March 31, 2020 19:51

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The economy needs a quick response

10:36 | 17/02/2020

VCN- During the regular Government meeting in January 2020, Prime Minister Nguyen Xuan Phuc requested ministries and branches to respond quickly to the economy, finance and production to compensate for the economic slowdown caused by the coronavirus, from which they "transform failure into victory", overcome difficulties, brought the economy forward, meeting the expectations of the people.

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Border trade will be greatly affected by the coronavirus epidemic. In the photo: Trading activities stalled at the border of Coc Nam and Lang Son. Photo: H.L

Great challenge for the economy

Vietnam is a large open economy, integrated and connected withthe world and highly dependent on the Chinese market, so the impact of acute respiratory infections caused by new strains of corona virus (nCoV) will be significant.

VnDirect Securities Company, in the recent report,forecasted the nine industries most heavily affected, namely textiles, retail, seafood, beer, oil and gas, securities, seaports - transportation, airport services and aviation.

Regarding import and export, Deputy Minister of Industry and Trade Tran Quoc Khanh assessed that the impact of the epidemic and the anti-epidemic measures on import and export activities is relatively wide, but border trade will be most affected. However, shippers are reluctant to be asked to switch to official exports because shifting to regular export means additional costs, not to mention other requirements for packaging, labeling and origin. With agricultural products, according to the latest information from the Ministry of Agriculture and Rural Development, in January, the export value of agricultural, forestry and fishery products was estimated at $3 billion, 84.3% over the same period in 2019.

In the field of tourism, China is an important market forVietnam. In 2019, Chinese tourists account for about 30% of total foreign visitors to Vietnam. Restricting trade due to the epidemic will be a disadvantage for thetourism industry. In addition, the current time is the peak of spring tourism activities and festivals fordomestic tourists, so the disease will make this activity significantly reduced. It is notable these are seasonal tourist activities, so it is difficult to compensate for the coming months, even when the epidemic has finished. Especially, in Vietnam's GDP structure in 2019, the service sector accounted for 41.6%.

For the industry-construction sector, according to experts of Bao Viet Securities Company (BVSC), disruptions in the global supply chain stemming from the epidemic in China could affect the import of a number of commodities as input materials for production in Vietnam. According to the General Department of Customs, Vietnam's total import-export turnover with China in 2019 accounts for about 30% of Vietnam's total export turnover. On that basis, the epidemic in China could affect the production of some key export products that depend heavily on imported materials such as phones and electronic components, computers, electronic products, textiles and footwear.

In addition, according to data from the Ministry of Labor, War Invalids and Social Affairs, approximately 91,500 Chinese citizens were granted permission to work in Vietnam before the LunarNew Year, at least 40% of which returned. But when the virus broke out, many businesses, including the Formosa Steel Complex, could not accept anumber of these workers returning to work. This is not to mention the losses if the virus reaches a larger scale, businesses may have to let workers quit to prevent the disease.

"Turning defeat into victory"

By the end of 2019, Vietnam's economy witnessed spectacular development. This is a solid fulcrum for economic development in 2020. However, in the current situation, we all see 2020 will be a challenging year. During the regular Government meeting in January 2020, Prime Minister Nguyen Xuan Phuc asked: Absolutely neither subjective nor pessimistic, not bewildered, wavering; social stability at the same time proactively and actively respond inall fields from health to diplomacy, defense, security and socio-economy.

The direction of the head of the Government showed a great determination of the Government as well as ministries and branches to help people and businesses have confidence in the successful results of the domestic economy. There is no official scenario of economic growth under the impact of the coronavirus epidemic, but Prime Minister Nguyen Xuan Phuc has affirmed that we can’t have strong solutions to ensure development because we are committed to performing the tasks assigned by the Central and National Assembly. The Prime Minister said that in the first quarter of 2020, we may reduce growth, firstly in January, the month with the long Tet holiday. The initial estimate showed that GDP growth could fallin the first quarter of 2020 by about 1%. If China's economy declines, it will continue to affect Vietnam.

Therefore, the Government agreed on the motto of action: "Thesynchronized and drastic fighting theepidemicto protect people's health and life is a top task but must promote and sustain economic development, keep social stability, macro economy, ensure national defense and security.”

The Prime Minister asked the ministries and agencies to be resolute and take strong measures not to reduce growth deeply, to respond quickly to economy, finance and production to offset the economic decline caused by the epidemic. The administrative system of the whole country, from the central to local levels, must concentrate on the performance of assigned tasks, and follow the practical and growth scenarios of each industry, each field and each locality.

Therefore, many ministries and agencies have launched a series of solutions to support industries and fields in overcoming difficulties. Typically, the Ministry of Industry and Trade has directed overseas businesses to organize activities to find and connect with new customers to contribute to shifting exports to some new markets. In addition, the Import-Export Department (Ministry of Industry and Trade) has also proposed logistics enterprises (especially those with cold storage) to give priority to supporting Vietnamese agricultural exporters to store and preserve agricultural productspending export to China, diverting exports or domestic consumption. On the side of the State Bank, this agency also directed credit institutions to balance capital sources, promptly apply supportive measures, remove difficulties such as rescheduling debt repayments, considering exemption reducing interest rates for people and businesses affected by nCoV.

Along with solutions to cope with the epidemic, to ensure macroeconomic stability, the Prime Minister asked ministries and branches to propose solutions to overcome shortcomings, such as disbursement of public investment capital, deploying major construction, market diversion, import-export market structure, tourism market, aviation restructuring.Especially, the Prime Minister also emphasized his determination not to regulate adjusting growth targets, this task is a challenge to the bravery and determination of ministries and branches.

By Huong Diu/Quynh Lan