View: Do it like Vietnam, the new way to manage Covid and economy
By Renuka Bisht
It should turn country after country green with jealousy. Vietnam has managed to have a ‘good’ pandemic. The country with a population of 97 million and an active border with China, has seen only 355 confirmed coronavirus cases and not a single recorded death.
It is therefore sitting pretty to rake in a Covid dividend where a swifter return to normal translates into greater investments as multinationals look to rejig their supply chains. As it is the lockdown was less disruptive to businesses here by plan, with go nment allowing many non-retail companies and factories to operate through it. And before the lockdown Vietnam was in another sweet spot of having gained the most export market share in Asia over the last five years, thanks to which it was clipping along at a nice 7% growth.
While other economies are set to contract this year ADB is forecasting a GDP growth of 4.1% here. HSBC bank has dubbed the country “Pho’nomenal Vietnam”, the reference to its iconic noodle soup underlining how well it has managed both Covid and the economy. Good management is the key here. It is not like Vietnam doesn’t have notable vulnerabilities. Or that good fortune just landed in its lap. The real learning is how it has minimised weaknesses and maximised strengths. Making the most of the hand it has been dealt.
Consider the Covid battle first. Its medical facilities are less advanced than the peers in the region. Had the infection numbers grown here into hundreds of thousands its healthcare system would also have struggled. Its density of doctors of 8 per 10,000 people is marginally better than that of India but nothing to Brazil’s 22 or America’s 26. However, what Vietnam lacked in resources it more than made up for in preparation and prevention.
Prime Minister Nguyen Xuan Phuc declared war on coronavirus in January itself. It didn’t have South Korean wealth for mass testing. Instead it mobilised the co unist party, the military and the state’s vast surveillance apparatus to meticulously track and trace all infections, often down to their second and third hand contacts, and then put them in institutional quarantine, which was not fancy but well-organised and strictly enforced.
Moving on to management of the economy, Hanoi is using the stimulus opportunity to address some of the infrastructure shortfalls that limit the integration of domestic firms into the global value chain. From new metro lines to expressways, big projects are reportedly being fast tracked. As it is between 2016-18 Vietnam climbed from 64 to 39 in the World Bank Logistics Performance Index, which measures how efficiently countries move goods across and within borders. But the real feather in its cap is the FTA with EU ratified last month. Again, it is a measure of how unusually Vietnam has kept juggling many balls that this is the first FTA the world is seeing since the outbreak of the pandemic.
India’s long flirtation with FTAs with the EU and US has been stymied by a concern about risks. Vietnam also has its worries. For example, as economist Trinh Nguyen emphasises, the FTA requires the entire supply chain to be within the two markets to qualify for zero duties. This is a challenge for Vietnam which is heavily dependent on China for inputs. However, it has chosen not to play the defensive game. It has taken the bet that it can and will upscale.
对风险的担忧，阻碍了印度与欧盟和美国的自游贸易协定的长期谈判。越南也有自己的担忧。例如，正如经济学家Trinh Nguyen 所强调的，自游贸易协定要求整个供应链都在两个市场内，以符合零关税的标准。这对严重依赖中国进口的越南是一个挑战。然而，越南选择了不采取防守战术，它押注自己能够而且将会走高端路线。
But such is the economic dependence that they still say, when China sneezes Vietnam catches a cold. In trying to script a different future what is exemplary is that Hanoi is acting clinically, building alliances and planning for change over the longer term. In this sense the EVFTA is already a ringing success.
For India on the other hand it is bad news. Of the 56 companies that moved bases from China in 2018-19, Nomura found that Vietnam got 26, Taiwan 11, Thailand 8 and India 3. On really incentivising foreign firms to set up shop in the country, we are only playing catch up rather than leading the race. Of course India’s economy and human capital are many times greater. With suitable reforms and stewardship they can deliver much greater acceleration. But failing this, as an earlier generation of Indians watched living standards in China zoom ahead today’s generation may face the same with Vietnam.
In a socially backward and riots ridden country, companies hesitate to set up their businesses.
Prof Manohar Lal
NO ONE, incl our Central and state Bureaucracy was expecting MNCs having manufacturing facilities in China to shift their facilities to India. It was widely expected they shift their facilities to Vietnam first followed by Thailand, Indonesia, Malaysia , Bangladesh etc. However in next 3 years considering the domestic market in India and scope for exports in the region, all the new MNC manufacturing and service facilities can certainly be expected to come to India, provided the geo political tensions with China remain subdued
whatever, at least china economy will get weaker,, India can work on service sector/others..less pollution
Well i think it is difficult for india to offer same incentives what viet nam or China or Indonesia can offer
Don't wory. they will soon catch up. only time will tell.
failed go nment, diplomacy and propoganda.
Lol. Modi says a lot, boasts a lot, but in substance it is very little.
kindly write an article "why companies are not willing for India?"
Because, infighting is high on India. And also, indians are not fools like other nationals to allow few peoples on the name of business and economy to loot Inida and indians.
Yes we should blame Nehru for this
With corrupt Indian Opposition politicians ensuring that India LOSE out in all fronts, what do you expect from MNC companies?
So opposition is more powerful than the ruling party?? Lol than why be in power they should just resign
Vietnam doing quietly. We are advertising even for exporting a tablet or ppe. Self glorification of our politicians a bane, businessmen interest is their profit.
shut ur mouth congi troll
In Global business fraternity India is now identified as communally unstable nation
labour is good in india, but lack commitment
India is really a joke. Talk always louder than action.
India cannot control co ption, and co ption is the root cause of non development