.

“A flexible wage regime should be introduced in thiscurrent difficult context. This content in the Labor Codeshould be implemented sooner,” he added.

On logistics, according to VCCI President Loc, seaport feesshould be reduced by 50%, and the Ministry of Transportmust work with foreign shipping lines to request to reduceexcessive and improper logistics surcharges as now. On roadtransport, the toll collection time should be extended to reduceBOT costs.

On tourism, 50% of tourism deposits in 2020 will be usedto support business operations or tourism deposits will be

reduced by 50% in 2020 and 2021. Land rents should bereduced for hotels and resorts. Support measures need to beimplemented quickly, ensuring efficiency, publicity andtransparency, upholding accountability.

“We also suggest rapidly building e-government,accelerating institutional reform, and drastically reducing andsimplifying procedures. In the current context, fees foradministrative procedures and public services related toenterprises’ production and business activities should beexempted,” he said.

At the same time, good policies are needed to takeadvantage of opportunities from economic restructuring whenthe pandemic is pushed back. Particularly, promoting thedevelopment of the domestic market and supportingindustries is an important approach. Certainly, post-pandemicnational development policies will also move more towardsthis direction and Vietnam is no exception.

By far, the Covid-19 epidemic outbreak has shownVietnam’s excessive reliance on foreign markets, both oninput and output. This is a very weak point of Vietnam’seconomy.

Dr. Loc said, the business community must immediatelytake measures to cut costs, tap the domestic market,strengthen connectivity and develop the local market. Morethan ever, business linkage is extremely important. At thesame time, businesses should further train their employeesduring this time. Meanwhile, the Government supposedly usesunemployment insurance funds to assist businesses in thiswork. Business, strategic and governance restructuringtowards sustainability should also be focused on. The next stepis to boost digital transformation and to further upholdentrepreneurship in all Vietnamese businesses.


VCCI

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Mr. NICOLAS AUDIER

CHAIRMAN OF EUROCHAM

On March 31, 2020, thePrime Minister of Vietnamissued Directive 16/CT-TTg on theimplementation of urgent

measures to prevent andcombat Covid-19 epidemic.

EuroCham highly appreciatesthe timely and drastic actions of the

entire Vietnamese political system,especially the call of General Secretary, President Nguyen PhuTrong, and the guidance of the Government and PrimeMinister Nguyen Xuan Phuc, and believes that with thecurrent measures, the disease will be quickly repelled, and theeconomy will return to normal activities soon. We suggestadding some points as follows:

The Government should consider putting employees'income tax into the list of tax payment extension so thatenterprises will have more cash flow for production andbusiness activities; supplement the Special Income Tax and atthe same time allow the extension of the time limit for payingSpecial Income taxes arising from March to September 2020;consider additional measures such as tax exemptions, and theexpansion of preferential treatment due to the impact of thedisease; expand the subjects who are entitled to the extensionof social insurance payment. The disease is still under control,the Government should not restrict production and serviceactivities for production and business of businesses,maintaining production (especially for export) will createfavorable conditions for businesses and workers to maintaintheir revenue at least through the pandemic. The Governmentshould consider fast approval of chemicals needed for Covid-19 testing as well as alternative medical products during theepidemic, without closing the border for goods, especially theborder with Laos, Cambodia. It is necessary to streamlineadministrative procedures, especially in the field of customs,so that enterprises can have production materials as quickly aspossible and at the same time minimize the need for directcontact with state agencies.

Mr. KIM HEUNG SOO

CHAIRMAN OF KOCHAM

The damage caused byCovid-19 has been and willcontinue to spreadworldwide, not just in some

countries, and many expertsand companies worry that

this will lead to many differentdifficulties. Fortunately, on

March 7, the VietnameseGovernment announced a support policy of up to VND280trillion, including a credit support package, and a supportpackage for tax and fee exemptions and other fees, bringinghope to many businesses affected.

We recognize that the epidemic causes serious losses notonly to FDI companies, including Korean companies, but alsoaffects companies in Vietnam and the economy in general.Therefore, KOCHAM has some recommendations as follows:

For a workplace that is suspended or blocked bygovernment order, it is recommended that the Governmentissue a special circular to allow businesses to let employeesquit salaries without agreement with workers because underthe labor law, business owners must agree with workers toleave without pay without agreement; newly issue workpermits, visas for foreigners who have entered Vietnam beforethe outbreak; allow foreigners, businessmen, experts, andbusiness partners to enter Vietnam; provide financial supportfor businesses in the downturn, support both servicebusinesses, expand the scope and scale of support; defercorporate income tax payment; reduce utility costs forbusinesses such as electricity, water, social insurance,industrial park management fees; postpone time for carryingout procedures for initial investment capital contribution andexemption from import tax on factory installation machinesdue to import postponement of new investment companies;and postpone regular tax and customs inspections this year.

KOCHAM sincerely wishes that the damage of the Covid-19 epidemic to businesses and all Vietnamese people would beminimized. We hope that the Vietnamese government willconsider the above recommendations and urgently developmore practical support policies to help businesses overcomethis crisis.

Ms. MARY TARNOWKA

EXECUTIVE DIRECTOR OF

AMCHAM VIETNAM IN HCM CITY

I want to convey thecontinuing appreciation ofAmCham Vietnam-Ho Chi

Minh for the effectiveness ofpragmatic and decisive

actions taken by VietnameseGovernment leaders and the

incredible dedication of Vietnameseofficials, as well as the transparency of information beingshared by official notices, emails, and texts.

AmCham Vietnam leadership and our members arecommitted to support Vietnamese Government measures torespond to the Covid-19 pandemic. We value the health andsafety of our employees and their families. We also want tominimize the economic and social costs to Vietnam and itspeople. Vietnam is the country where we live and work, wherewe call “home” and in whose success we are invested. In orderto minimize the damage caused by Covid-19, we have somerecommendations to the Vietnamese government as follows:Flexibility to allow defending filing and payment of CorporateIncome Tax, VAT and withholding taxes. Carry-backwards of2020 losses to apply to 2019 profits for purposes of CorporateIncome Tax; Payment of Employment Insurance to workerswho are partially unemployed but not completely separatedfrom their positions, so that they may continue to stay in the F

Mr. CHU TIEN DUNG

CHAIRMAN OF THE HCM CITY BUSINESS

ASSOCIATION

There are many policies; however,they need to be most responsive to life,

most practical, most feasible andpredictive. Taking tax reduction and

extension policies as example, if policymakers believe that enterprises still can pay

taxes this year to ensure the fiscal income for the Statecoffers, these policies will be infeasible because it is impossible to knowwhen the epidemic will end and when enterprises can recover.

It is important to make policies transparent and easily executed.Although the banking sector has many policies, each bank itself needs topublicly announce criteria, subjects, beneficiaries, procedures and time-limit for settlement.

Policies can be divided into two groups: Emergency assistance policyand development stabilization policy. Currently, policies mainly focuson emergency issues while making light of stabilization anddevelopment aspects.

Production stabilization policies need to separate: input costs,output costs and production costs. What the government can interveneshould be reduced most (energy price, tax, procedure, location,transportation and customs). Preparations for the time after the end ofthe Covid-19 epidemic should be discussed soon.

As for essential services, it is advisable to stop rather than continueproduction. If being stopped, clear support policies should be in placeimmediately, while only administrative orders are used for the timebeing. At the same time, top-down policies should be used rather thanby locality. Some provinces want to quarantine people from Hanoi andHo Chi Minh City and this affects freighters. Businesses have to dealwith different scenarios in different localities.

Ms. VU KIM HANH

CHAIRWOMAN OF THE HIGH-QUALITY VIETNAMESE

PRODUCTS BUSINESS ASSOCIATION

Presently, as enterprises areconfronting business hardships anddealing with high inventories, weshould promote support for

Vietnamese manufacturers.In addition, it is necessary to make

policies transparent and explainimplementation progress. Policies should

certainly focus on essential industries, but theyalso cover some other industries as well, such as office stationery. Is thisan essential industry or not? This industry is also confronting hardshipsand serving education. We necessarily take production chains and inputsectors for essential industries into consideration.

In addition, some localities are banning mobility. This affectsbusinesses and commodity circulation.

Particularly, it is important to retain workers and keep the laborforce throughout the epidemic. Labor is the strength of Vietnam.Trying to keep the labor force through the epidemic will enable us torestore production immediately. Employee policies not onlytemporarily relieve hunger, but also provide extra training forworkers to prepare for the future.

system for unemployment insurance, healthinsurance, social insurance, etc., even whilepayments are deferred for several months;Liberalization of criteria to allow provision of loansand provision of low-interest loans; Flexibility atleast short-term to e-file documentation whichwould normally be required in hard copy, andwaiver of normally required consularauthentication or notarization; Flexibility onpolicies for extension of visas, and provisions forWork permits and Temporary residence Cards, etc;Allow professional services in office buildings tomaintain minimum staff and functions essential totheir own business.

We request, that in order to ensure essentialneeds of the population, other serviceestablishments be allowed to continue operations,including but not limited to: Warehousing, logistics,supply chain, and express delivery services,particularly for essential goods; Food and beveragedistribution and sales; petrol and oil sales; hotelsand places of accommodation; transportation anddelivery by taxi or motorbike services, with extraattention to hygiene, to facilitate e-commerce anddelivery services; banking services;telecommunication, internet and postal services;basic utilities: electrical, water, and wastemanagement services; janitorial laundry, andcleaning services and other services required tomaintain safety, sanitation, and essential operationof residences and essential businesses.

In addition, as noted earlier, we request thatall other non-retail professional services, such aslegal and consulting services, investmentcompanies, private education institutions, as wellas non-governmental organizations such asbusiness chambers, be allowed to operate largelythrough telecommuting, with minimal officestaffing as required to ensure continuity of basicoperations, including use of VAT invoicing andthe company chop.

We understand the outbreak situation continuesto evolve and additional measures may need to betaken. That said, when and if additional measuresneed to be taken, we respectfully request that, inorder to ensure essential needs of the populationand minimize the negative economic impact,essential/critical manufacturing and productionindustries be allowed to continue operations,including but not limited to manufacturing andrelated supply-chain manufacturing and productionof: Food and beverages; health and hygieneproducts; pharmaceutical products, medical andsurgical equipment, and medical devices; personalprotective equipment (PPE); disinfectants andcleaning products; critical infrastructure, includingthe electrical and electronic sector; animal food,feed, and ingredients, including veterinary drugsand chemicals used by essential industries.


VCCI

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Mr. TRUONG VAN CAM

VICE CHAIRMAN & GENERAL

SECRETARY OF THE VIETNAM

TEXTILE AND APPAREL

ASSOCIATION (VITAS)

Over 90% of garment andtextile producers are affected by

the epidemic. Redundancies willrise to 30% in April and to 50% in

May. If the plague is controlled soon,recovery is expected in June.

Currently, garment and textile companies are under heavypressure as they are trying to prevent the contagion on the onehand (just one worker being infected means the whole factory willhave to be closed, while the number of workers is great) andmaintain production (reducing input and output markets), searchfor markets and produce face masks on the other.

It is necessary to quickly and drastically implement supportpolicies. If policies need to be appraised and inspected,companies will go bankrupt and workers will lose their jobsbefore they get support.

Therefore, in the near future, paying health insurance andsocial insurance premiums should be halted before consideringa reduction or exemption of these items for enterprises. Inputcosts should be slashed for them, including BOT fees,electricity and water prices (reducing for operationalbusinesses right away).

In the long run, it is essential to develop supporting industries,plan textile industrial parks, revise down VAT on domestic fabricproduction (domestic production is being now imposed 10%while import duty is 0%), reduce unemployment insurancepremiums for both employers and employees from 1% to 0.5%,exempt trade union dues in 2020, and then reduce to 1% from thefollowing years.

Mr. PHAM DINH DOAN

CHAIRMAN OF PHU THAI GROUP

The entrepreneur is one offrontline forces in the fightagainst the epidemic andeconomic recession.Therefore, the business

community needs a“stimulant” to enhance

resistance and a specific “cure” foreach industry. Stimulants are easily

applied.Debt payment should be extended for companies by three

months. Corporate income tax payment deadline should beextended to the third quarter of 2020. Workers need to acceptpartial salary payment and get the rest in the future.

Input costs should be reduced, particularly traffic tolls. It istime to call all to reduce space rents for business operations.

More companies should be allowed to be operationalduring the social distancing period. Companies shouldmaintain operations on the one hand and prevent theepidemic on the other.n

Vietnam, U.S. Sign Agreement toStrengthen Bilateral Partnership

The United States Agency for InternationalDevelopment (USAID) and Vietnam’s Ministry ofPlanning and Investment (MPI) virtually signed aUS$42 million agreement on April 15 to advanceVietnam’s economic competitiveness, throughstrengthening private sector competitiveness,innovation and startup ecosystems, and humancapital.

USAID technical assistance activities under thisagreement will enhance the capacity of Vietnamesesmall and growing businesses, including those led byvulnerable populations, by facilitating access tocompetitiveness-enhancing technology, businessmanagement skills, and capital. The agreement willalso foster greater entrepreneurship; enable deeperlinkages of Vietnamese startups to corporations,investment capital, and other supporting organizationsin the international innovation and startup ecosystems;and strengthen high-quality human capital needed fora robust knowledge-based economy.

Speaking about the agreement, U.S. Ambassadorto Vietnam Daniel J. Kritenbrink said, “Thisagreement reflects the United States’ continuedcommitment to support Vietnam’s efforts to becomea more open, innovative, and inclusive economy.Through close collaboration with the Government ofVietnam, we can ensure that USAID’s developmentassistance will meet our two countries’ mutual visionfor a prosperous and independent Vietnam.”

Ha Vu

ADB Triples Covid-19 ResponsePackage

The Asian Development Bank (ADB) recentlytripled the size of its response to the novelcoronavirus disease (Covid-19) pandemic to US$20billion and approved measures to streamline itsoperations for quicker and more flexible delivery ofassistance.

The package expands ADB’s initial response ofUS$6.5 billion announced on 18 March, by addingUS$13.5 billion in resources to help ADB’s developingmember countries counter the severe macroeconomicand health impacts caused by Covid-19. The US$20billion package includes about US$2.5 billion inconcessional and grant resources.

The new package includes the establishment of aCovid-19 Pandemic Response Option under ADB’sCountercyclical Support Facility. Up to US$13 billionwill be provided through this new option to helpgovernments of developing member countriesimplement effective countercyclical expenditureprograms to mitigate impacts of the Covid-19pandemic. Some US$2 billion from the US$20 billionpackage will be made available for the private sector.

L.A

This information was stated ina brief report on “Impact ofthe Covid-19 pandemic onlabor and employment inenterprises in Vietnam”

conducted by the Vietnam Chamber ofCommerce and Industry (VCCI) inMarch 2020. Recommendations weregathered from online meetings andreports from over 700 businesses andbusiness associations in 46 provinces andcities across the country.

Private sector suffers mostAccording to VCCI's report, 52.47%

of businesses surveyed said that theepidemic caused them to fall short ofcapital. The private sector was worst hit(58.61%). The plague caused inputshortages for 45.14% of enterprises.Difficult production reduces labordemand and narrows the labor force ofnearly 43.95% of respondents, especially

private enterprises (48.56%).Only 3.75% of businesses said that their estimated

revenue in 2020 would increase over 2019, and 4.43%thought that their revenue would be equivalent to that in2019. Meanwhile, nearly 92% thought that their 2020revenue would be less than in 2019. Particularly, 21.47%expected a reduction of over 50%; 27.77%, a decline by 30-50%; and 20.44%, a revenue drop by 20-30%. This reality isserious for all business sectors including SOEs, privateenterprises and FDI enterprises, with the worst seen fromthe private sector (30.38% anticipated a revenue decreaseby 30-50% and over 22% forecast a drop by over 50%).

According to the report, given the current complicatedevolution of the pandemic, with heavy dependence onforeign input and output markets and shrinking domesticdemand, keeping production is very difficult forenterprises. Up to 29.81% of businesses can only survive 1-3 months; 29.47% can operate 3-6 months; 20.78% canmaintain operations for 6-12 month; and only nearly 20%can exist more than one year. Business difficulty willcertainly affect employment, income and livelihoods ofworkers in addition to numerous economic consequences.The hardest difficulty falls on private enterprises and FDIenterprises as 33.33% and 30.38% of enterprises canmaintain operations for only 1-3 months, respectively.


Businesses Battered by Market Shrinkage

VCCI

The Covid-19 pandemic has actuallycaused very serious impacts on business

operations, with the hardest blowcoming from market shrinkage. Up to

83.30% of enterprises said that theepidemic had narrowed the market.

The private sector was most affected bythe pandemic (85.17%), followed by

foreign-invested enterprises (82.50%)and State-owned enterprises (69.39%).

The loss of markets affected theircapital and cash flows.

Anh MAi- Lien Bui

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The survey includes all classes of enterprises, by sector, by employment size and byindustry: Manufacturing and processing industries (including garment, footwear and

electronics), wholesaling, retailing, repairing, warehousing, accommodation and cateringservices, support services, education and training, agriculture, forestry and fisheries,construction, finance and health, among others. Among respondents, State-owned enterprises(SOEs) accounted for more than 8%, private businesses 71%, and foreign direct investment(FDI) enterprises more than 20%.

By industry, manufacturing and processing,wholesaling and retailing, and accommodation andcatering service companies suffered from the hardestblows. About 63% of manufacturing and processingenterprises can maintain operations 1-6 months. Therespective rates of wholesale and retail companies andaccommodation and catering service companies are 60%and 75%.

Labor fluctuationsGiven current business hardships, it is easy to

anticipate corporate employment. More than 75% ofenterprises announced downsizing plans. They typicallyreduced their workforce by 10-50%. Nearly 10% cut staffby over 50%. The highest rate of layoffs was seen from theprivate sector. 23.50% did not plan to increase the laborforce while only 0.51% planned to recruit more workers.

Staff cuts were most serious in education and expertisecompanies (83%), accommodation and catering service firms(81%), and processing companies (78%). However, with tensof millions of people working in manufacturing andprocessing industries, especially in garment-textile, footwear,electronics, food processing, and wood processing, joblesspeople may soar to millions in the near future.

56.22% of companies said that the labor cost perworker in 2020 would be higher than in 2019 and this willbe a tougher difficulty for them. 26.75% said the cost peremployee would rise by 10%; 18.91% by 10-20% andnearly 11% by over 20%. The reality is not much differentamong types of enterprises (SOEs, private enterprises andFDI enterprises). About 26.41% said this cost would notchange and 17.38% said that it would be less than in 2019.

The highest rate of companies reporting the increasein average cost per employee belongs to professional andscientific firms, including education and training (nearly68%); manufacturing and processing industry (nearly60%); and agriculture, forestry and fishery (55.3%).

Recommendations by businessesFacing this reality, enterprises have been very active

and creative to introduce appropriate and timelysolutions on reasonable employment: nearly 62% haveapplied flexible working methods; 47% do not cut thestaff but reduce working hours; 41.23% allow work fromhome; and nearly 41% use this low time to train theirstaff. Only 19.42% fired their employees and 19.93% hadto cut salaries rather than sack their employees.

With the current epidemic fallout, businesses areconfronting numerous difficulties in maintaining theiroperations and workers are exposed to more risks. In thiscontext, businesses have asked authorities to help them toget through this hard time and overcome the crisis.Specifically, up to 69.85% of businesses proposed thegovernment deliver financial/credit/debt freezing/debtrescheduling support; 83.82% asked for tax support (taxreduction and deferred payment); 58.77% proposed theState to have worker protection programs; and 38.67%asked the government to support epidemic prevention foremployees.

In addition, 72.57% asked for a halt in social insurancepayment from March to the end of December 2020;55.71% proposed a halt in unemployment insurancepayment from March to the end of December 2020;21.29% asked the government for support in workertraining; 13.97% asked the government for salary supportfor employees.

Notably, 76.49% proposed a postponement of uniondues payment until the end of December 2020 andreduction of union fee rates to 1% from March to theend of December 2020 and about 82% of respondentsrecommended not to increase the minimum wage by2021.n

The increasingly complicated outbreakof Covid-19 has greatly affected thetravel of investors as well as newinvestment decisions and the expansionof the existing foreign investmentprojects in Vietnam, making FDIattraction in the first three months of2020 decrease both in quantity and totalregistered investment capital.

DuC Binh

As of March 20, 2020, the total newlyregistered, adjusted and contributed capitalto purchase shares of foreign investors inVietnam reached US$8.55 billion, equaling79.1% of the same period in 2019. Disbursed

capital of FDI projects is estimated at US$3.85 billion,equaling 93.4% compared to the same period in 2019.Despite a decrease compared to the same period of 2019, interms of value, the registered capital in the first threemonths of 2020 still increased against the same period of2016-2018 period (up 47% compared to 2018, up 11%compared to 2017 and up 97% compared to 2016).

Accordingly, accumulated until March 20,2020, Vietnam has 31,665 valid foreigninvestment projects with a total registeredcapital of US$370 billion. The disbursedcapital of FDI projects was estimated atUS$215.63 billion, equaling 58.3% of thetotal valid registered investment capital.

Exports of FDI enterprises (includingcrude oil) in Quarter I/2020 reachedUS$40.4 billion, equaling 97.1% over thesame period, accounting for 70.8% of exportturnover. Exports excluding crude oil wasnearly US$39.9 billion, equaling 97.1% ascompared to the same period in 2019, a slightincrease (0.2%) compared to the same period in 2018,accounting for 67.5% of nationwide export turnover in thefirst three months of 2020. Due to the impact of the Covid-

19 pandemic, the export turnover of the FDI sectordecreased from the same period after many years ofcontinuous increase.

Import of the FDI sector also decreased, reachingUS$33.18 billion, equaling 99.2% of the same period andaccounting for 59% of import turnover of the whole country.

In the first three months of 2020, although import-export turnover decreased against the same period lastyear, the FDI sector still had a trade surplus of US$7.2billion including crude oil and US$6.7 billion excludingcrude oil. Meanwhile, the domestic economic sector had atrade deficit of US$4.4 billion.

Electricity sector attracts a large amount of capitalForeign investors have invested in 18 sectors, of which

electricity production and distribution takes the lead with atotal capital of over US$4 billion, accounting for 47.5% ofthe total registered investment capital. Manufacturing andprocessing industry ranks second with a total investmentcapital of US$2.72 billion, accounting for 31.9% of totalregistered investment capital. However, considering thenumber of projects, the processing and manufacturingindustry still accounts for the majority (accounting for29.7%). Next are the wholesale and retail business, realestate business with total registered capital of US$682million and US$264 million, respectively.

Singapore leads with US$4.54billion of investment

There are 87 countries andterritories investing in

Vietnam. Singapore leads theway with a total investment ofUS$4.54 billion, accountingfor 53.1% of total investmentcapital into Vietnam; Japanranks second with totalinvestment capital of

US$846.7 million, accountingfor 9.9% of total investment

capital. China ranks third with atotal registered investment capital

of US$815.6 million (including anewly licensed project of US$300 million

and a capital-adjusted project of US$138 million),accounting for 9.3% of total investment. Next come South


INVESTMENT IN Q1

Drop in Both Quantity andInvestment Capital

BUSINESS - INVESTMENT

Althoughimport-export

turnover decreasedagainst the same period lastyear, the FDI sector still had atrade surplus of US$7.2billion including crude oiland a surplus of US$6.7

billion excludingcrude oil.

Korea, Hong Kong (China), and Taiwan (China).Considering the number of projects, South Korea ranks first

(210 projects); China ranks second (113 projects); Japan ranksthird (93 projects); Singapore ranks fourth (64 projects).

Bac Lieu takes the lead with a US$4 billionproject

Foreign investors have invested in 55 provinces and citiesacross the country. Bac Lieu leads with a major project withinvestment of US$4 billion, accounting for 46.8% of totalregistered investment capital. Ho Chi Minh City ranks secondwith a total registered capital of over US$1 billion, accountingfor 12.3% of total investment capital (of which investment bycapital contribution, share purchase accounts for a largeproportion of 78.8% of the total registered investment capital ofthe city and 53.2% of the total capital contribution, sharepurchase and accounting for 42.3% of the total value ofcontributed capital of the whole country). Tay Ninh ranks thirdwith US$506.8 million, accounting for 6% of total investmentcapital. Next come Hanoi, Binh Duong, and Ba Ria - Vung Tau.

Considering the number of projects, Ho Chi Minh City leadsthe way with 290 projects; Hanoi ranks second with 169projects; Bac Ninh ranks third with 53 projects).n

www.vccinews.com 13

SOME MAJOR PROJECTS

IN THE FIRST THREE MONTHS OF 2020

u Bac Lieu LNG-fired thermal power project, LNGThermal Power Center (Singapore) with a totalregistered investment capital of US$4 billion.

u Radian Jinyu Tire Manufacturing Plant Project(Vietnam), with a total investment of US$300 millioninvested by Chinese investors in Tay Ninh province.

u Radian tire production project (China) in TayNinh increased investment capital by US$138 million.

u Sews - Components Vietnam factory project(Japan) with the goal of producing electrical andelectronic components for automobiles and motorcycles;produce plastic products in Hung Yen, increasedinvestment capital by US$75.2 million.

u The project of manufacturing electroniccomponents, peripheral devices and optical devices(Taiwan) in Hai Phong increased investment capital byUS$68 million.

The People’s Committee of Bac Lieu province grants an investment policy decision to Singapore’s Delta Offshore Energy Pte.Ltd

to build a US$4 billion liqueied natural gas-ired power plant

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www.vccinews.com 15

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www.vccinews.com 17

Anticipating bad developmentsAccording to a report by the Ministry of Planning

and Investment, Vietnam's economic growth reached3.82% in the first quarter of 2020 – the lowest in 10years; service sectors were hardest-hit by the Covid-19epidemic, growing just 3.27%, lowest in the sameperiod from 2011 to 2020.

In this context, more companies accepted to leavethe market, clearly showing the trend that they preferwaiting for better prospects and “hibernating”. In thefirst quarter, nearly 34,900 businesses withdrew fromthe market, while 12,200 halted operations and waitedfor dissolution procedures. About 10% shrank theiroutput. Some industries and sectors such as tourism,accommodation and restaurants reported reductionsby 70-80%.


Joining Forces forEconomic Recovery

BUSINESS

The Prime Minister of Vietnam has putforth four principal contents to mitigate theimpact of the economic downturn amid the

Covid-19 epidemic outbreak: Removingbusiness difficulties, promoting public

investment, supporting people, andensuring social security.

huong Ly

The Ministry of Planning and Investment forecast that ifthe epidemic continues, over 250,000 workers will be fired and1.5-2 million workers will be laid off in the second quarter. Incase of a stronger outbreak, 400,000 workers will be sacked andabout 3 million workers will face layoffs in the quarter.

The chance of recession is forecast to be even worse thanthe financial crisis in 2008. Resolved to revive the economy,Vietnam has launched support packages, focusing on fourprincipal contents: Removing business difficulties,promoting public investment, supporting people andensuring social security.

Four major support packagesTo support businesses to cope with emerging difficulties,

the Government has introduced two solutions on fiscal andcredit policies. Firstly, the VND300 trillion (nearly US$13billion) monetary package helps capital-short companies toextend debt payment terms to continue operations. Secondly,Decree 41 extends the payment deadline for value added tax,corporate income, personal income tax and land rent withthe value of VND180 trillion (roughly US$8 billion).

Reforming administrative procedures is a particularlyimportant measure to create an enabling businessenvironment, complete the legal framework, and reducecosts for people and businesses. The Ministry of Finance isalso planning a package to reduce fees and charges worthVND40 trillion. The ministry will allocate and guaranteeresources for epidemic prevention and control.

Stressing the importance in private investment and FDIattraction, the Prime Minister has instructed all levels andsectors to pay attention to developing major centers anddriving areas and plan FDI attraction to catch up withinvestment flows shifted towards Southeast Asian countries,including Vietnam. In particular, the nearly VND700 trillion(US$30 billion) public investment package will also bequickly executed and strictly controlled so as not to delay thedisbursement and transfer investment fund to other projects.

With respect to social security, the Government has

launched a VND62 trillion (US$2.7billion) package and requested theMinistry of Public Security, localagencies and big cities to work outspecific plans and solutions to ensureorder and security, fight againstburglary and commodity speculation,manage migration, and suppresshostile forces.

Business support launchedHow to enforce government

support policies effectively andequitably is really important.Ministries and sectors need to havespecific guidelines for enterprises toaccess support packages.

A representative from theVietnam National Textile andGarment Group (Vinatex) also saidthat the degree of tax extension andreduction in support packages is not

significant because textile exports are not imposed VAT. Thedelayed payment of land rents will not produce considerableimpacts because its share is low to overall costs. For labor-intensive companies such as textile and footwear producers,the most important support policy is postponing socialinsurance, union dues and unemployment insurancebecause these costs account for 34% of wage funds, andapproximately 20% of corporate expenses.

Recently, the Vietnam Beer, Wine and BeverageAssociation proposed this because businesses in this sectorare not entitled to tax and land rent delayed payment.

Dr. Vu Tien Loc, President of the Vietnam Chamber ofCommerce and Industry (VCCI), raised concerns thatpolicies, particularly Directive 11 and Directive 16 of thePrime Minister, are slow and inconsistent among localities.

He analyzed that bailout scenarios should be taken intoconsideration in the current context of the epidemic.Accordingly, the two most important tools of theGovernment are fiscal and credit policies and othermeasures play a supporting role. But if the epidemic lastslonger, corporate solvency is threatened and the risk ofclosure and dissolution is heightened, the bailout scenariowill be launched. The core of business rescue is looseningfiscal and monetary policies while increasing publicinvestment and spending. The government should evenconsider purchasing debts of large-scale corporations toavoid chain collapse.

Dr. Loc said that an important direction both tostimulate demand and lay a foundation for the nextdevelopment stage is to increase public investment, andfocus on future infrastructure such as informationtechnology, telecommunications and digital transformation.

The support is also necessarily selective, he said. Nomatter how the epidemic evolves, some companies will gobankrupt. This is a natural but harsh selection. Therefore,policies should support only prospective businessestemporarily hurt by the epidemic, not rescueuncompetitive ones.n

www.vccinews.com 19

According to BVSC, comparing macroeconomicindicators in 2008 and 2020, Vietnam's economy isnow more stable and firmer than in 2008. The stockmarket is still stable and more attractive than bankdeposit and bond channels. Deposit interest rates

and bond yields are currently not attractive, not significantlyadvantageous to securities investment channels. This is a bigdifference over 2008, which helps cash flows stay in the stockmarket.

The difference between 2007, 2008 and 2020 can be seen invarious macro indicators, economic and market operations.Credit growth soared over 50% in 2007 but it slumped to 12.63%as a result of monetary tightening policy to curb inflation in thefirst half of 2008. Inflation climbed 12.63% in 2007. In 2008,inflation growth exceeded 20% in some months. In 2008, theregulatory rates, e.g. refinancing rate, jumped to 15% per annum.The basic interest rate (used as a reference for commercial lending


Vietnam Getting Firmer,More Resilient

BUSINESS

The recent report released by Bao VietSecurities Company (BVSC) said thatdespite the numerous difficulties and

challenges facing the economy today dueto the impact of the Covid-19 pandemic,

compared to the previous majoreconomic downturn in 2008, everything is

now much better. 2020 will also be fardifferent from 2008.

DuC Binh

rates) was 14%. The actual deposit rate was over20% higher than 2-year and 5-year bond yields.

In recent years, credit growth was alwayscontrolled at around 14%, other macro indicatorssuch as inflation, exchange rates and interest ratesare under control and at low levels. Liquidity in thebanking system is also ample. In addition,compared with 2008, the Government's supportsolutions in 2020, for example interest reductionand debt rescheduling packages for businesses, taxbreaks, land rent cuts, social security, petroleumand power price reduction, are also beingimplemented in a timely and appropriate manner.Even, if the epidemic is still complicated, we believethat the Government still has room, more or less, tolaunch more policies to support the economywhen necessary.

Based upon a comparison of economic andstock indicators in 2008 to those in 2020, the stockmarket can be expected to remain much morestable this year. Strong slumps are caused byepidemic news and margin calls just short-termcases.

The stability of the banking system and macroindices, the health of businesses, and the appeal ofstock valuations are grounded for the belief that thestock market will be stable and no price shocks willhappen again.

Short-term market movements are still affectedby the epidemic control scenarios and time.However, it should be noted that although themacro landscape in 2020 is basically more stableand positive than in 2008, the debt size is muchlarger, reflected by the total outstanding creditloans to GDP reaching 130% or the size of thecorporate bond market has continuously expandedin the last three years. Therefore, if the epidemiclasts long, this could be one of the biggest risks forthe economy as well as the stock market in 2020.

One of the biggest risks faced by the economyis the increasing bad debt. According to apreliminary assessment by the State Bank of

Vietnam (SBV), the outstanding loans expected tobe affected are about VND2,000 trillion (US$85.3billion), accounting for 23% of the system's totaloutstanding loans, potentially posing risks tobanking activity.

In case the epidemic is controlled in thesecond quarter, this rate will be close to 4% in thesecond quarter and 3.7% or even higher in 2020,resulting in the impact on the progress of carryingout restructuring plans aimed to deal with baddebts at credit institutions and build up resilienceof weak credit institutions.

According to BVSC, from 2012 to 2019,Vietnam's GDP per capita rose 2.5 times fromUS$1,150 to US$2,760, but the ratio of personalloans to credit outstanding balance increased quitefast, by 6.2 times. The personal loan outstanding at20 banks surveyed is quite large, accounting forover 40% of credit outstanding.

It can be seen that the rapid increase inpersonal loans has helped improve bankingperformance but it will pose more risks if theepidemic lasts long. However, at the current scale,this risk may not be high, partly because the shareof personal loans is low and savings, accumulatedby saving habits, remain ample in households.

Besides, there are risks from corporate bonds.In 2017, the corporate bond value was VND115trillion, VND224 trillion in 2018 and VND296.71trillion in 2019. Bank bonds still account for thelargest share, accounting for 41% in 2019 whilereal estate, consumer services, industry and othersectors accounted for the remaining 59%.

In the year to early April, the value ofcorporate bonds issued was VND37.2 trillion, ofwhich real estate and construction firmsaccounted for over 35% of the total issued value.Given a strong growth of corporate bond value inthe last three years, the risk of corporate bonds willalso appear in the current context. If the epidemiclasts too long, corporate bond yields will increase,thus placing more pressure on issuers.n

www.vccinews.com 21

The differencebetween 2007-2008and 2020 is reflectedin many macro

indicators, economicand market

performance. Creditgrowth soared over50% in 2007 but itslumped in the firsthalf of 2008 as a

result of government-backed monetarytightening policy tocurb inflation. Inrecent years, creditgrowth has beenalways controlled ataround 14%, othermacro indicatorssuch as inflation,exchange rates andinterest rates are

under control and atlow levels.

50% Reduction in Some SecuritiesTrading Fees

In response to the Prime Minister’s Directive 11/CT-TTg,the State Securities Commission of Vietnam (SSC) hassubmitted to the Ministry of Finance a proposal on fee andcharge exemption and reduction in securities trading tosupport entities affected by the Covid-19 epidemic.

Based on current laws on fees and charges, the Ministryof Finance has elaborated and consulted ministries,ministerial-level agencies, the Vietnam Chamber ofCommerce and Industry on a draft circular on exemptionand reduction of securities fees and charges.

Accordingly, organizations and individuals will enjoy a50% reduction of 19 fees and charges: Issuing operationcertificate to securities companies; issuing operation

certificates for securities investment fund managementcompanies and securities investment companies; issuingoperation certificates for open-end funds, ETFs, closedfunds, real estate investment funds and public funds; issuingoperation certificates for member funds; and issuingoperation certificates for securities companies' branches,foreign securities investment fund management companiesin Vietnam. The Ministry of Finance will also slash 50% ofmanagement fees for unlisted public companies. The fee foropen fund management is expected to be VND5 million ayear.

Other contents related to collection, payment,management, use, collection receipt and publicization ofcharge and fee collection regimes are not mentioned in thedraft circular but still compliant with Circular 272.

Q.C

Covid-19 crisis Most businesses feel the negative effects of the Covid-19

pandemic on their operations. Cancelled important events andpostponed travelling have seriously impacted all services,especially logistics, commerce, restaurant and hotel. Shops areclosed, neighborhoods are unoccupied, schools and daycarecenters are closed, workers are forced to work from home toprevent the epidemic spreading, supply chains are disrupted,the market is inactive and hospitals are always overloaded. Allthis weighs on the economy and businesses.

Accordingly, 14% of German companies estimate theirbusiness performance to be weakened in 2020, while 59%expect that their operations and financial position will bestable this year, but only as good as in 2019. Only 27% areoptimistic about their performances in 2020 Vietnam (thisindex reached 77% in 2019). Compared with other Germanfirms and investors in ASEAN, the German businesscommunity in Vietnam has an optimistic perspective andexpectations for the upcoming year.

Most businesses significantly lowered their financial goalsin 2020. According to the survey, 82% revised down revenuetargets due to the Covid-19 outbreak. 9% admitted theirrevenue will decline more than 50%, and 63% anticipated adecline by 10-50%.

In addition, most German companies in Vietnam havealready experienced the epidemic’s effect on their businessactivities, with different levels and aspects. 86% said entry haltsand travel restrictions are impacting their business. 59%reported coronavirus disrupted their supply chains. 55% offirms witnessed contract cancellations and 50% delayed newinvestment projects to an indefinite term as the plaguespreads.

The GIC/AHK survey also noted that concerns aboutmarket demand and economic policies are increasing in theGerman business community in Vietnam.

Accordingly, 68% said the Covid-19 epidemic has resultedin a substantial decline in market demand, while 59%expressed concerns that economic policies will be a challengeto their business activities in Vietnam. Other matters such as

finance, infrastructure and shortage of high-quality labor willaffect German firms’ operations in Vietnam in the mediumterm.

72% of businesses continue their investmentplan

According to the German Industry and CommerceVietnam, 2019 was considered a successful year for Germany -Vietnam trade and investment relations. Vietnam has becomethe second most important partner of Germany in ASEAN,and also drawn much attention of German investors, who areinvesting in more than 350 FDI projects in Vietnam.

In 2020, although worried about negative impacts of thepandemic on their business performance in Vietnam, they stillexpect a medium-term economic recovery of Vietnam. Indicesin Vietnam are substantially higher than their averages acrossSoutheast Asia.

According to the survey, 43% of German companies arealready feeling the effects that the coronavirus pandemic willhave on the Vietnamese economy in the middle term, despitegood prospects for the Vietnamese economy. One out of fiverespondents thought Vietnam’s economy can even be betterdespite this epidemic in the medium term. The Government ofVietnam has launched aid packages to help businesses getthrough the crisis caused by this pandemic. As the Vietnamesegovernment has taken decisive, forceful and prompt actionagainst the impact of the coronavirus crisis, businesses believethat the economy will therefore recover quickly and keepgrowing.

As for future investment plans, 72% of Germancompanies in Vietnam intended to keep investing inVietnam and 27% planned an increase in employment. Thisshowed Vietnam’s efforts to improve the investmentenvironment, as well as positive effects of free tradeagreements (FTAs), especially the EU - Vietnam Free TradeAgreement (EVFTA). This pact is expected to leverageVietnam's economic recovery, bring it to the current growthpath and attract more quality investors from Europe andGermany in the medium and long term.n


72% of German Businesses Set toContinue Investment Plans in Vietnam

BUSINESS

Despite expressing concerns about the negative impact of the Covid-19 epidemic onbusiness performance, 72% of German businesses expect to keep investing in

Vietnam in the near future, according to the AHK World Business Outlook (AHKWBO), a survey to assess global German business confidence, announced recently by

the German Industry and Commerce Vietnam (GIC/AHK Vietnam).

Thu hA

In a recent survey conducted by CELCorporation in late March, 83% ofcompanies in the physical value chain inVietnam (retailers, shippers, traders andproducers) have been suffering fromsupply issues over the past two months.47% of them faced difficulties withChinese supplies, largely involved in rawmaterials.

Linh hA

Shrinking market demandAccording to a survey by CEL, a supply chain

management consultant in developed economic markets, thepandemic is affecting every country no matter how developedit is. Flights were gradually stopped. Import and export flowswere delayed as human resources were not enough to runoperations on the floor: stock pickers, truck drivers andmachine operators.

In Vietnam, demand clearly surged in some categories,such as packaged food (up 26%), dairy (up 10%) and personalcare (29%). Shopping carts got significantly bigger whenpeople started reducing the frequency of shopping. For thetime being, orders are at their lowest levels, with sales ofbeverages, fashion goods, electronics, vehicles, agriculturalproducts, furniture, footwear, and many other productscoming to a halt both locally and globally.

Besides, according to CEL, in Vietnam and elsewhere,

manufacturers and retailers’ current sales are too low toabsorb fixed costs, leaving thousands of businesses withnegative margins and thin reserves of cash. Export-basedcompanies are seeing orders cancelled every day, particularlyfrom the European Union (EU) and the United States.

Consequently, the global transport sector is also beingaffected and freight forwarders in Vietnam are seeing theirvolume drop by 25-70%. Some small and medium-sizedenterprises (SMEs) already declared bankruptcy, and forothers, the impact on human resources - the key adjustmentvariable - is being felt strongly and unemployment isthreatening multiple industries. In addition, pressures onrents are getting heavier because retailers are losing theirmoney and real estate and construction industries are beingstressed. Government measures are expected to relieve theseimmediate pressures because the end of this crisis is stillunclear.

Changing the channelThe survey by CEL also found that companies operating

in retail, distribution and logistics services (excluding e-commerce and last mile delivery) reported revenue short of25% in the first quarter and did not expect to recover this lossthis year.

But as social distancing has become more urgent. Urbanconsumers seek convenient and safe shopping alternatives fortheir daily family needs. E-commerce and home deliveryservices have become central to this evolution. People getwhat they need, businesses and small businesses maintainoperations to a certain extent when their stores are closed,closing on-site service but continuing takeaways and last miledelivery.

www.vccinews.com 23

How Has Vietnamese Supply ChainResponded to Covid-19 Pandemic?

(continued on P.26)


BUSINESS

The Ministry of Industry and Trade said that ithas just sent an official letter to the localdepartments of industry and trade, and VietnamElectricity (EVN), on guiding theimplementation of reducing electricity price for

customers to ease the pain caused by the Covid-19 epidemic.Specifically, a 10% discount on retail electricity price will

be applied in all frames, including peak hours, normal hoursand off-peak hours. The 10% reduction will be applied in theretail price of household electricity from grades 1 to 4 underDecision 648/QD-BCT.

As for tourist accommodation establishments (as definedin the 2017 Tourism Law and related documents), theelectricity price will be reduced from the retail price forbusiness to the one for manufacturing industry afterdiscount.

For wholesale electricity prices in rural areas; collectives,residential clusters and the wholesale price for trade-service-daily complexes, under the guidance of the Ministry ofIndustry and Trade, there will be 10% discount in wholesaleprices for grades 1 to 4 of daily-life electricity; and 10% offwholesale electricity price for other purposes.

With the wholesale electricity price for industrial parks,the wholesale price for the markets, the reduction is 10% ofthe wholesale electricity prices compared to the wholesaleprice rate.

Regarding the reduction of electricity price (pre-taxvalue) directly to facilities that prevent and combat Covid-19epidemic using EVN units’ services, the official letter of theMinistry of Industry and Trade states that there will be 100%reduction of electricity bill for facilities (other than hotels)used to isolate and examine patients infected or suspected ofbeing infected with Covid-19.

In addition, there will be a 20% reduction in electricitycharges for health facilities used to examine, test and treatpatients suspected or confirmed of Covid-19 infection; 20%discount on hotels used to isolate patients suspected of orinfected with Covid-19.

The list of facilities which are serving the prevention andcontrol of Covid-19 epidemic, entitled for electricitydiscount will be issued monthly by the National SteeringCommittee for Covid-19 Prevention and Control, Ministryof Defense, Ministry of Public Security, People's Committeesof provinces and cities under the Central Government to theelectricity units for implementation.

According to the Ministry of Industry and Trade, thetotal amount of discount is three months. In particular, forcustomers using electricity for daily life, the amount ofelectricity used by customers with cycles starting in April,May and June 2020 determined according to the period ofrecording monthly index of electricity units, the electricityprice will be reduced respectively in electricity invoiceperiods in May, June and July 2020.

For customers using electricity for production, businessor administrative activities, it will be applied from the latestinvoice period from the date of issuance of this OfficialDispatch (April 16th).

As for tourist accommodation establishments, theMinistry of Industry and Trade requests EVN and localdepartments of industry and trade to issue detailedguidelines to ensure the implementation of electricity priceand electricity charge reductions for the right subjects andtime, in accordance with the actual situation of socialisolation in each area.

The Ministry of Industry and Trade notes that, localdepartments of industry and trade, EVN needs to direct andguide the relevant units in detail to implement the reductionof electricity prices and electricity charges under the guidanceof the Ministry of Industry and Trade in this Official Letter.

In the course of implementation, if any problem arises,EVN and local departments of industry and trade need topromptly report it to the Ministry of Industry and Trade, theMinistry of Finance and the Committee for Management ofState Capital at Enterprises for settlement according to itscompetence or report to the Prime Minister forconsideration and settlement.n

Guidance on CuttingElectricity Price

The Ministry of Industry and Trade of Vietnam hasinstructed an electricity price cut to help easedifficulties in the context of the Covid-19 outbreak.Accordingly, the amount of electricity used by

customers in April, May and June 2020 will berespectively reduced in the invoice periods of these

three months.

Minh XuAn

www.vccinews.com 25

Vietnam’s electronic customs dataprocessing system operatedautomatically and stopped receivingcustoms declarations when theregistered volume reached April’sexport quota of 400,000 tons.

Le hien

On April 13, the General Department ofVietnam Customs officially releasedinformation on the export quota. The agencyfollowed the Prime Minister’s direction onrice export amid epidemic, drought and

saltwater intrusion. On April 10, the Minister of Industryand Trade issued Decision 1106/QD-BCT to announce riceexport quota for April 2020. The decision, effective from00:00 on April 11, 2020, stipulates quota managementprinciples.

Specifically, traders who register customs declarationssooner will have export quota sooner. The declared quantityon registered declaration forms will be subtracted from the

permitted export amount in April.In case customs declaration is no longer valid for

carrying out procedures or the actual export quantity is lessthan the declared amount on the customs declaration form,the balance will be added back to the April quota.

Customs declaration forms are valid for carrying outcustoms procedures until the total registered quantity ofexport reaches 400,000 tons (excess quantity will be not valid).

According to the General Department of VietnamCustoms, the VNACCS/VCIS automated customs clearancesystem, funded by the Government of Japan, is operatedautomatically. To carry out the decision of the Ministry ofIndustry and Trade, the General Department of Customsneeds time to set up criteria on the system.

From the midnight of April 11, 2020, the modifiedsystem was operated automatically, from receivingapplication forms to subtracting the quota amount, on theprinciple of first come, first served, without manualintervention.

The e-customs data processing system automaticallystops receiving customs applications when the registeredquantity reaches the export quota in April (400,000 tons).

According to data from the General Department ofCustoms, 40 companies registered to export 399,999.73 tonsof rice from 00:00 to 19:34 on April 12.n

April Rice Export Quota FullyRegistered in Two Days

CUSTOMS & BUSINESSES IN PARTNERSHIP FOR DEVELOPMENT

For a group of individuals and businesses withgood financial abilities and variousexperiences, the Covid-19 pandemic is a greatopportunity to conduct mergers andacquisitions (M&A) at a bargain price.

huong Ly

Retail and service industries will recover fastestAlthough the Covid-19 pandemic is spreading rapidly in many

countries and causing severe damage to the global economy,Vietnam continues to effectively control the epidemic, whileensuring that economic activities are not interrupted, but with anarrower scale than before. The short-term economic growth is stillsignificantly affected. In the first quarter of 2020, Vietnam's GDPincreased by 3.82%, the lowest growth rate in the past 10 years.More than 18,600 enterprises have suspended business activities, anincrease of 26% against the first quarter of last year.

Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, saidthat the retail, tourism and hospitality service sectors are expectedto be hardest hit, while the manufacturing sector is also decliningdue to supply chain disruptions and lower orders because of therapid decline in global consumption. The World TourismOrganization has revised down the prospect of international touristarrivals in 2020 from 1% to 3%. This is the first time the number ofinternational visitors is expected to decrease after ten consecutiveyears of growth. Vietnam has also witnessed a significant decline ininternational arrivals, of which China and South Korea were thetwo most important markets, accounting for 56% of internationalarrivals to Vietnam in 2019.

For the retail sector, the increase in social isolation measureshas reduced consumption. Most business tenants said theirrevenues plummeted and expected rent reductions to share theburden. As for the the landlords, they are monitoring the progressand impact of the Covid-19 epidemic and considering measures toreduce rent by up to 50%.

Although the impact of the Covid-19 pandemic is expected tolast until the end of 2020, the tourism and hospitality serviceindustry may be the first to recover strongly and quickly. Like aspring becomes more powerful when pressed harder, with theadvantage of the majority of visitors being domestic ones(accounting for 82.5% of total visitors in 2019) and major foreignmarkets such as China and South Korea, these groups of visitors areexpected to return shortly after the pandemic is over. Covid-19 isalso expected to accelerate the diversification of supply chains forproduction, opening up more opportunities for industrialproperties in Vietnam.


Opportunities forPost Covid-19M&A Deals

BUSINESS

(from P.23)

Figures have not been officially publishedin Vietnam, but Lazada reported a 300%growth in orders in Singapore and Grabdelivery surged by 200% in Bangkok. Ingeneral, a large amount of goods has movedfrom offline distribution channels to onlinechannels and last mile distributors have notbeen able to cope with the surge of orders. Onemain challenge that this change is posing todomestic distribution is long-distance cargotransport. Taking North-South transportationin Vietnam as example, air and rail transport isconstrained. Long-haul trucks become scarceand insufficient transport capacity causesadditional delays and disruptions.

According to Mr. Julien Brun, PartnerManager at CEL, as people start gettingaccustomed to more systematic onlinepurchase and home deliveries, this is likely tobecome a habit, and the post-crisis situationmay still benefit the e-commerce and deliverysector while the offline retail sector recovers.This is certainly a fundamental new trend inthe consumer goods industry.

Moreover, the crisis will also furtheraccelerate e-government initiatives, allowingpeople to fulfill their administrative dutiesonline and thus avoiding long physical queues.Once the crisis ends, it is likely that theimplementation of digital solutions forconsumers and citizens will increasedramatically. “This is a time when companiesneed to renovate and re-adapt themselves tonew demands, patterns and trends. Businessesthat cannot adapt quickly enough will beexcluded from the game,” he stressed.n

Many opportunities for M&A dealsAmid the Covid-19 pandemic, solutions of mergers and

acquisitions to increase capacity and restructure investmentsectors are chosen by many large economic groups. Accordingto the Ministry of Planning and Investment, within the firsttwo months of 2020, the capital inflows, that foreign investorsbrought to Vietnam in the form of capital contribution andshare purchase, reached over US$827.3 million.

Travel agencies, retailers, pharmaceuticals, and beveragecompanies, in addition to acquiring small units in theindustry, have now set foot in new and potentially profitableareas such as entertainment - media, preschool education,tertiary education, and pharmaceutical processing. Sometypical M&A deals in recent times include Hau GiangPharmaceutical with Taisho, Vietravel with Kent InternationalCollege, Tiki and Sendo. In transport and logistics field, Graband GoViet intend to merge in the future. The SouthernLogistics JSC has basically agreed to sell 100% of its capital toIndo Trans Logistics Group. Gemadept’s shares have beenbought in a large amount by Sumitomo Corporation.Mapletree Logistics Trust also acquired Unilever's VND725billion warehousing.

In real estate field, according to the report by VietnamAssociation of Realtors, the real estate market in the firstquarter of 2020 was extremely quiet compared to the sameperiod every year. The supply, transaction and absorption rateswere at the lowest levels in the past four years. Facing credittightening and inablity to sell products due to the epidemic,investors with weak financial capacities are seeking to offer ortransfer projects in the form of M&A or project shares.

According to Dr. Su Ngoc Khuong, the housing realestate sector has been negatively impacted in the short termby the ban on entry, disrupting the survey and execution oftransactions by foreign visitors, in which Chinese, Koreanand Japanese customers account for the largest proportionof real estate transactions with foreign visitors. However,real estate developers are still preparing new projects tomeet the needs of domestic and foreign customers whendemand recovers, with the expectation that Vietnam is stillone of the most profitable markets with high rental rates andlowest real estate prices in the region. In January 2020,Mitsubishi Corporation and Nomura Real EstateCorporation announced the purchase of 80% of the shares ofthe Grand Park Project - Phase 2, with an area of about 26hectares, which is expected to develop more than 10,000apartments in Ho Chi Minh City.

“Covid-19 is a difficult time for many domestic andforeign investors in general. However, for a group ofindividuals and businesses with good financial abilities and alot of experiences, this is a great opportunity. Recently, themarket has witnessed a lot of potential investors who havebeen ready to buy and transfer projects from investors who arefacing difficulties in real estate. Savills Vietnam recognizes thatsince 2019, a number of projects have been under negotiationwith an estimated value of over half a billion dollars. We hopethat after the epidemic has gone, along with the very strongdirectives of the Government of Vietnam in supporting realestate businesses in recent times, more investors will seizeopportunities, and soon the real estate market will becomebetter," said Dr. Su Ngoc Khuong.n

www.vccinews.com 27



How will Quang Nam province carry outpensions and social insurance paymentduring the pandemic?

Currently, VSS Quang Nam is payingmonthly pensions and social insuranceallowances to 32,000 beneficiaries, including24,000 receiving cash and nearly 8,000receiving via registered personal accounts.Payment is scheduled to start on the fourth orfifth day of the month and to be completed in aweek.

To ensure safety, avoid gatherings andfacilitate people in the time of preventing andcontrolling the Covid-19 epidemic in the spiritof the Prime Minister’s Directive 16, and withthe approval of the Vietnam Social Security(VSS), the payment of April and May pensionsand social insurance benefits will be made onlyone time. VSS Quang Nam advised theProvincial People’s Committee to assign thesocial insurance authority and the post office todevelop a plan to pay April and May pensionsand social insurance allowances in April.

Specifically, the payment will be carried outfrom April 16 to May 20, delivered to the homeof pensioners and social insurance receivers. Atthe same time, social insurance agencies andpost offices will coordinate with authorities ofdistricts and towns to direct communes, wards,towns, villages and residences to reviewaddresses of receivers to ensure timelypayment.

Could you tell us more about difficultiesin making payments at home?

Home-based payment has been largelymade for sick people, disabled people andpeople aged over 80. Home delivery to allbeneficiaries is totally new and it will bedifficult for this sector amid the Covid-19epidemic.

Another difficulty is insufficient personnelto deliver payment across 18 districts, townsand cities. Payment is delivered at everyregistered address of the beneficiary.Beneficiaries must be present at home whensocial security officers arrive to ensure timelypayment, effectively prevent disease contagion

VSS QUANG NAM

Consistent Solutions to Ensure Benefitsof Policyholders amid Pandemic

Carrying out the Prime Minister’s Directive16/CP-TTg dated March 31, 2020 on urgent

measures against Covid-19 and instructivedocuments of the Vietnam Social Security(VSS), the People’s Committee of QuangNam province dispatched Official Letter

1785/UBND-KGVX on payment of monthlypensions and social insurance allowances

during the pandemic. Mr. Nguyen ThanhDanh, Deputy Director in charge of social

insurance, spoke about the implementationof solutions to ensure the rights of

participants of social insurance and healthinsurance amid the Covid-19 pandemic.

www.vccinews.com 29

and keep a safe distance for people involved. This is aconsiderable difficulty for us.

Anticipating these difficulties, VSS Quang Nam hasintroduced measures to solve, for example contactingcommunes, wards, townships and residential areas to revieweach address of the beneficiary and then assigning socialsecurity agencies and post offices to arrive beneficiaryaddresses to pay pensions and social insurance allowances bylocality. For large localities with a lot of beneficiaries, socialsecurity agencies and post offices must give higher priority inpayment. This solution will ensure safety of beneficiaries,avoid gatherings and limit the spread of Covid-19 epidemic.

In addition, we have thoroughly communicated directionsof the Provincial People’s Committee to our employeesassigned to pay pensions and social insurance allowances tobeneficiaries and follow epidemic prevention and controlinstructions: People on duty must not have anyepidemiological risk factors, must wear face masks, measurebody temperature at least twice a day, wash hands withantiseptic solutions after each payment and take othermeasures as recommended by health agencies to meetrequirements concerning Covid-19 prevention and control.

In addition to this work, how do you carry out thesettlement of social insurance and health insurancebenefits regimes during social distancing?

Currently, VSS Quang Nam has 18 single-window units at

the district level. Every day, the social security industryreceives applications through the following channels:Electronic platform, public postal service, and single-windowdivision.

When the Covid-19 epidemic is developing complicatedly,to carry out directions of the Prime Minister and the VietnamSocial Security, VSS Quang Nam has reported and had theconsent of the Provincial People’s Committee to provide twoout of six regular procedures online: Replacing lost ordamaged health insurance cards when the insured is beingexamined and treated and closing social insurance books forworkers quitting their jobs or terminating employmentcontracts (facilitating workers to promptly completeunemployment insurance documents). At the same time, theagency has enhanced communications on its website and localmass media to recommend people to wait until April 16 tosubmit their documents if they are not in an emergencysituation.

Additionally, provincial and district social security agenciesstill arrange officers on duty at single-window divisions toreceive documents online and return settlement results ofadministrative procedure via public postal services. Socialsecurity workers are required to work from home, applyinformation technology to ensure effective work settlement,assign staff to work directly at social insurance agencies at alllevels to ensure the Covid-19 epidemic prevention and control.

Thank you very much!

Government Issues Instructive Decree onEnforcement of Public Investment Law

The Government recently issued Decree 40/2020/ND-CPdetailing the enforcement of some articles of the Law onPublic Investment.

The decree details 12 contents in the Law on PublicInvestment. It provides detailed regulations on dossier,content and time of evaluation, investment policy decision,investment policy adjustment decision, adjustment cases, andproject categories (A, B and C). It details dossiers, contentsand time of appraising and deciding a program or a project;contents, order and procedures for elaborating and appraisingadjustment of public investment programs and projectsclassified as A, B and C projects; principles, competence, orderand procedures for deciding investment policies; andprinciples, competence, content, order and procedures forformulating, appraising and deciding investment in publicinvestment projects classified as A, B and C projects in foreigncountries.

The decree also guides the decentralization of authority,order and procedures for deciding investment policies andinvestment decisions for programs and projects of groups A, Band C funded by the State budget, and subjects and contents ofpreliminary environmental impact assessment to decideproject investment policies.

This decree, which takes effect from April 6, 2020, isapplied to organizations and individuals that participate in orare related to public investment, manage and use publicinvestment capital. For projects without constructioncomponents, the formulation, appraisal, approval and

management is subject to comply with this decree and relevantspecialized laws.

Thu Ha

Decree on Management, Connection andSharing of Digital Data of State AgenciesIssued

On April 9, 2020, the Government issued Decree47/2020/ND-CP on management, connection and sharing ofdigital data of State agencies.

The decree stipulates management, connection andsharing of digital data of State agencies, includingmanagement and administration of digital data; connectionand sharing of digital data; use and mining of digital data ofState agencies; provision of open data of State agencies fororganizations and individuals; and rights and responsibilitiesof state agencies in connecting and sharing digital data.

One of new points in the decree is regulations based onapproaches to data, data sharing, and use of new technology inthe current context.

The decree is set to take effect from May 25, 2020.Together with other decrees such as the decree on electronicidentification and authentication and the decree onimplementation of administrative procedures in the electronicenvironment, this decree is seen as a major solution toimprove institutions and create a complete andcomprehensive legal basis for the deployment anddevelopment of e-government.

Ha Linh

In addition to applying urgent solutionsto clear hurdles against businesses, it isextremely important and necessary toincrease public investment, ensure socialsecurity and work out scenarios andsolutions to revive the economy as soonas the pandemic is over.

Anh quAn

This was also one of Prime Minister NguyenXuan Phuc’s important directions at the onlinecabinet meeting with localities on urgent tasksand solutions to overcome business difficulties,promote public investment disbursement,

support workers and ensure social security, order and safetyamidst the Covid-19 epidemic. This “All-in-One”conference was designed to mobilize resources to overcomethe epidemic and create momentum for social andeconomic recovery and development.

According to Minister of Planning and InvestmentNguyen Chi Dung, the Covid-19 pandemic has wide-ranging impact on all economic and social fields of

countries in the world. In Vietnam, the target of 6.8% GDPgrowth is extremely challenging and can hardly beachieved. In case the plague is controlled in the secondquarter, the country’s GDP growth is forecast at 5.32%. If itlasts till the third quarter, the rate is forecast at 5.05%.

To solve difficulties caused by Covid-19, in the pasttime, the Government has launched many timely solutionsto support businesses and ensure social security. Amongthem are Directive 11/CT-TTg dated March 4, 2020 withseven groups of specific tasks and solutions, targeting thosebusinesses and laid-off workers. Besides, support measuresinclude monetary support package of about VND300trillion (US$12.8 billion), financial support package ofabout VND180 trillion (US$7.7 billion), social securitysupport package of over VND62 trillion (US$2.6 billion),power tariff support package of VND12 trillion ( US$512million), and telecom tariff support package of VND15trillion (US$640 million). Most recently the Governmentissued Decree 41/2020/ND-CP dated April 7, 2020, onextended deadline for payment of value added tax,corporate income tax, personal income tax and land rent tothose affected by Covid-19. These urgent solutions havebeen producing positive effects and laying the foundationfor early social and economic recovery.

However, according to economic experts, in addition totimely policy responses, it is necessary to prepare for "post-


Urgently Making Economic R


Covid-19" scenarios rather than just waiting for the end ofthe plague to do it. Different scenarios from short to longterm must be prepared also, with common factors of theworld and the country taken into account. Besides, thescenarios must also be specific to each industry, field,locality and business. This will help Vietnam takeadvantage of every opportunity to develop rapidly andsustainably.

At this online meeting, the Prime Minister assigned theMinistry of Planning and Investment to "urgently developscenarios to quickly revive the economy". Previously, theministry also actively prepared initial steps to work out thisscenario, including mechanisms and policies forimplementation in all three phases: during and after thepandemic.

Regarding economic development scenarios, theNational Economics University also studied and forecastthe impact of the pandemic on several economic sectors.Under Scenario 1 (the epidemic lasts until the end of April),merchandise trade sectors will fall by 20-30%; hospitalityand hotel sectors down by 15-20% in domestic andinternational visitors, a revenue by 20%, andunemployment by 15-20%; agriculture sectors by 2.8-27.4%.In the scenario in which the epidemic will last until the endof June, commodity trade sectors will decline by 30-40%;transport and logistics sectors by 20-30%; hospitality and

hotel sectors by 30-40% in domestic and internationalvisitors, a revenue by 40%, and unemployment by 30-40%.

Most recently, Dr. Can Van Luc and authors from theBIDV Training and Research Institute also updated theVietnam economic growth scenario in 2020 amid theCovid-19 pandemic (released on April 10, 2020), whichpresented three growth scenarios. Under the baselinescenario (the epidemic in Vietnam is controlled in thesecond quarter of 2020), the GDP in 2020 will decrease by1.8-2 percentage points to a growth rate of 4.81-5.01%. Inthe positive scenario (Covid-19 is under control in April2020 or mid-May 2020, and manufacturing - businessactivities will be resumed immediately after that), Vietnam'sGDP growth will decrease by 1.4 percentage points to 5.4-5.6% in 2020. In the negative scenario, the plague iscontrolled in the second quarter but external supply anddemand are negatively affected, Vietnam's GDP growth willslip 2.58 percentage points to 4.07-4.42% in 2020.

Assessing the impact of the pandemic on sectors and fieldsand forecasting these trends and opportunities will makeVietnam proactively ready to face any situation without beingleft outside or behind on the new playground that will formafter the epidemic. And even though studies show differentscenarios, they share one thing in common: If the pandemic isnot controlled quickly, there will be more negative effects onthe economy and other aspects of social life.n

www.vccinews.com 31

ic Recovery Scenarios

Direct support of the economyAccording to a report by the General Statistics Office

(GSO), the first-quarter social investment fund rose byonly 2.2% as compared to the same period of 2019, thelowest growth in the 2016-2020 period as the Covid-19pandemic had affected all business operations. However,State-funded investment was impressively VND61,591billion in the first quarter of 2020, equaling 13.1% of theinvestment plan in 2020, higher than the growth of11.2% in the same period of 2019. On average, publicinvestment disbursement reached 91-93% of the yearlyplan in 2016-2019.

Mr. Nguyen Viet Phong, Director of Constructionand Investment Statistics Department (GSO), thispositive signal portrayed the outcome of theGovernment’s drastic solutions to boost publicinvestment disbursement. In addition, public investmentincreased in the first quarter of 2020 - the last year tofulfil the medium-term public investment plan from


PUBLIC INVESTMENT

Catalyst for Economic Recovery


While the epidemic fallout is downsizingother investment channels, public

investment is considered one of powerfulboosts to economic recovery. DisbursingVND700 trillion (over US$30 billion) orpossibly more will create more jobs and

offset the growth gap to accelerateeconomic growth in the context of the

Covid-19 epidemic outbreak.

hA Thu

2016 to 2020 and carry out the socio-economic developmentplan in 2016-2020. Moreover, the Law on Public Investment(amended), effective from January 1, 2020, gives more powerto ministries, branches and localities to accelerate investmentand relocate the fund planned for slowly-disbursed projectsto feasible projects.

Remarking on its effect on economic development,experts said that boosting public investment will helpprevent economic downturn and save businesses andworkers before recession caused by the Covid-19 pandemic.Furthermore, disbursing this huge investment fund will alsoenable the economy to rebound, not being affected toomuch, if it has to undergo expensive and time-consumingrevival after the epidemic ends.

Remarking on its effect on economic development,experts said that boosting public investment will helpprevent economic downturn and save businesses andworkers before recession caused by the Covid-19 pandemic.Furthermore, disbursing this huge investment fund will alsoenable the economy to rebound, not being affected toomuch, if it has to undergo expensive and time-consumingrevival after the epidemic ends.

In addition, when the State funding channel is unlocked,private and foreign investment will flow into the economy,an extremely important factor to boost manufacturing andbusiness operations, economic growth, employment andfiscal revenue.

According to the GSO, just 1% of public investmentfunding disbursed will increase non-state capital by 0.92percentage points and increase GDP by 0.06 percentagepoints. If 100% of the planned funding is disbursed, only 7percentage points added will help spur economic growth byover 0.42 percentage points. This does not take ripple effectsof non-state investment into account.

Recently, at the online cabinet meeting with localities onurgent tasks and solutions to address business difficulties onApril 10, public investment and accelerated disbursementwas a key matter of debate. Prime Minister Nguyen XuanPhuc emphasized that a potential recession is forecast to beworse than the crisis in 2008. There is a dire need for“boosts” and support packages for many fields. And,speeding up public investment disbursement will helpincrease growth and revive the economy quickly after theepidemic.

Full disbursementAccording to a report by the Ministry of Finance, State-

funded public investment is nearly VND700 trillion in 2020,2.2 times as much as the disbursed value in 2019 (VND312trillion). Maximum focus on public investment is consideredan imperative in the time to come.

At a government meeting on March 27, Prime MinisterNguyen Xuan Phuc stressed that the remaining fund in 2019and the planned fund in 2020 must be disbursed in full. Mostrecently, at the video conference between central and localauthorities on April 10, he underlined the completedisbursement of public investment this year.

To demonstrate this willpower, he affirmed that leadersof agencies failing to disburse the investment fund will bereprimanded. By September, if disbursement is unsuccessful,the situation will be reported to the National Assembly andan inspection panel will be set up to probe the case.

Reporting to the video conference of the cabinet on theGovernment’s draft resolution on tasks and solutions toremove business difficulties and promote public investmentamid the Covid-19 pandemic, the Minister of Planning andInvestment said that the amount of capital needed to bedisbursed in 2020 is enormous. Therefore, when drafting theresolution, the ministry requested relevant ministries,branches and localities to concentrate all measures to spendall public investment funds in 2020, direct investors, projectmanagement units and contractors to accelerate constructionand ensure safety for workers in line with regulations onCovid-19 prevention and control to make construction bigenough to get disbursed.

Ministries and localities must also actively review andadjust funding plans or report to competent authorities toadjust funding plans from slowing-moving projects andallocate capital to fast-moving projects.

In addition, on business support, Minister of Planningand Investment Nguyen Chi Dung said that policies need tobe further reviewed to promptly remove barriers anddifficulties to access budget, conduct constructioninvestment, accelerate decentralization and simplification ofadministrative procedures. Regulations on public debt ratioand state budget overspending need to be researched andreviewed to propose amendments to inappropriate mattersand ensure increased resources for development investment.

However, according to many specialists, while boostingpublic investment is important, a new bold and innovativeway of doing this is needed. Priority should be given tomotivational and influencial projects. For example,important projects can change the form of investment toaccelerate progress.

Previously, to speed up the disbursement of medium-term public investment fund in 2016-2020, Prime MinisterNguyen Xuan Phuc agreed with proposals submitted by theMinistry of Transport and the Ministry of Planning andInvestment on conversion of eight Eastern North-Southexpressway projects and My Thuan - Can Tho Expresswayproject to public investment. These proposals will be furthersubmitted to the National Assembly for approval under theLaw on Public Investment.n

www.vccinews.com 33

In 2019, Vietnam’s exports ofinformation and communicationtechnology (ICT) were estimated atUS$91 billion, accounting for 34.4% ofall goods exported.

Vietnam had 38,861 ICT companies in 2018and currently boasts 2,000 tech startups.Investment by large multinational companiesand other foreign investors is greatly attributedto this rapid growth, but local companies arealso growing quickly, notably in e-commerceand financial technology (fintech). For its part,the Government has applied new policies andregulations to encourage this development. Thegrowth of the digital economy provides newopportunities for knowledge-intensiveemployment. The net revenue of firms offeringsoftware, digital content, and ICT servicesincreased from US$7.7 billion in 2015 toUS$11.5 billion in 2018. Their combinedcontribution is 11.1% of net revenue in the ICTindustry, an important employer. The numberof jobs in ICT manufacturing grew from

533,000 in 2015 to 718,000 in 2018. In the sameperiod, employment in the software industry,digital content, and ICT services grew by 36% toreach 255,000 jobs.

Vietnam ranked 42 among 129 countries in theGlobal Innovation Index 2019, staying on par withtop economies classified as upper-middle income.This ranking reflected high ICT exports andimports. Vietnam has other advantages that shouldenable it to move up in the index. It has strongprimary and lower-secondary education, a youngpopulation, abundant labor, and ample credit, withoutstanding bank loans estimated to equal 135% ofGDP in 2019.

Some factors nevertheless hold back thenational innovation system. According to ADB,gross domestic expenditure on research anddevelopment (R&D), both public and private,equaled only 0.53% of GDP in 2017, far below1.44% in Malaysia and 0.78% in Thailand a yearearlier, which clearly illustrates that Vietnam needsto step up its spending on R&D.

In addition, universities in Vietnam rank lowerthan in upper-middle-income countries inSoutheast Asia in quality and quantity, as measuredby gross enrollment ratio. Although Vietnamcompares favorably in the number of students intertiary education overseas and has 55,000 studentsenrolled domestically each year in tertiary ICTprograms, these future graduate numbers may beinsufficient to meet surging demand from rapidlygrowing ICT industries. Ensuring more and betterfresh graduates is critical for Vietnam to leap aheadin technological innovation.

On the other hand, while the financial sectorhas grown steadily and innovative fintech is beingadopted, the current legal framework has not keptpace with the development of fintech products andservices. An enabling regulatory framework tonurture the application of fintech would helpVietnam to expand and deepen its financialservices.n


Vietnam Needs to Boost R&D Spending


Vietnam hasrapidlyintegrated intothe globaleconomy andmoved up thechain of valueaddition fromagriculture tolightmanufacturingand ontoelectronics.

In the Asian Development Outlook (ADO) 2020 released by the Asian DevelopmentBank (ADB), Vietnam’s total trade is now valued at twice its GDP, having swiftlyemerged as a significant value chain hub in Southeast Asia for the manufacturing ofinformation and communication technology (ICT) hardware and electronics.

quynh Chi

Key rating drivers for Fitch to revise its outlook onVietnam reflects the negative impact of theescalating Covid-19 pandemic on the worldeconomy and world credit, including Vietnam,through tourism and export sectors, and

weakening domestic demand. During working sessions between Fitch Ratings and the

Ministry of Finance and relevant agencies to assess thenational credit rating at the end of March 2020, theVietnamese side exchanged and presented convincingevidence on its economic resilience in today's challengingglobal context. The Government and the entire people ofVietnam have made strenuous and effective efforts and haveachieved initial successes in controlling the spread of theepidemic on the one hand and effectively performing socio-economic development and social security tasks on the other.This result has been highly appreciated by the World HealthOrganization, governments of other countries as well as theinternational community, thus helping foster a favorablefoundation for strong economic recovery after the epidemic iscontrolled.

Given the complicated, unpredictable development of theepidemic as now, the fact that Fitch affirmed to maintain the

national sovereignty rating at BB reflects that Vietnam’s brightcredit outlook is not affected. The affirmation reflectsVietnam's strong medium-term growth prospects, lengtheningrecord of macro stability, lower government debt levels andstronger external finances compared with peers. Fitch alsoappreciated Vietnam for building up foreign-exchangereserves over the previous few years during more favorableeconomic conditions to increase the buffer against macrorisks.

Fitch expected Vietnam’s economic momentum torebound in 2021, with growth projected at 7.3% as externaland domestic demand gradually recovers in line with globaland regional trends.

In the past month, Fitch revised down sovereignty ratingto negative to 19 countries around the globe, with sevenhaving their outlook downgraded.

The Ministry of Finance and relevant agencies have beenworking closely and updating information on the socio-economic situation in Vietnam amid the ongoing epidemic forFitch Ratings. Thus, the Ministry of Finance believed thatFitch and other credit rating agencies will have sufficientinformation to provide a correct and positive view onVietnam's credit profile in the future.n

www.vccinews.com 35

Fitch Ratings Maintains Vietnam’sSovereignty Rating

FitchRatings

retainedVietnam’ssovereigntyrating at BBand revisedits outlookfrom positiveto stable.

Le hien

Deputy Prime Minister Trinh Dinh Dungrecently signed Decision 479/QD-TTg toapprove the task of making Quang NinhPlanning for the 2021-2030 period, with a visionto 2050.

The scope of Quang Ninh Planning covers the wholenatural land area of 6,178.8 square kilometers and the seasurface area of over 6,000 square kilometers (managed bythe province), stretching across 13 administrative units:Four cities (Ha Long, Mong Cai, Cam Pha and Uong Bi),

two towns (Quang Yen and Dong Trieu) and seven districts (BinhLieu, Tien Yen, Dam Ha, Hai Ha, Ba Che, Van Don and Co To).

The planning must express the view of strong renovation towarddevelopment mindset, especially the sustainable development mindsettoward preservation and promotion of heritage values; the mindsettoward maximized and effective utilization of local distinctive potentialand advantages so as to create a high consensus on the awareness ofactions of all levels and sectors from central to local levels, amongresident communities and businesses about the unique developmentmodel and methods of Quang Ninh province, especially when theprocess of changing from "brown" model to "green" model isproducing clear effects.

The planning will further study the province’s viewpoint of spatial

development toward “One center - Two directions - Multidimensions” with “Two breakthrough points” of Van Don EconomicZone and Mong Cai Border Gate Economic Zone. Quang YenEconomic Zone is a nucleus, a new growth engine for the westerndirection that matches the strategy and planning.

It will also convey development viewpoints, objectives and plans(including development views, development scenarios and plans,development goals, key tasks and breakthrough stages).

Besides, it will include plans: Developing important sectors(including industries; services; agriculture, forestry and fishery; culture,society and defense - security); organizing socioeconomic activities;operating urban and rural systems and infrastructure; allocating andzoning land areas by function and by land type to the district level;protecting the environment, nature conservation and biodiversity;protecting, extracting and using resources.

The Quang Ninh Provincial People’s Committee will base on itsapproved tasks to conduct the Quang Ninh planning for the 2021-2030 period, with a vision to 2050, to ensure compliance with thePlanning Law of 2017 and other current regulations, and submit it tocompetent authorities for approval in accordance with the law.

The Ministry of Planning and Investment, the Ministry ofFinance, the Ministry of Construction, the Ministry of NaturalResources and Environment, other relevant ministries,branches and agencies will, according to their jurisdiction andcurrent regulations, guide the Quang Ninh Provincial People’sCommittee to establish the planning.n



QUANG NINH PLANNING TO 2050

Van Don, Quang Yen andMong Cai in Focus

The outbreak of Covid-19 hasaffected the market of keyagricultural products in BinhPhuoc province. The price ofcashew has dropped sharply,

sending not only the cashew farmers but manybusinesses, cashew production and tradingestablishments into difficulties. The purchaseprice of fresh cashew nuts is down 10,000VND/kg compared to 2019. Currently, theprice of fresh cashew purchased in Binh Phuocranges from 26,000 to 27,000 VND/kgdepending on the region.

Difficulties According to Mr. Bui Van Tan, owner of

Hoang Long cashew processing facility in BuDop - Binh Phuoc province, this time last yearthe facility collected more than 100 tons ofcashew nuts to process for many exportorders. However, this year, the impact of theepidemic has led to a reduction in the numberof orders. Until now, the establishment hasonly operated only a small part of its capacityof about 10 tons of cashew nuts.

"In the first three months of this year,orders have plummeted, many processors donot dare to buy in large quantities because ifthey cannot sell cashew, it will lead to too

much inventory," Mr. Tan added.As for small manufacturing facilities, there is no

other way than being forced to shut down theirbusiness. Mr. Nguyen Viet Toan, owner of a smallcashew processing facility in Bu Dop district, said:"We have been closed for more than a month. Withlittle capital, if we continue to produce but cannot sellproducts, we will not be able to bear the burden.production costs and loan interest rates. For a fewyears, the cashew industry has been in trouble, nowreceving a fatal blow by the Covid-19 disease, makingit increasingly difficult for the facility to producewhile interest and taxes still have to be paid in full."

According to experts' calculations, the newcashew crop in 2020 will reach an average of 1.5tons/ha, earning just over VND40 million a year.Many farmers said that the revenue from everyhectare of agricultural land is very difficult for thisperiod.

Looking forward to support from banks According to Mr. Pham Van Cong, Chairman of

Vietnam Cashew Association (Vinacas), Binh Phuocis the major center of the country for growing andprocessing cashew nuts for export. Cashew growersare geographically supported with large annualconsumption, but people cannot get rich from thisproduction. This year, the impact of the epidemic insome major cashew consuming countries hasbrought even more difficulty to the processingindustry and farmers.

Mr. Nguyen Anh Hoang, Director of Binh PhuocDepartment of Industry and Trade, said that theCovid-19 epidemic was a storm that made the cashewindustry tumble: the cashew prices are low; theChinese market freezes; importers from Europe andthe Americas are also cautious about agriculturalproducts from Asian countries.

“The biggest difficulty currently for cashewproduction and export enterprises is the capital. Mostbusinesses now borrow money from banks. Whenthere is a big fluctuation in the cashew market, ingeneral, all banks reduce lending and tighten lendingconditions, which makes it difficult for us," Mr.Hoang said.

Therefore, support from banks by loweringinterest rates, debt rescheduling, debt freezing, as wellas the policy to remove difficulties for businesses ingeneral from the Government, is what businesses inthe industry awaiting.n

M. N

www.vccinews.com 37

BINH PHUOC CASHEW INDUSTRY

Bearing Brunt of Pandemic

Due to thelong-lasting

Covid-19outbreak, theprice of raw

cashew nuts inthe country has

dropped to arecord low inrecent years,

which iscausing cashewnuts businesses

to suffer.

Job mobilityAfter nearly two months of ranging pandemic, many companies

have become inactive and fired up to 80% of their staff. To survive,many businesses are temporarily adopting to online working whileothers had to involve in other business.

Mr. Nguyen Thanh An, Director of Thien Tam An TourismCompany, said, the company had to switch to online propertymarketing training.

“When losing the Chinese market, tourism firms are still hoping tolive through the tough time. But now all major markets are all closed atthe same time. There is no way to manage and maintain operations.My company had to fire some employees and reduce salaries paid toexisting ones because we found no other better way,” he said.

Le Cong Nang from Viet Tourism Company said, like many bigtravel companies, from January 2020, the company had to cancelthousands of tours and suffered heavy losses. Without enough jobs, thecompany had to arrange alternate jobs for employees, shift to otherbusiness and rotate jobs for employees. In the time of hardships for all,the company had to shift to distribute face masks and antibacterialhand sanitizers to generate more income for workers, but thecompany is always prepared to revive the tourism array with high-quality products when the plague is over.

Likewise, Ms. Hoang Quynh, Marketing Director of Oriental SailsCompany and A Travel Mate Company, said: The pandemic seemsincreasingly complicated; countries are closing their internationalroutes. There are no tourists at all. Most employees are out of work.Many are selling things through social networks. Many employees,

especially salespeople, actively asked for no salary to share hardshipswith the company in this tough time. Currently, the company is paying30-50% of salary to ensure a minimum standard of living foremployees during this period.

“Hardships are faced by all enterprises. To maintain operations,our company has advocated online operations and intensive internalconsolidation from the first days of epidemic outbreak. Reviewing andupgrading websites and online channels such as Facebook, YouTube,email marketing and social networks are maintained regularly andconsidered important during this time. Internal communication,solidarity consolidation and spiritual stimulation are focused to gathersynergy to overcome this epidemic. We take an active part incommunications on Covid 19 and build the trust of our employeesand partners” she said.

Rays of lightWhen the tourism industry is freezing, businesses cannot stop

working and suspend operations but start restructuring their businessand fields of activity, training and streamlining staffs to improve theirperformance. Many companies see this as a stage for long-term largeprojects.

Notably, on April 3, 2020, the Prime Minister issued Decision457/QD-TTg on establishment of Vietravel Airlines. The airline has atotal investment capital of VND700 billion and a lifespan of 50 years.In the first year, it will operate three aircraft and eight in the fifth year.The airline will headquarter in Phu Bai International Airport based inThua Thien Hue province. The tourism airline will help improve


Economic sectors have suffered from severe damageby the Covid- 19 pandemic. Many businesses acrossindustries have terminated or suspended operations,including those in tourism. But, this is also the timefor the entrepreneurship. Never accepting tosurrender, tourism businesses have quickly adoptedjob mobility and run online operations.

giAng Tu

Vietnam's air transport capacity and boost tourism development andsocioeconomic development in the context of internationalintegration.

Hardship is also an opportunity for businesses to stand morestrongly united and prepare for connecting and stimulating demandafter the pandemic. Recently, Danang Tourism Promotion Fund(DTPF) was officially launched with a social operating model joined bytourism individuals and organizations in the city, including Ba NaCable Car Service Joint Stock Company, Hoa Binh Co., Ltd - Da NangBranch, Vinpearl Joint Stock Company - Da Nang Branch, DHCInvestment Corporation, Silver Shores Investment and DevelopmentCo., Ltd, TravelMart Vietnam Joint Stock Company, and Tien Sa VietJoint Stock Company. The fund conducts market research andproduct development to support tourism businesses to work effectivelyand create sustainable income for the community. In 2020, the fundplanned to study Indian and Muslim travelers’ tastes, work with the DaNang Department of Tourism and the Da Nang Tourism Associationto launch the Danang Tourism Stimulation Program after the Covid-19 pandemic, coordinate with the Da Nang Tourism PromotionCenter to organize the Danang Tourism Introduction Program inAustralia, encourage direct flights from Melbourne to Da Nang,tentatively cooperate with the Vietnam International Tourism Fair inDa Nang and the TAAI Convention. Furthermore, this is also the timefor businesses to focus on market research and distinctive productdevelopment.

Earlier, the Vietnam National Administration of Tourism said theCovid-19 was forecast to cause US$5.9-7 billion loss in tourismindustry. But, in this context, the entrepreneurship is shown mostclearly. Importantly, the government and businesses get united tostrengthen resilience to the epidemic and, at the same time, enhancebusiness health by effectively managing human resources, productinvestment and career mobility to get well prepared for the demandboom after the epidemic is over.n

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Serious lossData from the Vietnam National Administration of

Tourism (VNAT) showed that the tourism industryplummeted in the first quarter due to the impact of the Covid-19 epidemic. In March 2020, international visitor arrivals toVietnam were fewer than 450,000, lowest in more than 10years. In Hanoi, tourist arrivals reached 321,000 in March,

down 87.4% from a year ago. Particularly, internationalarrivals to the city slumped 80% while domestic tourist arrivalstumbled 90%. Tourism revenue dived 83% from a year-earlierperiod to VND1,585 billion (a drop of VND7,714 billion).

In the first quarter of 2020, tourist arrivals to Hanoi totaled3.85 million, down 47.2% year on year. Total tourism revenuewas VND15,687 billion in the quarter, down 38.8%

Tourism Services AdverselyAffected by PandemicFirst-quarter operating results released by the Ministry of Planning and Investmentshowed that the service industry, including accommodation, catering and traveling, ishardest hit by the Covid-19 pandemic. Vietnam’s service growth reached only 3.27%,lowest in the same period in 2011-2018 and lower than the overall economic growth.Notably, the country’s tourism revenue was estimated at VND7.8 trillion (US$333million), accounting for 0.6% and declining 27.8%.

Thu huyen

F

Lieng Nung is a gorgeous tourist site in Dak Nong province

(VND9,938 billion). The average occupancy of hotelrooms was only 43.06%, down 26.16% from the same period in2019.

In March, among the 10 biggest tourist markets ofVietnam, only arrivals from Russia increased by 4.9% againstMarch 2019 to 72,000. However, Khanh Hoa province, thebiggest receiver of Russian tourists in the country, still sufferedserious losses due to the decline in tourists, hotel closures andunemployed tourism workers. According to the Khanh HoaTourism Department, the Covid-19 pandemic caused about17,100 tourism workers to lose their jobs, of which theaccommodation sector saw a decline of about 15,000(accounting for 30% of workers in the sector), the travel sectorwitnessed 2,100 people unemployed (a drop of 60%).Transport service providers stopped operating 1,780 vehicles.A series of downtown and suburban hotels in Nha Trang Cityare on sale.

The number of international tourists to Ho Chi Minh Citywas estimated at 117,000 in March, down 84.23% year on year.International visitor arrivals to the city were only over 1.3million in the first three months, fulfilling 14.49% of the yearlyplan in 2020 and down 42.26% from the same period of 2019.Data from the HCM City Statistics Office showed that thecity’s tourism revenue reached VND554 billion in March,down 64% from February and 77.4% from March 2019. In thefirst quarter, the city’s tourism revenue was forecast atVND4,505 billion, down 39.9% on year. This is one of theindustries hardest hit by the Covid-19 pandemic.

Like the travel sector, accommodation and cateringservices in the city also witnessed a year-on-year revenuedecrease of 30.3% in the quarter, projected at VND19,793billion. The March value reached VND2,943 billion, down59% from February and 68.4% from the same period of 2019.This industry has also fallen into a severe recession andwitnessed negative growth.

The HCM City Tourism Department said that the totaltourism revenue was estimated at VND3,496 billion in March,down 65.26% year on year. The sector fetched onlyVND25,591 billion from January to March 2020, fulfilling18.28% of the full-year plan and down 26% from the sameperiod of 2019. The sector was anticipated to lose nearly

VND10 triillion in the first threemonths of 2020 from a yearearlier.

SolutionsIn the face of the severe

damage caused by the pandemic,which may last long and cripplethe tourism economy, tourismauthorities and agencies havediscussed measures to respondto the Covid-19 epidemic.

Mr. Tran Duc Hai, Directorof the Hanoi TourismDepartment, said, from nowuntil the end of this year, thedepartment will continue toinstruct local tourismbusinesses, organizations and

individuals to ensure safety in the fight against the epidemic,working out solutions to deal with business losses and risksduring and after the epidemic. The department will alsopromote destination construction and improve destinationquality; formulate a scheme to enhance the quality of local keytourist sites. In the long term, it will promote investment intotechnical facilities, develop complete and high-quality tourismproducts, accelerate the construction progress of high-classtourism sites, destinations and hotels.

On April 8, the HCM City Tourism Department also sentDocument 463 to the Ministry of Culture, Sports and Tourismand the Vietnam National Administration of Tourism topropose urgent tasks and solutions to remove difficulties intourism business, ensure social security and respond to theCovid-19 pandemic. In addition, the department proposed theministry report to the Prime Minister for using the WorldBank's emergency support package to launch the supportprogram. Specifically, first of all, the support will go toinstitutional reforms and administrative reform in the tourismfield; assist the program to boost information technologyapplication in tourism sector like building an electronic datainterchange model for tourism companies to serveadministration by relevant authorities, building solutions todevelop the tourism industry, and offer operating software forbusinesses and tourist accommodation facilities. Besides, itwill support training programs, foster tourism humanresources and enable tourism stimulus programs.

According to the Khanh Hoa Tourism Department, if theplague is contained soon, it will focus on promotingcommunications with the topic “Live safe” and “SafeVietnam”, in which it affirms that Vietnam in general andKhanh Hoa in particular is a safe destination for tourists. Atthe same time, it will launch international and domesticstimulus programs and address difficulties for businessesaffected by the Covid-19 epidemic.

Some other provinces such as Ba Ria - Vung Tau have alsoproposed plans to develop localized community tourismproducts to 2025 by creating community-based tourismproducts. Tra Vinh province has also put forth plans toprevent and control the epidemic for tourist accommodationfacilities in three southern provinces.n


CULTURE & TOURISM

INTERNATIONAL VISITORS TO VIETNAM, Q1/2020(Thousands of people)

Source: GSO

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VOL. 01, NO. 02 (1271), Apr 21 - May 05, 2020 ISSN...

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