Covid surge shakes Vietnam’s status as a manufacturing powerhouse

Covid surge shakes Vietnam’s status as a manufacturing powerhouse


Vietnam Update

When the coronavirus first reached Vietnam in January 2020, its Communist Party leadership adopted one of the most successful containment policies in the world.Officials compared to Campaign to eliminate Covid-19 to fight war -In a country that has recently won victory, this is a powerful metaphor.

By introducing strict isolation and detailed tracking systems-with the help of police state tools and personnel-the country was able to eliminate local infections and eliminate any new outbreaks by the middle of the year.Vietnam’s apparent success in resuming normal business is supported Its propaganda to foreign investors As an alternative to China that is less geopolitical.

A year later, the more contagious variant of Coronavirus Delta brought the number of new infections to a record level, exceeding 10,000 per day, which raised doubts about the future of one of Asia’s major manufacturing centers. Nikkei Asia now ranks Vietnam at the bottom, tied for 120th place with Thailand. Its Covid-19 Recovery Index, Its standards include infection management and vaccine launches in various countries-Vietnam has not adequately planned for this area.

Huong Le Thu, a senior analyst at the Australian Institute of Strategic Policy, said: “Covid has broken out for several waves, and every time we can control it.” Paper author Regarding the coronavirus response in Vietnam. “This time Delta Air Lines is more difficult to control.”

Alex Wuwen, a professor at the Asia-Pacific Security Research Center in Honolulu, said that Vietnam’s pattern of meticulously tracking and tracing and then blocking people in the infected group “wasted precious time” and “provided benefits for the Delta variant” last year. s help”. Environmental spread”.

The epidemic has been hit hardest in Ho Chi Minh City, Vietnam’s densely populated commercial center, where the authorities have imposed a 12-hour curfew, banned most operations and deployed thousands of soldiers.brand Including Nike and Adidas The disruption of operations in Vietnam underscores the growing role of Vietnam in the global supply chain. Due to the shortage of parts made in Southeast Asia, Toyota also announced the suspension of 27 production lines at its 14 Japanese factories-mainly in Vietnam, but also Malaysia. Malaysia is also fighting a surge of cases.

Prime Minister Fan Mingzheng, appointed in February during the five-year leadership reorganization of the Communist Party, and his new government are stepping up to secure and manage more vaccines and get the economy back on track. This is a crucial task in a one-party country where leaders have gained most of the legitimacy from achieving economic growth.

Since the country’s previous zero-case strategy is now meaningless, most of Hanoi’s focus is on controlling infections and keeping businesses running. Some companies adopt the “three-in-place” model to allow factory employees to work, eat and sleep at work. But this is difficult for employees and costly for the company. Some multinational companies have been arranging managers in hotels in the city center.

VinaCapital, an investment manager in Ho Chi Minh City, said in a report to clients last week that although large foreign companies have the ability to pay for hotels, companies that produce low-value-added products such as clothing, shoes or furniture “have difficulty maintaining production time.” It pointed out that Vietnam’s exports of these products fell sharply in August, and said that the decline in exports, coupled with the decline in consumption, may “drag down Vietnam’s GDP growth this year”.

“These restrictions severely limit the country’s manufacturing capabilities,” said Nguyen Phuong Linh, deputy director of control risk. “Some factories are afraid of accepting new orders because they worry that they will not be able to complete orders without enough workers.” However, she added that the interruption may be a “short-term problem, because compared to other Asian countries, Vietnam is still a foreign investor. An attractive option”.

The government has set a goal of controlling the epidemic in Ho Chi Minh City by September 15, which is defined as a 20% reduction in the number of new coronary pneumonia deaths per day, and the number of discharged patients with new coronary pneumonia exceeds the number of admissions.

The bigger question is whether Vietnam can contain the crisis fast enough to avoid alienating foreign investors. At present, there are almost no obvious signs of divestment. The Vietnamese dong is one of the few currencies in Southeast Asia that has appreciated against the U.S. dollar this year. As one economist said: “China-US relations will not disappear.”

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