After weeks of reporting mostly negative developments about the Covid-19 pandemic in Vietnam, this week’s update is finally positive. Several key health indicators here have improved recently, while there has been a lot of official discussion of a ‘new normal’ beginning October 1 (Ho Chi Minh City’s strict “shelter-in-place” lockdown expires on September 30). The seven-day rolling national average of Covid cases has fallen to 9,938 – the lowest that number has been in about five weeks – and health officials said that Ho Chi Minh City has passed its peak. Large-scale testing in at-risk areas over the weekend returned a positivity rate of just 0.2%. The following is Access Asia’s Monday update on the situation in Vietnam in collaboration with Vietnam Weekly, a subscription-based publication covering current affairs in Vietnam.
On Saturday, Prime Minister Pham Minh Chinh told a government meeting that Vietnam is officially moving away from ‘zero-Covid’ to “a safe, flexible adaptation and effective control of the disease.”
In Ho Chi Minh City, municipal officials are drafting a new directive specifically for the city, which will be announced before the 1st. The good news is that this seems to imply that the current military-supported strict lockdown will not be extended.
Officials have also said that all barriers within the city will be removed, while travel permits will also be abolished – though checkpoints will remain in place at the city’s entrances. This would be a huge step, as checkpoints and confusing permit regulations have made life miserable for delivery drivers and businesses currently able to operate.
The business sector (both domestic and foreign-invested) has been lobbying hard for a rapid national re-opening amid massive damage: the tourism sector, for example, has only been able to operate for three months so far this year, while tens of thousands of workers in the industry are unemployed. Vietravel, a leading tour operater, currently has just 20 active employees, compared to the usual 1,700. Meanwhile, foreign investors in Vietnam have warned the government that its strict lockdown rules in the south has forced some companies to move production (although Access Asia has yet to come across one). No matter the case, one thing is clear: the government is keenly aware that the restrictions that have crippled the economy since June cannot continue as the economic repercussions are becoming unacceptable. At a digital nationwide conference between government and the business community yesterday, Chinh said the country will run out of resources if it solely focuses on fighting the epidemic, while the head of the Vietnam Chamber of Commerce and Industry said that if lockdowns continue, business will collapse.
We expect that the worst is now behind us and in the coming weeks and months the economic narrative will turn from stand-still to rebound. In our view, the economic impact caused from Vietnam’s 4th wave of Covid-19 will be a mere blimp in what is otherwise a positive growth story. We note that despite the short-term challenges, the macroeconomy is remarkably stable, inflation is under control, and foreign investors remain long-term upbeat on Vietnam. Remarkably, Foreign Direct Investment (FDI) inflow this year as of September 20 has grown by more than 4 percent year-on-year – despite the Covid-19 calamity. In particular, Vietnamese tech start-ups have attracted much foreign investment during the year, capitalizing on the country’s young and tech savvy population. We see great potential for Vietnam’s emerging fintech sector – and the Covid pandemic is only spurring its growth in Vietnam (and elsewhere in Southeast Asia). Meanwhile, other sectors are also fairing relatively well, including property, power, logistics and banking. While the short-term picture remains unclear, the long-term picture remains bright. We are confident that the economy will make a forceful recovery in the coming months.
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Vietnam’s gross domestic product could grow between 3.5%-4.0% this year, well below the government’s earlier target of 6.5%, the country’s Minister of Planning and Investment Nguyen Chi Dung was cited by state media as saying.
We don’t yet know what this will mean for daily life in HCMC, but last night we learned that municipal officials are drafting a new directive specifically for the city, which will be announced before the 1st. The good news is that this seems to imply that the current military-supported strict lockdown will not be extended.
Officials have also said that all barriers within the city will be removed, while travel permits will also be abolished – though checkpoints will remain in place at the city’s entrances.
This would be a huge step, as checkpoints and confusing permit regulations have made life miserable for delivery drivers and businesses currently able to operate.
This move toward a unique new directive came after city leaders asked for permission to create their own set of guidelines since, according to the health ministry’s latest parameters, HCMC would still be considered ‘very high risk,’ making re-opening impossible.
One major issue that still needs to be clarified is how exactly the proposed ‘green pass’ system will work for fully vaccinated people. While digital records are being worked on (my vaccinations finally showed up in the app last week), it is not known where these will need to be used, or who will check them.
There hasn’t been much discussion of how things are going in District 7 and Cu Chi, which were meant to pilot some potential new policies for the rest of the city.
There’s also this confusing proposal regarding new traffic rules (if domestic media calls a plan ‘elaborate,’ you know it really is).
City agencies are also working on plans to bring workers who left earlier in the outbreak back: according to this, HCMC has worked with other provinces to help around 33,000 people return to their hometowns since July. Many others left without official assistance in order to escape when the outbreak was its worst: it’s now time to figure out who wants to come back (and how).
(In fact, lots of people are still leaving the city, particularly for the Mekong Delta, where many provinces have loosened their lockdown restrictions amid falling case numbers.)
Overall, I’d say HCMC’s direction remains somewhat confusing: we know changes will happen on Friday, but it’s not at all clear what businesses will be able to re-open, who will be able to move around the city, whether in-person grocery shopping will resume city-wide, or whether outdoor exercise will finally be allowed again. (Though at least we know, according to this frankly baffling article, that beauty clinics and cosmetic departments at hospitals will be able to re-open.)
I’m still of the belief that little will happen fast, as everything so far has been extremely conservative and risk-averse, while officials do not want to get caught allowing crowds like Hanoi saw last week to gather on the streets.
While Friday’s newsletter focused outside of HCMC, a lot of space this week will be devoted to the city, whose ‘shelter-in-place’ lockdown expires on September 30 (Thursday night).