Friday, July 24, 2020

Can Vietnam leverage its COVID-19 success for economic growth?

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Inshiya Nalawala

Article Title

Can Vietnam leverage its COVID-19 success for economic growth?

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Global Views 360

Publication Date

July 24, 2020

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A policeman helping a rider fix their mask

A policeman helping a rider fix their mask | Source: Đài Truyền Thanh TPST via Wikimedia

While the entire world is battling with COVID-19, Vietnam, in a country of over 100 million recorded just 330 cases as of early June 2020 and zero death in May 2020.

A professor at Nagasaki University’s Institute of Tropical Medicine Vietnam Research Station said that "Vietnam has no special test kits or drugs to treat the disease, but the government decided to do what it had to do at an early stage and put that plan straight into practice."

Vietnam was quick in its action. As soon as the first case was confirmed, the government had called upon measures for serious quarantine, implemented strict border control measures, and curbed unnecessary local movement. Close to a million people were isolated to halt the spread of further infections.

The strict measures helped Vietnam to quickly control the COVID situation and put the focus back on the economy. The mainstay of Vietnam's economy, garment export and tourism witnessed steep fall resulting in loss of employment to over 3.5 million people in the first half of 2020. Still Vietnam’s economy has expanded by 0.36% over last year in the same period unlike other countries in the region where it contracted as compared to last year. The annual GDP growth for Vietnam in 2020 is expected to be around 2.7% to 3% which again is the best in the region.

Vietnam , today is the safest country in the region to travel, work, or stay amidst the worldwide COVID pandemic. It is being favourably considered as an alternative destination by many companies who are looking to cut down their reliance on China in their supply chain.  The Free Trade Agreement (FTA) between the European Union and Vietnam which will be operational in August, may help Vietnam grow its exports.

Apart from export led growth, the tourism sector may also grow significantly as the other major tourist destinations in the region, Singapore and Thailand, are still battling with the pandemic, while Vietnam has successfully overcome the same.

The government is also looking to support the local business by slashing the corporate income tax to 30 percent which increased the liquidity for some sectors of economy. Special tax benefits and deferred tax payments(in some cases) are also in  line for small and medium enterprises (SMEs) which constitutes almost 97% of all the businesses in Vietnam. All these measures are expected to lead to a 7% GDP growth for Vietnam in 2021.

The miraculous recovery from the pandemic, government incentives to industry, and the willingness of many companies to relocate from China present such a perfect mix of opportunities for Vietnam to leap ahead and become the fastest-growing economies in SouthAsia. What remains is to see how fast and how effectively the country is able to act while this window of opportunity is open.

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February 4, 2021 4:42 PM

COVID-19 in Iran: Fighting pandemic while facing US sanctions

After backing out of the nuclear deal with Iran in 2018, the United States had toughened the sanctions on petrochemical trade and other vital sectors of Iranian economy. The Iranian government is claiming that those sanctions are heavily affecting their ability to act against COVID-19.

These sanctions forced the Iranian government to significantly change infocus from curbing the spread of infections to stabilizing the economy.  There have been some restrictions but no lockdown imposed on the movement of people as the lockdown would further weaken the economy. Also, a lot of pharmaceutical companies aren’t willing to trade with Iran because of the fear of getting caught up in secondary sanctions, even though the US governments deny any restriction of the same. 

All of this has led to a global outcry against the sanctions. The United Kingdom is pushing the US to ease the sanctions because they believe that the hospitals in Iran are badly overstretched. The UK tried to provide direct support to the country via WHO, but Iran refused any help that didn't come with the lifting of the sanctions. The United Nations High Commissioner for Human rights, Michelle Bachelet, has urged the global community to rethink the existing sanctions on countries like Iran in the light of the current pandemic. The United States also offered humanitarian assistance to the state but was rejected by the Supreme Leader Khamanei, who declared the US as being charlatans and liars, and said that a wise man should not accept medicines from a country alleged of creating the virus. Russia, China and some other medical and rights groups have been urging the Trump administration to lift the sanctions. Over 21,000 lawyers and legal experts in Iran have signed a statement declaring that the US sanctions on Iran are anti-human. On the 26th of March, the US imposed even more sanctions, on more than 17 entities. The sanctions were announced a day after the family of a retired FBI agent claimed that the agent had died while in custody in Iran; two days after Ms. Bachelet made her statement on rethinking sanctions.

The crisis has touched most corners of the country, but it is most severely impacting the poor and working class. While it is older men who are dying in the highest numbers, the economic impact especially hurts women, who are most liable to lose work, and shoulder increased duties, looking after sick relatives and children staying home from school. Iranians’ purchasing power has plummeted in the past two years, as the mismanaged economy shuddered through Donald Trump’s withdrawal from the nuclear deal and the re-imposition of US sanctions. As Nahid, a women’s rights activist put it: “When people met this virus, their nutrition was already poorer, their immune systems were weakened, and many were already unable to afford health care.” Charities and private sector groups are joining together to raise funds for importing equipment and other medical supplies from China to set up facilities of COVID-19. However due to the sanctions it is becoming difficult to move money from Iran to any other country.

Arshi Tirkey, a Junior Fellow with Observer Research Foundation has put quite aptly: “It is true that political instability, corruption and economic mismanagement in Tehran have aggravated the issue; and likewise, this calls for governance reforms and financial transparency initiatives in Iran. But this is not the sole reason for the scarcity of medical equipment and the condition of health infrastructure in the country today. Sanctions remain a central impediment to improving Iran’s capacity to respond to the pandemic.”

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