Vaccination and surging confidence foster economic growth

Wednesday, 2021-03-10 13:19:25
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Anti-COVID-19 inoculation and recovering confidence of businesses provide a strong foundation for high growth in Vietnam this year
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NDO - Despite the resurgence of the health crisis, the Vietnamese economy is forecast to maintain the highest economic growth in Southeast Asia this year thanks in part to its fresh anti-COVID-19 vaccination programme and the recovering manufacturing industry.

The thirst for anti-COVID-19 vaccines has been partly quenched as, the Ministry of Health has been implementing a large-scale programme on vaccination against the pandemic since early this week. On Monday, as many as 250 medical staff at the Hospital for Tropical Diseases in Ho Chi Minh City and the National Hospital for Tropical Diseases in Hanoi and Hai Duong Province became the first in the country to receive the inoculation.

According to the National Expanded Programme on Immunisation, Vietnam may receive 4,177,000 doses of COVID-19 vaccine over the next two months, supported by COVAX Facility via the United Nations Children’s Fund. The country will likely receive 1,373,800 doses of vaccine by late this month, and 2,803,200 doses in April. These are all COVID-19 vaccines from AstraZeneca, a British-Swedish multinational pharmaceutical and biotechnology group.

Also, in next month, Vietnam may also be provided with 1.48 million doses of COVID-19 vaccine of AstraZeneca purchased by the Ministry of Health through Vietnam Vaccines JSC.

In total, during March and April, the nation will likely receive 5.657 million doses of COVID-19 vaccine from AstraZeneca.

The government expects that the vaccination programme and the ongoing recovery of industrial activities will help the country achieve high economic growth and continue to rank first in Southeast Asia.

Confidence recovery

At the meeting with Prime Minister Nguyen Xuan Phuc with typical businessmen and intellectuals on the afternoon of March 6, Don Lam, the general director of VinaCapital, rated Vietnam as a nation full of potential and vowed to call for a total investment of as much as US$10 billion in the economy.

This showed that the confidence of investors and businesses is on the rise.

Last December, general director of Samsung Vietnam Choi Joo Ho worked with authorities of Quang Ninh Province, and has stated that the group is concentrating its investments in the provinces of Bac Ninh, Thai Nguyen, and Ho Chi Minh City, with total investment capital of over US$17.5 billion, in addition to a US$230 million research and development (R&D) centre in Hanoi which currently remains under construction. Ho said that Samsung “will support Quang Ninh woo more foreign direct investment (FDI).”

Ho also visited the province’s Dong Mai Industrial Park which covers 168 hectares and currently boasts 18 investment projects registered at more than US$350 million.

Over the past few months, Quang Ninh has received a number of other big investors from the Republic of Korea and Japan who want to implement investment projects in Vietnam following their gradual shifts of investment out of China.

Last November, nine projects were licensed with total registered capital of several hundreds of millions of US dollars in Quang Ninh, according to a source from the province’s Investment Promotion Centre.

According to the Ministry of Planning and Investment (MPI), Quang Ninh is among many nations currently being eyed by many foreign investors who view the country’s successful control of COVID-19 while achieving high economic growth as special advantages for them to invest in. Over the past few months, a number of high-profile international organisations have rated Vietnam the best performer in Asia for 2020 – fuelled by the country’s good job in reining in COVID-19 and managing the economy.

Last year, in defiance of the COVID-19 pandemic, total registered FDI into the country hit US$28.53 billion, which expert Thanh said is “a positive signal” for 2021.

According to Do Nhat Hoang, director of the MPI’s Foreign Investment Agency, many foreign investors are interested in investing in Vietnam.

Specifically, nearly 300 enterprises from many nations in the world are planning to expand their existing investments or are exploring investment opportunities in the country. Of which, more than 60 groups have reaped initial results in new investment and expanded investment here. Initial information showed that the total registered investment capital of these projects will likely be over US$60 billion, doubling the capital registered in Vietnam in 2020.

“This is quite a good signal that international investors are showing big interest in doing business in Vietnam,” Hoang said.

In the first two months of 2021, Vietnam witnessed 18,100 newly established enterprises registering at VND334.8 trillion (US$14.55 billion), employing 172,800 labourers – up 4% in the number of enterprises, 52.2% in capital, and 9.7% in the number of labourers compared to the figures in the same period last year.

Highest growth in Southeast Asia

With these firm foundations, in addition to Vietnam making great efforts to further improve its investment and business climate, Vietnam is expected to continue being ranked first in economic growth in the region, as it did last year, especially in the context of COVID-19 showing no signals of stoppage in the region and in the wider world – on which Vietnam has been depending significantly when it comes to exports, which is the key pillar for the country’s economic growth and job generation.

Under its fresh forecast for Vietnam, Global data analyst and provider FocusEconomics said that “Growth should jump next year, supported by a likely strengthening of the external sector, and Vietnam should continue outperforming its regional peers.”

Specifically, after economic growth gained further momentum in the fourth quarter of last year, whose growth hit 2.91% in 2020, signs for the first quarter of 2021 are generally positive.

“Economic growth is projected to rocket this year amid the strengthening of domestic and foreign demand, with Vietnam set to continue outperforming its regional neighbours. The recent spike in COVID-19 cases and associated implementation of restrictions are a cause for concern, however, while a possible prolonged downturn in the tourism sector remains a key downside risk,” FocusEconomics said in a report sent to Nhan Dan Online. “Our panelists expect GDP to expand 7.4% in 2021, which is unchanged from last month’s forecast, and to 6.9% in 2022.”

Under the firm’s forecasts, in 2021, all other regional nations will see economic growth far lower than Vietnam, including ASEAN as a whole (5.4%), Brunei (2.8%), Cambodia (5.7%), Indonesia (4.8%), Laos (5.4%), Malaysia (6%), the Philippines (7.3%), Singapore (5.7%), and Thailand (3.7%).

Last December, Maybank released its forecast for Vietnam’s growth, referring to the country as having the best ASEAN growth story.

“We expect GDP growth to rebound to 6.8% in 2021 and remain strong at 6.7% in 2022, versus 2.9% in 2020, cementing Vietnam’s position as one of the best growth stories in ASEAN,” said the Maybank report. “Exports and manufacturing will remain the main growth engines. Private consumption (68% of GDP) and investment (32% of GDP) are recovering from the COVID-induced slowdown. […] Investments will return on the back of a pick-up in private investments and FDI.”

Under a recent survey by the Association of German Chambers of Industry and Commerce over German businesses’ sentiment in Vietnam, 80% of German businesses are now performing well in Vietnam regardless of the ongoing COVID-19 pandemic, 40% of respondents said that they feel satisfied when performing in the country – this rate in Vietnam ranks third in the Asia Pacific region, after China and New Zealand.

About 55% of German enterprises expect that the Vietnamese economy will strongly recover in 2021. Around 72% of respondents said that they will continue implementing their investment plans in Vietnam in the time to come, and 27% said that they will recruit more staff.

CONG THANH