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Friday, July 24, 2020

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

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Inshiya Nalawala

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Article Contributor(s)

Inshiya Nalawala

Article Title

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

Publisher

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 4:58 PM

Tanzanite Gemstone: Changing the future of Tanzania’s small miners

A beautiful gemstone with a wide range of colours, from light to dark hues of blue and violet, found only in a patch 4 kilometres long and two kilometres wide at the foot of mount Kilimanjaro in Tanzania. Existing supply of these gems would run out in about 20 years and finding it in any other region has the probability of just one in a million. Tiffany & Co, the American jewelry manufacturer, described it as “the most important gemstone discovery in over 2000 years”. Yes, we are talking about Tanzanite, the pride of Tanzania.

This rare gemstone was in news recently when a small time miner, Saniniu Laizer found two large weighing 9.27 and 5.103 kgs which are the two largest tanzanite gemstones ever found. This discovery turned the miner millionaire overnight as those pieces were sold at about 3.35 USD. He was congratulated on live television by President John Magufuli, who himself was elected in 2015 with the promise of preservation of the nation’s interest in the mining industry. Mr Laizer’s mining operation includes more than 200 miners and he intends to use the money for the development of a school and a shopping mall near his home.

In order to promote the industry, many reforms were undertaken by the government of Tanzania. It started taking a 50% equity in all mining projects after 2010 and banned the export of large sized raw gemstones. A fence was also built in 2018 around the whole area where Tanzanite is mined but about 40% are siphoned without paying any royalty to the government.

However the discovery of such gemstones by a small miner was made possible due to the government policy of promoting local artisanal miners. In order to foster local ownership, the government gave the land and exclusive mining rights to the artisanal miners who mostly owned small and medium establishments. Many trading centres were established by the government in 2019 to facilitate these miners sell gems and gold directly to the government and earn better revenue.

Such discoveries sound promising for the industry in the light of how extensively they are promoted, and how many effective actions the government has taken to protect the industry. This also acts as a big morale booster for the small miners to redouble their efforts and search for the gemstones more vigorously.